Sharing a Realtor - how bad of an idea is this really?
July 16, 2007 11:30 AM   Subscribe

How naive am I to think that my situation is an exeption to the general wisdom that you shouldn't share a realtor with the seller?

We have been house hunting for 3-4 months now and have yet to find a house we like. Our realtor is awesome. She has shown us almost 100 houses, and is always quite frank with us about issues with houses - to the point of talking us out of buying several of them. We have grown to trust her, and I am convinced that she really is acting in our best interest, and not just going for a quick and easy commission.

However, she is now listing a house that she thinks is perfect for us (we haven't seen it yet). I know that sharing a realtor with the seller is usually a bad idea, but I'm not sure how to proceed, given that
a) I'm am realtively confident that she will try her best to act fairly to both parties and not just try to maximize her commission,
b) She has invested a *ton* of hours with us, and I would feel really bad for her not getting compensated for that.

So several questions-
How dumb would it be to go ahead with her acting as a dual agent for both us and the seller? Assuming that our realtor won't act unethically, what should I watch out for?

Are there any other good compromises other than simply switching realtors at this point? For example, having another realtor manage our closing, but share the commission with our current realtor?

If we do switch realtors, what could we do to thank/compensate her? Would some sort of gratuity be appropriate?
posted by jpdoane to Home & Garden (33 answers total)
 
I think you're maybe being a bit too nice. Appropriate gratuity = good words about her whenever anybody asks you about agents.

I went the dual agency route, and am now saddled with a regret.

I wouldn't consider not having a 'buyer's agent' again unless I was completely head-over-heels in love with both my home inspector and my real estate lawyer.
posted by kmennie at 11:39 AM on July 16, 2007


I don't think that it's a big deal as long as you look out for yourselves and do your own due diligence. There are so many tools available to you these days, real estate is not the mystery that it once was.

Have her do a comparative market analysis, and then do your own research on a site like zillow.com. If zillow sin't available in your area, the tax assessor's office or recorder of deeds should have records of what other houses in the neighborhood have sold for. Usually you can access these records through their websites. If you happen to live in St. Louis or Chicago, blockshopper.com is a great research tool as well.

Definitely hire an inspector. If he/she finds anything major, you can use it as a negotiating tool.

With the amount of time that she has invested in you, I think that switching realtors at this point would be kind of a low move. Just make sure that your offer is backed up by your own research. And really, you should do this regardless of whether or not the realtor is representing both the buyer and the seller. No one is going to look out for your interests as much as you would.
posted by Ostara at 11:41 AM on July 16, 2007


Your contract with your agent usually promises the agent exclusivity. If you want to use a different agent, you'll need to wait until your current agency agreement expires.
posted by winston at 11:55 AM on July 16, 2007


Well, go take a look at it, of course. The whole thing may be moot if you just don't like the house enough.

If you do like the house enough to put in an offer, just double-double check with yourselves to make sure you don't feel talked into anything. For instance:

* Is this house within the same price range as the others?
* Is the price appropriate for the house, or is it even a little bit too good to be true?
* Why does she think it's perfect for you? Are these reasons within your criteria as already established, or she taking you in a different direction?
* Did it really just come on the market, or has she represented these folks for awhile?

It's not the initial offer that would scare me with a dual agent -- it's the negotiations. How will she handle negotiating the best price and terms for both sides? Ask her this and see what she says.

Find out what the real estate laws are in your state regarding dual agents. She may be required to have another realtor step in, and the extent to which they divide the commission may be mandated.

And get a great inspector.
posted by desuetude at 11:57 AM on July 16, 2007


winston: we have no signed contract with our agent

Ostara: we will of course get a home inspection
posted by jpdoane at 11:59 AM on July 16, 2007


We discussed whether this might happen w/ our realtor - she basically said that someone in her group would have to represent the seller or us, rather than her. If she works in a larger realty group, she may be required to split it that way (from what I recall, that seemed to be the case with our realtor).
posted by Medieval Maven at 12:27 PM on July 16, 2007


Just make sure you have a good inspector (i.e. not the one(s) your realtor suggests) and have a good lawyer (representing you, not your lender) look over all of the paperwork. If you do those things and you truly trust your realtor, you should be able to rest easy that nothing major is being overlooked.
posted by tastybrains at 12:37 PM on July 16, 2007


Legally she will have to bend over backwards to make sure she does right by both parties, as a dual agent. A lot of times agents actually prefer NOT to be in that position. However:

I say a lot depends on how much think you can trust her. From what you describe I think she's the kind you can trust (the other kind doesn't talk you out of buying stuff, generally.)

