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RE Agent representing both buyer and seller

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Member
Apr 4, 2013
252 posts
37 upvotes
Milton

RE Agent representing both buyer and seller

Hi

My wife and I have checked out a house online sent to us by our agent. Before we register any interest in the house and actually schedule a viewing, I'm a little concerned because our agent happens to also be the agent of the sellers. I had a few questions with regards to this situation

1-Isn't there conflict of interest for the agent? What does code of conduct say in this situation?
2-Does the agent still make 5% commission? If we buy the house the agent would be making double what he would normally make. Is there room to negotiate that with the agent such that it is a win-win situation for both him and us (Perhaps a 3% commission)?
3-What other advantages/disadvantages do you see with such an arrangement that we should be aware of? Anyone who's been in a similar situation, please chime in with your thoughts

Thanks
13 replies
Deal Addict
Aug 19, 2013
2397 posts
1091 upvotes
My only advice is ask to see lots of comparables before making an offer and don't let the agent convince you to offer more then what you think us reasonable. Don't tell you agent what your top $ for the property would be (keep that to yourself). Also if you are buying you aren't paying the commission so you can't negotiate. The seller may be able to. If you are also selling with the same agent you may be able to negotiate a lower commission on the house you sell.
Sr. Member
Mar 15, 2008
557 posts
132 upvotes
Montreal
We did exactly this for a recent purchase. I had no issue with dual agency (you can google this term to read more about it - I definitely did):

- He was professional and didn't give us any inside info from the sellers. We didn't over-share so he had nothing to tell them either, even if he wanted.

- He was on paper making his full commission. If you think in terms of incentive, your agent will REALLY want to make this deal happen. We probably got the house for less because of it. I imagine the sellers didn't want to take our offer and he probably made up the difference. I'd guess he made more than usual, the sellers got the number they wanted, and we got the house cheaper. The agent bridged that gap with a part of the non-existent buyer's agent cut.

- Personally we saw no need for a buying agent. We found the house ourselves, knew what we wanted, knew approximately what it was worth based on comparables (I had a friend pull some up), and took all the proper precautions. Do not let him show you not-so-comparable comparables. He tried showing us a more run-down house at a similar price to emphasize what a good deal it was, but it was in a much better location.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
Good morning,

I'm a fellow Realtor and can gladly help you with this situation.


1-Isn't there conflict of interest for the agent? What does code of conduct say in this situation?

There is no "conflict" as long as both parties are aware of the Realtor's involvement. This can be a bit of a grey area as most Realtors would LOVE the opportunity to enter into a multiple representation situation if they have the chance to double-end the deal themselves, with no other Realtor involvement. It is called "Multiple Representation" and there is a form that you will be requested to sign. Multiple Rep also occurs when the same brokerage represents the buyer/seller (not just the same Realtor as we are mere representatives of our brokerages).

2-Does the agent still make 5% commission? If we buy the house the agent would be making double what he would normally make. Is there room to negotiate that with the agent such that it is a win-win situation
for both him and us (Perhaps a 3% commission)?

Yes, there is a "chance" that the agent can make the full amount of commission (we usually aren't privy to what is being offered to the selling agent), however as a term of the agreement, one could request that the agent take a bit of a discount so that he/she can bring both parties down to an agreeable amount. I would suggest that you have the highest amount you are willing to pay kept to yourself, and should no agreement be reached, then you can ask the agent about a reduction. In all cases though, he/she is still doing the job of being your rep, right, and should be entitled to their full commission. (Oh, to dream...LOL) I'm not a fan of discounts, but we do what we do to make our clients happy :) It NEVER hurts to ask about a discount in any situation. If you don't ask, you won't know! Despite what the previous poster says, your purchase price is inclusive of the cost of the seller's commission. Don't fool yourself ;) We're all savvy enough to know when we price out the house that we also include the cost of the commissions. (Just being honest.... 20 years in the industry and I won't sell you BS). Like I said, ask for the discount.... it doesn't hurt. And if you REALLY want to play it hard, ask for that discount AFTER you decide on your lowest price so that you will bring the price down even lower.

3-What other advantages/disadvantages do you see with such an arrangement that we should be aware of? Anyone who's been in a similar situation, please chime in with your thoughts.

