Dual-agency: Using the Listing Agent to Buy a Home

 Not that kind of duel.

Not that kind of duel.

Dual-agency.

This is a divisive term in the world of real estate.

Some agents will happily represent both the buyer and the seller on a transaction. Some agents are vehemently against it and believe there is no way to adequately and fairly represent both parties. Other agents will only consider it in non-multiple offer situations. Other agents foam at the mouth and bend over backwards to try to find "double-ended deals". 

As long as it's allowed, I think it will always be up for debate. But, the most important thing that I always keep in mind is: what's best for the client(s)?

What is dual-agency? 

Dual-agency (specifically known in Oregon as "Disclosed Limited Agency") occurs when a real estate agent represents both the buyer and the seller on the purchase/sale of a specific home. It also happens when an agent represents multiple buyers that want to place an offer on the same property (much less common but happens on occasion).

Why would a buyer want to use the listing agent to represent them?

 Why be alone on an island of confusion?

Why be alone on an island of confusion?

This is a really good question. Buyers that say they only want the listing agent to represent them are often reticent to explain their reasoning. I've found through consistent and patient communication that there are 2 real reasons:

  1. They feel that they will receive "insider" information and that they will get a better deal or their offer will have a better chance to be accepted (usually more of a concern in a highly competitive seller's market).
  2. They think that they will pay less commission.

Wait, is that how it works?

No. If anything, your agent will be more hampered when attempting to represent both parties at once. There are very specific duties of a dual-agent:

To both buyer and seller, except with express written permission of the respective person, the duty not to disclose to the other person:
a. That the seller will accept a price lower or terms less favorable than the listing price or terms;
b. That the buyer will pay a price greater or terms more favorable than the offering price or terms; or
c. Confidential information...
— OREGON REAL ESTATE INITIAL AGENCY DISCLOSURE PAMPHLET OAR 863-015-215 (4)

When I represent a buyer, I try to communicate directly with the seller's agent (or the seller themselves on a FSBO (for sale by owner)) as much as possible to glean any information I can. 

This process is a "slow squeeze"... I start with easy questions, like asking about why they're selling, what appliances they prefer to keep, information about the home, etc.

Then I work my way around to more sensitive information, such as: other buyer interest, how many other offers are received/incoming, the seller's motivations, and what it would really take to get under contract. I may ask about details from when the seller purchased the home, what happened during those inspections, and information about any areas of concern that came up when my buyer toured the property...

If there are other offers, I then try to uncover any details I can about those offers, such as terms (closing date, whether or not they are offering rent-back that the seller wants, financing method or if it's cash, etc.) and any info I can find out about how much the other buyers are offering.

To get to the point that I have a shot at uncovering ANY of these details, it requires real-time conversations, establishing rapport, and patience. 

 Representing both the buyer and seller can feel as though I'm walking around like this.

Representing both the buyer and seller can feel as though I'm walking around like this.

But, if I were representing both the buyer and the seller, my hands would be completely tied! I would certainly be privy to a lot of the above information, but I would not be able to communicate any of it to the buyer without violating ethics rules (unless I received written permission).

When I represent a seller, I want to uncover useful information from the buyer's agent about the buyers (have they made offers before, have they walked away during inspections, etc.). Early on, I ask leading questions about how the showing went, and try to find out how much they loved the home (the more the love, the more the potential negotiating power for the seller). Eventually, as the offer negotiation proceeds, I'll try to uncover what terms the buyer might be willing to bend on that would be beneficial for my seller and negotiate the highest possible net sale price for my seller.

Again, this is all info that I would be privy to if I represent both sides, but I would only be able to tell the seller what the buyer approves (in writing).

Long story short, representing both parties takes away a lot of the tools I have in my toolbox.

To learn more about the duties and responsibilities of a buyer's, seller's, and disclosed limited agent, check out the Oregon Real Estate Initial Agency Disclosure Pamphlet.

But, does a buyer pay less commission if they use the listing agent?

