Peter's Blog

Peter, I think it's unethical for a listing agent to imply that a customer would save money by not being represented.

It's probably a combination of scenarios...including the existence of "Wal Mart" shoppers who are more concerned with saving a few dollars (they THINK) than they are with representation.  If they do not value what a buyer's agent can do for them, then they either haven't been educated on the subject or don't see the value. 

Unfortunately, there is a low barrier to entry in this profession and a lot of people have had bad experiences with agents who did not bring value to the table, so their attitudes are they will skip having an agent of their own and go directly to the listing agent, as they believe they will "save money."

Brian, I agree, that's my problem, we all seem to agree and understand what is right and what is wrong (or unethical), yet every buyer that I run across seems to think this way.

Susan, the combination of scenerios can explain most of it. How many buyers do you come across that specifically look for a buyers agent to represent them? And how many search for a home then call and use the sellers agent? Or how many have called you because you are the listing agent of a property that they are interested in?

Most of my business is by referral, consequently this is not a scenario I find much -- maybe it could be because of where my clients are coming from.  I explain agency to them and when I get to the part about for whom the listing agent works, they say, "we definitely want our own agent." 

As a listing agent, I do explain agency first, letting prospects know they have the right to their own respresentation.  Only once has a prospect come right out and said they didn't want representation because they "wanted the other half of the commission."  Ironically, that couple trolled a particular neighborhood for three years before finally buying something -- without representation -- only to end up with a property with several problems (they ended up telling me the story because they called on one of my listings when they thought their deal was going south). In their minds, they probably thought they got a bargain, but they really did not when compared to what other properties were offering in the way of upgrades.  Oh, well, you cannot convince some people they are wrong and I don't waste my time trying.

Since you are running into it more than I am, apparently, this begs the question...what is different about our respective markets?  I find this quite interesting. Are certain leads more prone to feeling this way than others?  Where are your leads coming from?

Susan, thanks for the detailed response. I guess since most of your business comes as a means of referral, you would not see any of this. Although I am a RE broker, I am more of a property owner/manager so I don't have the real estate sales office exposure. 

My questions and concerns come from talking to people in general and reading blogs and comments that people make. I am concerned, because my interest is to one day have that sales office and use my RE experience to be exclusively a buyers agent.

The only thing you can do, I guess, is concentrate on providing outstanding service to your buyers so you end up with a lot of referral business.  ;-)  

There are plenty of business models out there that encourage savings over service, so that is going to be a regular challenge.  And we also have to fight the perception we aren't worth our commissions, thanks to less than stellar service provided by less than stellar agents, who abound in this business.

We can only concentrate on educating our buyers the best we can and then prove our value by providing over the top service, going the extra mile.

Another question is whether or not there is a particular price range in which this is more prevalent;  perhaps concentrating on a specific niche market might be the answer? 

Susan, I appreciate your comments, I was hoping to get various comments that would help me better understand this. You may not see it, many other agents out there may not see it, but whether the buyer is open and honest or not, it does go on.

Maybe the lack of response is in some way proof that sellers agents (who 1/2 of their time are also buyers agents) are the cause of this perception whether intentionally, unintentionally, ethically or unethically. 

We do a lot of dual representation in Arkansas and I can't see a problem with it.  I can see where in cases the commission can be cut if needed if the listing agent is also the selling agent.  With so many new agents who know zilch about real estate, one could choose a very bad buyer's agent.  At least the listing agent usually knows the property.

Barbara, thank you. Because I have been on neither side, I see more of this and it just doesn't seem right.

I think it is a matter of an uneducated buyer, lack of knowledge and past business practices.  Buyers simply do not know that they can be represented unless the buyers agent tells them about their duties to a buyer in a transaction and the difference if the same agent is representing both parties.  Many buyers still believe they have to call the name on the sign to look at a house.  It us up to us as professionals to educate.

At the same time you will always run across the buyer working with several different agents, who will only buy from the agent that found them the house or property.

Our team sells many of our listings.  I work as a buyer rep and we have two seller reps.  I only work with the buyers.  For us, it works, my buyers trust me and I would never betray a buyers trust in a deal.  I work for them and not the seller. 

Leslie, thanks, your first paragraph sums up what most realtors beleive, but this is where I feel bothered by this. I'm thinking that the buyers were mis-educated along with un-educated. Meaning taught wrongly by selling agents.

My intention is not to bash selling agents, but to see if part of the problem is stemming from them either unknowingly or un-caringly (is there such a word?). And if you happen to be a switch hitter, representing both buyers and sellers at different times, are you educating and mis-educating your clients?

Hello Peter

AS a former listing agent , I can tell you that the buyers do feel that they can get a better deal calling the sign directly. A beginning agent will happily attempt to take the buyer and the selling side, but in my opinion, will soon wish they had brought in an agent to take one side or another.