She knows you, she knows what you like, and most important of all, she is gonna want you to be happy to give her referrals. I think in this case you are okay. But it couldn't hurt to get an independant appraisal.

(Hubby is a realtor and a sales manager at a real estate company.)
posted by konolia at 12:59 PM on July 16, 2007


Bunch o' bits of advice:

A) In many states, a real estate agent works for, and is paid by the seller. A "listing" is a contract for sale of a property exclusively through a particular agent, for a specific period of time (usually a minimum of 6 months) in exchange for the agents best efforts to advertise and sell the property at the best possible price. Agents, by law, must often disclose to buyers in writing that they are working exclusively for the seller, explicitly in their early dealings, and always when preparing an offer from a buyer, to present to a seller. Therefore, ethically, their first responsibility is always to the seller, and if I, as a seller, found out that an agent with whom I had listed property was, in any way, at any time, talking any potential buyer out of buying my property, I'd sue them, immediately. And I'd pursue that activity with the local Board of Realtors and have their license pulled, if possible. That kind of activity is more than unethical.

B) In some states, "buyer's agents" have sprung up. Essentially, these are people who purport to act on behalf of buyers in a real estate transaction, splitting the customary transaction with the selling agent. Often, these are new or part time agents, who have not developed their own listings and business, and are splitting the fees of more established agents. Frankly, in my experience, their only value in a transaction is that they may know slightly more about local market conditions and real estate procedures than first time home buyers, or people moving from out of the area. If you intend to employ a buyer's agent, be extremely careful about their background, length of time in the business, what they are doing for you, and what they'll be paid. In many cases, employing a buyer's agent complicates deals, and may reduce the number of properties you'll be able to consider, or increase your cost for properties, particularly those offered directly by owners.

C) A buyer's agent is not usually a lawyer, or at least, does not act as one. If you can only afford the services of either an attorney, or a buyer's agent, employ an experienced real estate attorney in your area, and pay attention to advice you get.

D) No real estate agent is "investing time" in you. They are sales people, and you are a person to whom they are trying to sell something. An agent that has shown you 100 homes without selling you one is wasting tons of your time. A good agent, who has properly interviewed you, and knows both your issues and the local market, shouldn't need to show you more than 10 properties to get to one that meets your needs. Not to disparage your efforts in finding a home, or the people you are working with, but if you've gone on 100 home showings, without finding a home to buy, perhaps you're dealing with an agent who isn't very busy, otherwise. Try going out with a few top agents, and get their perspective on your needs and the local market. You might be very surprised to find that the process is much easier than it appears to you now, simply because an experienced, successful agent is actively filtering the market for you, and presenting only those properties where there is good match to your needs and affordability.
posted by paulsc at 1:12 PM on July 16, 2007 [3 favorites]


and presenting only those properties where there is good match to your needs and affordability.

This would require buyers who are clear on these points. Many buyers, especially first-timers, aren't. It's not hard to look at 100 houses very quickly in an urban area.

paulsc, not saying that you're wrong for your area, but your points on buyer's agents do not jibe a bit with anything I've ever heard of in Philly.
posted by desuetude at 1:46 PM on July 16, 2007


Not to disparage your efforts in finding a home, or the people you are working with, but if you've gone on 100 home showings, without finding a home to buy, perhaps you're dealing with an agent who isn't very busy, otherwise.

Seconded. We spent a year searching with one agent, and she never came through with anything we liked in our price range except once, and that was a house across the street from the one she was showing us, that I pointed out and she tried to discourage us from looking at!