The main disadvantage is that you have one person who is working in the best interest of both seller and buyer, but is also out there to make the most for him/herself at the same time. So... once he/she becomes aware of what you are willing to spend AT MOST, then he/she can use that to help the seller decide how much to sell for.... although they cannot release that information to either properties, assuming you are both CLIENTS. If you are going in as a CUSTOMER, then the agent IS actually allowed to give out some private information (which is why you should NEVER be a CUSTOMER in a bargaining position).

My advice would be to trust your gut. How well do you know your agent? Can you ask the agent to have another rep from his brokerage be available to use during the time of bargaining to act on the seller's behalf? Ask him how many other Multiple Rep situations he/she has been involved in?

Best of luck :)


(As well, I'm really sorry if I have missed something or am not quoting properly... I'm on 3 hours of sleep after a late-night offer situation and my advice comes with this disclaimer that I may or may not make 100% accurate sense at the moment ;) )
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
PS - the old term was Dual Agency. It is now known as Multiple Representation :)
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
The agent who sold my mother's condo also represented the buyers. The commission was 3%. It was certainly an advantage financially for my mother, but I can't think of any specific advantage for the buyer. We used a buyer's agent when we bought our current home, and we were happy with her involvement. It didn't cost us anything, since the seller paid the commission. Since market value is what someone will pay, the issue of commission having an impact on the sale price is a red herring, but it will certainly come up in any discussion about fees.

Good luck and enjoy your new home when you get one!
Deal Addict
User avatar
Aug 3, 2009
2294 posts
720 upvotes
Nova Scotia
I believe you sign an agreement indicating you understand so that you cannot later sue the agent for breaching his/her fiduciary duty.
Sr. Member
Apr 6, 2007
506 posts
60 upvotes
Here's a question for anyone who wants to take it. If I go in as a buyer, directly to the sellers agent to make an offer on a home I would expect to have a dual agency or I guess now a multiple representation form slid under my nose. I'm inclined not to sign this, and instead pay my lawyer an hourly rate to prepare my offer. Thoughts? This seems to get right to the bottom of the commission, and gets the buyer and seller as close as possible right off the bat.
Banned
User avatar
Sep 1, 2012
1783 posts
78 upvotes
let say you willing to pay $550 000.00 but the seller only going for $570, 000. since you work with the same agent . the realtor will pay the difference back to the seller. to work this deal out
Deal Guru
User avatar
Nov 19, 2002
12253 posts
858 upvotes
noNuser wrote: let say you willing to pay $550 000.00 but the seller only going for $570, 000. since you work with the same agent . the realtor will pay the difference back to the seller. to work this deal out
Yes, absolutely, the agent will pay back $20K on a $550K home. Sure. :|
Sr. Member
Apr 6, 2007
506 posts
60 upvotes
noNuser wrote: let say you willing to pay $550 000.00 but the seller only going for $570, 000. since you work with the same agent . the realtor will pay the difference back to the seller. to work this deal out
I think your numbers are a bit out, and the mechanism is slightly different but, sort of yes - a realtor may reduce their commission in order to get the deal done. I have had it happen without even asking once, but your example is 3.6%, which is unlikely. Maybe 1%.

My idea is to leave the buyers agent position vacant and not let anyone claim that 2.5%.
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
florch and nouser, in my experience in selling property in the last decade for myself and relatives (as seller, not Realtor), the contract the seller has with the Realtor already takes into account the situation of a buyer not using a buyer's agent. In the most recent sale of my mom's condo and in last year's sale of vacant land we own, it was already in writing that the modified rate would be 3%. So approaching the seller's realtor would be unlikely to make much of a further difference.
Sr. Member
Apr 6, 2007
506 posts
60 upvotes
Thanks OG. I see no reason to sign the dual agency form then. At best it costs nothing, but the reason it exists is either to add cost or absolve responsibility. I'm using a lawyer anyway, so I'll let him write the offer.
Deal Addict
Nov 24, 2004
4664 posts
1242 upvotes
Toronto
The terms used to describe this situation are "multiple representation", "dual agency" or, more colloquially, "double-ending". All the caveats described above certainly apply. I would also add that a large fraction of RECO's disciplinary actions against Realtors (fines and sanctions) have to do with dual-agency situations.

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