That is the real problem with trying to do both sides, I don't think you can offer great service to one without stepping a bit on the other. There is an inherent danger in saying that you represent only the deal, and its that your ability to stay focused will be comprimised. You then have a situation where neither side is properly represented, and the refferrals will never come

Mike, thanks, you make some great points.

Peter-Interesting post and it brings up good questions. In Illinois (where I work) it is legal to do dual agency, but it must be disclosed in writing. If a potential buyer says that they don't want you, as the listing agent, or any other agent to represent them, you must give them a notice of no agency. They are then "customers" not clients. This could happen, for instance, at an open house where a buyer wants you to write the contract but does not want representation. It doesn't really make sense because they will not get a better deal, and would benefit more from a dual agency arrangement.

In actual practice, I haven't done many dual agency sales, and I have never done a notice of no agency for a buyer. I know there are agents who only show their own listings in order to get both sides of a deal. That is not really acting as an agent for the buyer, and I believe it is unethical not to make a buyer client aware of other similar properties. I wonder if they are disclosing dual agency or giving the notice of no agency.

Buyers typically make the mistake of thinking they will get a better deal on new construction, if they go in without an agent. They are wrong in that assumption because the agent commission is just a cost of doing business for the developer.

On a resale, it is possible to offer a seller a lower commission if the listing agent brings in the buyer, so, in theory there may be some savings for the buyer. This too, must be disclosed in the MLS as a variable commission. Whenever I've done a variable commission, it is not to lure buyers as much as to let the seller know that, because I do not have to pay out to another agent, I would be able to charge less to the seller. I feel that buyers are best served by having an agent represent them. Dual agency is the next best alternative, if the listing agent follows the rules correctly.

Rich, You make great points, but as I read them, it only confirms more of what seems to be a double edged sword. I don't mean the dual agency, but that when agents represent sellers, they almost inadvertantly become the cause of buyers thinking this way when a buyer inquires about the agents own listing.

I know that for the most part, buyers need to be educated, but the way listing agents treat potential buyers almost seems like the educational process becomes an upstream swim (or an uphill battle). 

Because I've never really been involved in either side, I feel That I am able to see it from a neutral position where many agents are involved either as buyers agents or sellers agents and just want to get the deal closed.

Peter:  Representing both parties to a transaction is a bad idea and should be illegal.  Can you imagine dual agency in any other setting.  Court perhaps?  Defending and prosecuting at the same time? 

I am not finding it at all that all buyers think that working with the sellers agent will save them money.  There is still a vast lack of disclosure and playing it straight with buyers and sellers because of the income.  I personally won't be a dual agent.  My buyers are happy to have me and I guess after a lot of hard work they get it -

Peter-Thanks for responding to my comments. As mentioned, dual agency is legal in Illinois, but only after full, written disclosure. The only time I ever did it was when I worked with a partner. She dealt with one party and I dealt with the other. It was still dual agency because we were a team, but we kept a distance. I have not done it since I've been on my own. I wonder how many teams with buyers agents don't disclose the dual agency aspect of their situation. If the buyer's agent works on the listing agent's team, essentially it is the same as working with one agent.

I think Chris Ann's comment is a good one. It is important that we can be in a position to council our clients appropriately.

Chris, you're right, thanks for your comment, although that wasn't exactly the point I was trying to make.

Miriam, very interesting, maybe I just had the misfortune of seeing the smaller percentage that are. I also found that after a lot of hard work they get it and appreciate it. thank you.

Rich, thanks again, but this really isn't about duel agency. It's more about are sellers agents undoing what buyers agents have tough the buyer?

WOE to the buyer whoever does not sign the dual agency agreement!  Or worse, does not have a buyer's agent on their side.  SCENARIO: A listing agent works with a seller for 4 months. Buyer comes along to make a deal.  To which party is the listing agent going to feel he has more obligation?  Naturally, the seller.  The buyer who doesn't sign the dual agency may never see the proper comparisons to make an educated decision.

As for commission cutting, it is often prenegotiated that a seller pay slightly less if the listing agent bring a buyer.  What are the chances though?  And if that happens, it's a win-win. 

PETER - Buyers have been lead to believe that they will get a "better deal" by going directly through listing agents.  I did a post recently on this exact suject.  The fact of the matter is that a listing agent is obligated to get the highest price for the home.  Even though some will take a reduced rate to get both sides of the transaction, this is not always the case.  What is always the case though, is the fact that a buyer agent is obligated to try and get the home for the lowest possible price. 

anonymous responder, thanks, WOE to the buyer, but have we created this double edged sword?

Adam, thanks for your comments, it doesn't make me happy to hear this from you but it does confirm some of my questions and frustration.