 It's all about the Benjamins! Of course, sometimes it's about protecting the Benjamins, sometimes it's about saving the Benjamins, and sometimes it's about taking back the Benjamins. ideally, it's about spending the Benjamins, while keeping as many Benjamins in your pocket as possible. I guess I just like Benjamins.

It's all about the Benjamins! Of course, sometimes it's about protecting the Benjamins, sometimes it's about saving the Benjamins, and sometimes it's about taking back the Benjamins. ideally, it's about spending the Benjamins, while keeping as many Benjamins in your pocket as possible. I guess I just like Benjamins.

The commission amount that will be paid to both the listing agent and the buyer agent is determined by the seller and agreed to on a listing contract before the home ever hits the market. (Unless it's a "for sale by owner".)

The seller pays the commission for both the listing agent and the buyer's agent from the proceeds of the sale. So, the buyers don't directly pay for their agent's services.

There can be rare exceptions to this. For instance, occasionally FSBO properties have owners that don't want to pay any commission at all. In this case, usually the buyer's agent and buyer will discuss the commission and then make an offer that makes sense with that additional cost to the buyer factored in. Or, they may already have a contract in place that covers this detail (Buyer Service Agreement). Most FSBO's are happy to pay the buyer's agent's commission, though, since they'll still be saving a lot of money by not paying a listing agent.

In some cases, the seller chooses to pay a different, lower total commission rate if the listing agent ends up representing both parties. This would also be specified in the listing contract. But, even then, the savings are to the seller, not the buyer. 

In almost every case, the buyers receive no financial benefit from using a listing agent to represent them.

Which, of course, begs the question:

Why would a buyer not want their own representation?

I honestly don't know. Beyond finding a property to make an offer on... there are a LOT of details to keep track of during the purchase of a home, more pitfalls than I know how to enumerate, not to mention questions to ask, research to conduct, and negotiations to perform. Buyers that have purchased multiple homes are always surprised at how different every transaction is. And there is a lot of risk involved in buying a home.

In short, every buyer should have a qualified, professional real estate agent in their corner.

What about when selling a home?

real-estate-agents-1116776_1280.jpg

Listing a home for sale has plenty of pitfalls, too. I represented buyers recently on the purchase of a FSBO. When everything was wrapping up, the seller told me that even though the transaction went smoothly and concluded successfully, and even though she had a real estate attorney review the documentation, she would never sell a home without a listing agent again.

Since I wasn't representing her, I was unable to guide her in any of her decisions or help her with the timelines, paperwork, research, scheduling of contractors, etc... I was only able to answer basic questions that did not impact my agency relationship with my buyers. In the end, the stress of managing the whole process, trying to understand all of the paperwork and jargon, perform the negotiations, and make good decisions without any professional advice made her realize that it wasn't worth it to represent herself (and this wasn't her first time selling a home). 

I wouldn't say that every single person on the planet needs a Realtor. There are cases where an experienced homeowner has no trouble selling their home without an agent. But, that very experienced homeowner will more than likely still use their own buyer's agent when purchasing a home.

What about when buying new construction, can I just use the agent in the sales office?

 Check out my  blog about New Construction  and  contact me  if you are thinking about buying a new construction home!

Check out my blog about New Construction and contact me if you are thinking about buying a new construction home!

That's a whole other blog! Fortunately, I've already written it. Take a look at this blog for a lot of advice about buying new construction.

The quick answer is: No, you can't use the agent in the sales office. That agent is there solely to represent the interests of the seller/builder. They will frequently try to talk you into signing their purchase agreement without having your own representation.

If you do, then you would have no one in your corner. (Believe me, that agent in the office is not your friend.) It's kinda like someone representing themselves in court. Sure, you can do it, but it's not very advisable.


As always, all of the above information applies specifically to real estate in Oregon, and is as accurate as I can make it. Contact me if you have questions about any of my blog topics or other real-estate related shenanigans!

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