Then we hooked up with another realtor, and found the house we now occupy in a single weekend. It was, literally, the fourth we'd seen with her, and three of those four were in the running. She did the same thing for two other friends of ours shortly thereafter.
posted by davejay at 2:02 PM on July 16, 2007


OP here:
To be fair to our realtor, we are first time buyers, and what we are looking for has evolved as we have looked. Also, we ourselves have seen about 100 houses, but perhaps half have been open houses on our own, so our realtor has probably shown us 50 or so. Honestly, we probably have been nightmare clients, since we had pretty vague ideas about what we wanted going in, and have been pretty picky. But our realtor has done nothing to push us to buy anything we haven't been sure of.

paulsc - I also wonder if there are different customs in your area. Here (in Iowa) its normal for a buyer to enlist a realtor to represent them through the search, offer, negotiations, and closing. They typically split the commission with the sellers realtor. I beleive that most realtors work regularly with both buyers and sellers.
posted by jpdoane at 2:03 PM on July 16, 2007


Therefore, ethically, their first responsibility is always to the seller, and if I, as a seller, found out that an agent with whom I had listed property was, in any way, at any time, talking any potential buyer out of buying my property, I'd sue them, immediately.

she is the selling agent only on this latest house the OP discussed (as far as we know) so she wasn't talking them out of buying any other houses she is representing (that we know of).

In some states, "buyer's agents" have sprung up. Essentially, these are people who purport to act on behalf of buyers in a real estate transaction, splitting the customary transaction with the selling agent. Often, these are new or part time agents, who have not developed their own listings and business, and are splitting the fees of more established agents.

don't know where you are PAULSC but i have bought and sold property in major cities in both california and oregon and your across-the-board disparagement of buyer's agents is simply not true. this is also true with in years past when my parents were buying and in friends' experiences in other states. buyer's agents are very important in my experience (in terms of navigating legal and other issues, communicating with the seller's agents, having access to property that has just come on the market or even before coming on the market) and many of them have years of experience on both the selling and buying sides.

An agent that has shown you 100 homes without selling you one is wasting tons of your time…shouldn't need to show you more than 10 properties to get to one that meets your needs.

also not necessarily true. there are ppl who know exactly what kind of house they are looking for and there are people–especially first-time buyers—who really don't have any idea beyond how much they have to spend. even with those who know what they want, depending on the market and the availability, it's not necessarily a bad sign that they have had to look through so many houses.

as for the OP, it does sound like your agent sounds like she has been looking out for you (i think it is usually a good sign when you get talked out of buying in appropriate houses) so i would not warn against doing this. however, if you are comfortable with staying with her, i would try to get an independent inspector rather than rely exclusively on her regular as well as have independent checks and a lawyer on hand. if you are still hesitant, i think she would understand if you asked to have another agent represent you.
posted by violetk at 2:07 PM on July 16, 2007


You could think of it a slightly different way, even if you do bring in a different realtor and she splits the commission with them, your current one is still getting commission. It's just as a seller rather than a buyer. So you don't need to worry so much about her not getting paid (because she is) and you certainly don't need to give her anything above what she'll get for selling you the house.
posted by shelleycat at 2:28 PM on July 16, 2007


Buyers and sellers have opposing interests. You must keep this in mind.

I can understand that you want the realtor to be compensated. But in your sharing her as a dual agent, you could end up losing much more than the dollar amount that she will receive as "your" part of the commission.

You want to get the best price you can. You want your agent to be firm in advocating for you when the inspection turns up problems that will cost money to fix. And so on -- you can make a list.

You not only need your own agent -- you need an agent that works for a different real estate brokerage.
posted by wryly at 2:39 PM on July 16, 2007


I have never had an agent with dual agency, but I have run into a similar situation.

We were selling our first home during a flat market (the market had been roaring two months prior to that and started to roar again about a month later). Our agent went away for a week. She had arranged a back-up agent to do the open house and handle things. It was August and no one expected the place to sell in a slow month.

Well, we got an offer -- from the back-up agent's clients. It was actually the only firm offer we'd received since our place went on the market. It was for 20k below list. The agent seemed to think this was fair, because another unit on a higher floor had sold for 18k below that, about 2 months before. We explained the state of that unit, which had been in serious disrepair. We countered with about 3k below our list price.

The buyer came back with an offer for 7k below our list price, final offer -- with no subjects, except for financing. Now, to tell the truth, this wasn't a bad offer. And we did accept it. But neither we nor the buyers will never know if this was truly the best deal we could get, since we had one agent working for both of us. And the buyer's agent was only our back-up agent and not really our agent, so it wasn't true dual agency.

That being said, we were happy to sell and, to date, that's the highest price a unit in that building has sold for. (I think one unit has sold since then -- almost a year has gone by.) And we're much happier with our new place.

