…And who’s got your best interests in mind?
Understanding who real estate agents represent is confusing to many buyers and sellers. They don’t know what the agent’s responsibilities are, or whose best interests the agent has at heart.
Understanding the differences in relationships and representation with an agent is imperative to ensure the best outcome for your needs.
The duties of real estate agents
An agent may represent either a seller or a buyer, but may not attempt to represent both at the same time. It is difficult to act in the best interests of both parties simultaneously. Only a broker may act as a dual agent.
Sometimes these relationships seems clear, such as when a seller contacts an agent to market and sell their property. In that case, the agent represents the seller, and has their best interests in mind.
However, things are a little murkier when a buyer contacts an agent regarding a sales property advertised by that agent, and further requests that agent to help them find their ideal property. Is that agent going to have the buyers best interests in mind? Many companies enrich agents for selling “in house listings.” Any property owner listing his property for sale is entitled to the fiduciary duty of that agent. Fiduciary duties are defined as:
Obedience (within conformance of the law)
That being said, for any property that is NOT listed by that agent, or their company, the fiduciary duty MAY be to that buyer.
The word MAY is important since both the buyer and agent must agree on the representation of that agent.
All real estate agents are required to present a disclosure upon first substantive meeting. The disclosure fully explains who the agent will represent, buyer or seller.
So who should you go to?
If the agent works for the seller, the goal would be to obtain the maximum sale price on behalf of the seller. The agent is required to be fair to all parties, but the main focus is towards the benefit to the seller.
Likewise, the benefit of a buyer would be of topmost priority when the agent represents the buyer. In that case the goal would shift to obtaining a property for the lowest possible price. Although many buyers are tempted to contact the listing agent, it may be to their advantage to work with another agent or company that would put the buyers interests first.
Whether buyer or seller, upon your substantive first meeting, an agent will present you with the disclosure, “Whom Real Estate Agents Represent.” If you do not understand the form, the agent will be happy to take a couple of minutes to explain the options listed.
Full understanding is a great start to a pleasant and fulfilling real estate experience.