Well, it's the week before Thanksgiving, after which the real holiday festivities kick off in Prescott. Good morning, I'm Gary Edelbrock, and I've been talking with Nancy and Brian Biggs on who should represent you if you're a buyer. They wrote down some thoughts on the subject, which I share with you here.
As a Buyer, Should I Work Directly With the List Agent?
Before we move on to this important question, we have some exciting news to report! We, Nancy and Brian Biggs, are transitioning from Prudential Northern Arizona Real Estate to our own brokerage: Prescott Home Realty! We are creating a small brokerage of top agents who are dedicated to putting our clients' interests above our own. We will continue to provide our full-service advertising and a superb buying and selling experience for our clientele. We will remain in our current office building in Prescott Country Club. We anticipate the transition to be complete by the end of November.
Now on to the question… Should you, as a buyer, work directly with a list agent rather than using a buyer's agent to represent you? It depends, of course! In general, the most universal answer is no. What we are talking about is "agency." Agency is defined as the function/responsibility of an agent. When a seller hires a real estate agent to list and sell a home, the alliance of the real estate agent is pretty obvious. The agent is working on the seller's behalf to sell the house. In this scenario, the real estate agent has the seller's concerns in mind. Any questions that are asked by a prospective buyer or by someone representing a prospective buyer should be responded to honestly and fairly, but with the seller's interests in mind. The same thing goes if a buyer enlists a real estate agent to help the buyer find a house. The real estate agent is representing the buyer and their interests. The agent should deal honestly and fairly with the seller and/or seller's agent, but the primary focus is to meet the needs of the buyer. An easy way to see this point is with purchase price. If a seller lists a property for $200K, but during a discussion with the seller, it slips out that the seller would be happy with $150K, the seller's agent should not tell a potential buyer that the seller would be happy with $150K. The seller's agent should communicate information accurately, but with the seller's best interest in mind.
Now, what happens if a buyer approaches the seller's agent and asks the seller's agent to represent the buyer on the purchase of the house? If the agent, buyer, and seller agree to this, we have limited representation. The agent should not disclose anything to the seller that would compromise the buyer's position, and should not disclose anything to the buyer that would compromise the seller's position. In short, limited representation requires a very trustworthy and deliberate agent. So, why would a buyer think that working with the list agent is a good thing?
Money is the first reason. Sometimes list agents will give a break on the commission if the list agent also represents the buyer. The buyer might think that they will get a better price, because the agent is lowering the commission. Although this may be true, it frequently makes little difference. Although saving money is potentially a good reason for not using a buyer's agent, the risk is that the buyer is not directly choosing his/her real estate agent. The buyer just gets whichever real estate agent is listing the property. The list agent might not be a superb agent!
Mistrust is the second reason. Some buyers have had a bad experience with past buyer's agents and would like to cut out the middleman. This is unfortunate, but can be overcome by interviewing your buyer's agent. Again, how can you be sure that the random seller's agent is going to be a good dual agent, representing both the buyer and the seller?
Time is the third reason. Some buyers do not want to waste an agent's time while they are thinking about buying, and looking at all of the options. That is a very nice thought, but this is part of an agent's job. A good agent can help you weed out properties that you will not like, and find some that you will like. Also, agents often have access to more search capabilities than typical buyers.
So, unless you happen upon a very reputable, trustworthy, and deliberate list agent, it is generally not a good idea to have the list agent represent you when buying the listed property.
Nancy and Brian Biggs, Broker/Owners
Prescott Home Realty
1177 Old Chisholm Trail
Dewey, AZ 86327
Nancy's Cell: 928-273-7113
Brian's Cell: 928-273-7112