So it depends on how good you are at negotiating on your own and whether you'll be second guessing whatever deal you arrive at. We could live with it. Can you?
posted by acoutu at 2:49 PM on July 16, 2007


I would be leary about dual agency, but less so if I had an independent inspector lined up. (In my case, the inspector was hired by the seller, and he minimized all the work that needed to be done)

Has your agent suggested any solutions? She should understand your misgivings and caution. By now you have a very good idea what houses are worth, so you probably won't get talked into a terrible price, no matter how your agent behaves. But you do want to know that you are well represented, and no good real estate would deny you this.

Since your current agent is paid primarily by the seller, she shouldn't have a difficult time recommending someone to submit the bid on this particular house on your behalf.

Or, if it is possible to offer a bid on your own behalf in Iowa, she should put this option on the table.

Having lived in smaller places, I would be flexible on an agent from the same agency. I loved my agent and recommend him often, but I never doubted that he had an interest in selling me a house.
posted by gesamtkunstwerk at 4:01 PM on July 16, 2007


In reality, a buyer's agent has zero incentive to get you the "best price" you can get. You are probably lucky to get a fair price at best. From what I understand, there is usually a given markup for each area, and the buyer's agent should know roughly what this markup is and subtract this from the list price to make a reasonable offer. If you have looked at 100 homes with this agent she should have probably advised you for some of them what an acceptable offer would be in the area in question, so you should have some idea what a good offer on this house should be.

I would go to see the house and, if you like it, discuss your concerns about sharing an agent and suggest a reduced commission if both parties use her. For example, if the agent were to accept a 4% commission and lower the acceptable offer price by 1% instead of splitting the commission in half, the buyer, seller, and agent all come out ahead.

If you don't like it, go on to the next house..
posted by Yorrick at 5:42 PM on July 16, 2007


I haven't had a chance to read through all of the comments yet, but it did jump out at me that you don't currently have anything signed with "your" agent. In Missouri, at least, this means she is not "your" agent in any way at all. Legally, she is not representing you, and in my state could be reprimanded by the state for claiming she was working in your best interests without a signed Buyer's Agency agreement.

I'll post back with any other thoughts, but I always always always recommend someone use a separate Buyer's Agent.

On preview: Don't do what Yorrick said. In that situation, the listing agent (your agent) would most likely be considered the procuring cause for the sale, and would be due the full commission even if you brought in a buyer's agent. Decide before you see the house if you want to use another agent, or you'll really be in for a mess.
posted by shinynewnick at 7:45 PM on July 16, 2007


Taking a more practical tack: think of everything you have ever told this person thinking that she was "your" agent. Now imagine that she will tell all of this to the seller.

I know that everyone will say that ethically they are obligated to not do this. Believe that if you like.
posted by MrZero at 8:26 PM on July 16, 2007


paulsc writes "Therefore, ethically, their first responsibility is always to the seller, and if I, as a seller, found out that an agent with whom I had listed property was, in any way, at any time, talking any potential buyer out of buying my property, I'd sue them, immediately. And I'd pursue that activity with the local Board of Realtors and have their license pulled, if possible. That kind of activity is more than unethical."

This isn't the situation jpdoane described. They said that their agent, let's call him Tom, talked jpdoane out of a listing by another realtor, let's call them Jane. Despite Tom being paid by Jane's client Tom's job is to represent jpdoane. Around here anyways there is lots of law trying to preserve this relationship. Besides Tom isn't going to get a lot of repeat business if he doesn't represent buyers to the best of his ability when he is on that side of the table, which includes making recommendations when he feels a house is wrong or right. Tom knows that in the majority of cases in 3-7 years jpdoane will be selling and he wants that sale too. Especially consider that is usually a double (seller's commission and buyer's commission).
posted by Mitheral at 9:13 PM on July 16, 2007


mitheral is right. a good buyer's agent wants to make sure that you are a happy camper because they will want you to call them up when you decide to sell the house they helped you buy. i was so happy with my agent when i bought my first condo (in california) that there was never any doubt that i would use her when i was ready to sell it (and she did an even more fantastic job as the selling agent) and i would definitely use the agent who helped me buy my house up here in oregon if and when i ever decide to sell it—because he did a great job.

developing a great relationship with the buyer also behooves an agent when it comes to you recommending agents to friends and family who decide they are looking for a house as well. i would (and have) gladly and enthusiastically recommended the agents with whom i have dealt.
posted by violetk at 10:08 PM on July 16, 2007


oh, yeah, my point being, that if you do decide to switch agents to avoid conflict, then after letting her know personally why (and saying you are uncomfortable with any possible conflict that may arise is reasonable), i would write your present agent a nice note to let her know how much you appreciate the time she has spent with you so far and that you would gladly recommend her to anyone looking for an agent (if that is how you feel).
posted by violetk at 10:10 PM on July 16, 2007


I'm not sure I really understand - my mom's a realtor, has been for nearly 30 years, and sells clients her own listings all the time. And she's not the only one. Maybe it's a regional thing? However, she's been doing this for so long, that she relies utterly on referrals, and would never jeopardize that.

