Can you say Dual Agency?
Many of today’s buyers think that having the listing agent represent them on a transaction will help them get a better deal. They fail to consider the importance of having their interests represented exclusively.
When buyers have the option of working with a buyer’s agent who will represent their interests exclusively or working with the listing agent who has a fiduciary duty to the seller, misinformed buyers are choosing the listing agent. I have experience buyers visit an open house that doesn’t fit their criteria and the agent offered to help them find a different property, many “No thanks. We like to work with the listing agent. Do you have anything else in this neighborhood? It is happening with sign calls, Zillow leads, someone sent buyers a memo telling them that working with listing agents is a better choice.
Dual agency issues
The most important issue here is dual agency It’s one thing when the same brokerage represents both sides, but when the same salesperson represents both sides, it can get really ugly.
It also creates an interesting dilemma for the listing agent especially if there is more than one buyer romancing the listing agent to represent them on the buy side.
BUYER'S MISCONCEPTIONS EXPLAINED:
🤔 If I make an offer through the listing agent, then I will be able to negotiate a reduced commission because the agent has both sides of the deal. What? buyers don't pay commission.
We Have Rules My Dear
‼️ Many agents and buyers are unaware of an important MLS/Board of Realtors rule: If a listing agent will reduce his or her commission when that agent has both sides of the transaction, the agent must publish his or her “unfair advantage” in the MLS listing remarks. As It really does give the listing agent's potential buyer an unfair advantage over those offers that come in from other brokerages.
Violation of this rule can result in disciplinary action and can even lead to the loss of the agent’s license.
The reasons for its existence are obvious: reduction in arbitrations over procuring cause, protection of the buyer’s agency relationship and removal of the incentive for the listing agent to make a special deal with the buyer.
This also helps if the buyer wants a commission reduction and he or she wants to keep that money for themselves. It is not uncommon for buyers to ask for a "rebate"on the commission to help with down payment or closing costs.
Let me explain what doing this actually means
1. The seller must give their permission on a formal Addendum in writing that the buyer is receiving a credit and that the agent is taking the credit from his or her commission. Come on, if you were a seller would you want that reduction for yourself since you're paying it?
2. If the seller agrees to the credit the lender must know, and it has to be on the closing statement. It will not reduce your loan amount and any reduction in the down payment amount can jeopardize the deal. If the loan hinges on the buyer putting down 20 percent, the credit would result in a down payment less than 20 percent. This may mean that the buyer will no longer be able to obtain an 80-20 loan. Loans with less than 20 percent down typically require pay private mortgage insurance (PMI). This causes a big mess, a different loan, delay in closing mad sellers...not a good idea.
Do not ask your agent not to disclose the credit. You must let the lender know. Hiding it from the lender is fraud.
Now if you are a seller, you need to discuss the commission reduction when you sign the listing. Because the unfair advantage rule of dual/variable commission must be published at the time of the listing. You can't do it at the end if it was not discussed. Only the broker has the right to approve or disapprove of this credit.
It may get frustrating during multiple offer situations, and you may miss out on a few houses. But seriously, you want to work with an agent who is following the CAR/NAR Code of Ethics. You want someone who will be fair to all parties. You want someone to be your advocate and work for you. The listing agent can not do that.
In short, "I Only want the listing agent!" Not Such a great choice
While many of today’s buyers even (seasoned ones) are convinced that having the listing agent represent them on a transaction is a wise course of action, it is a flawed thought.
There are so many clear benefits of having an agent who represents the only the buyer's interests exclusively. Remember, asking for a commission reduction can jeopardize your deal.