I just feel like someone needs to defend the honest realtors out there. Geez.
posted by pyjammy at 11:03 AM on July 17, 2007


pyjammy, it's not about selling your own listing (this is always your ultimate goal, money wise). The issue here is that the Realtor in question would be representing both sides in the deal. If Joe Blow calls your mom's number on the sign out front, your mom represents only the seller. If another Realtor calls your mom about the listed house, that other Realtor represents the buyer.

I don't consider it an ethical issue as much as getting the best representation in a deal. If the Realtor is acting as a duel agent, they legally can't share information that could hurt either party - I can't tell the buyer "This house is overpriced and I think you can offer $10,000 less", and I can't tell the seller "This buyer doesn't have solid financial backing and most likely won't get the loan".
posted by shinynewnick at 12:07 PM on July 17, 2007


Hmm. Maybe I'm just confused.

Say she has a house at 123 Elm Street listed. And she has another client looking for a house. If she sells them 123 Elm Street, isn't she representing both sides? She gets the whole commission, in this case, instead of splitting it with the listing agent (or selling agent).

I certainly see where she could tell each client something that would make the house more expensive, and thus up her commission, but I know she wouldn't because it's unethical.
posted by pyjammy at 12:25 PM on July 17, 2007


pyjammy, the temptation to NOT be ethical (and to be lazy) s so great that many states now require at the very least, disclosure of the potential conflict of interest.

Also, there's the negotiation issue raised several times, including shinynewnick above. Sure, your mom can just suggest to both sides a fair price and convince them both to take it, but that introduces at least a subliminal bias towards the status quo, as the "fair" price is in comparison to the median price of similar houses.

Ideally, the buyer and seller would truly hash it out for the lowest the buyer was willing to pay vs. the highest the seller should get. Speaking in idealist mode -- this should keep the market more honest.

(And practically speaking, what happens if there is a dispute during closing and the realtor is representing both sides?!)
posted by desuetude at 2:33 PM on July 17, 2007


pyjammy, the issue isn't just making the house more expensive, it's that any advice given that benefits one side or the other becomes unethical in a dual agency situation. You can no longer give your professional opinion to the buyer or seller about offers, counter offers, etc. And as a buyer or a seller, that's one thing I'm paying for - professional advice regarding the negotiations. In dual agency I lose that aspect, but I'm still paying the same amount of commission.
posted by shinynewnick at 7:05 PM on July 17, 2007


In North Carolina you are legally required to show buyers a brochure talking about buyer's agency.

One thing the original poster needs to remember -along with the rest of you-is that real estate laws vary state by state. And any decent agent is very careful to be ethical because a) they do not want to be sued and they do not want to lose their license and b) they want those referrals.

Like any other industry, one needs to use due diligence to find a good agent.
posted by konolia at 10:59 AM on July 18, 2007


And practically speaking, what happens if there is a dispute during closing and the realtor is representing both sides?!)

That's why there are lawyers at closings, especially in NC.
posted by konolia at 11:00 AM on July 18, 2007


Well, I talked to my mom, and she said in the dual agency situations, both sides are made aware of it, and she just has to be careful about what she says.

What konolia says is right - she isn't going to jeopardize her license or her reputation! It's all she has.
posted by pyjammy at 11:12 AM on July 18, 2007


That's why there are lawyers at closings, especially in NC.

I bet this varies not only state to state, but area and other circumstances within a state. For straightforward real estate transactions in PA, I don' t know anyone who has had a lawyer at closing.
posted by desuetude at 11:40 AM on July 18, 2007


Same here in my part of Missouri, it is very rare to have lawyers involved in any "standard" real estate transaction. At most, someone might have a real estate lawyer look over paperwork before closing, but even that is extremely rare.
posted by shinynewnick at 6:00 PM on July 18, 2007


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