Boston condos for sale: Risk of using a Sellers agent as a buyer
Looking at Boston condos for sale? In a competitive market, buyers are looking for any way to increase their odds of getting that perfect Beacon Hill Boston condo and, if possible, to get it at a discount. After all, that’s what you would want as a buyer, right? That’s why it’s no surprise that we frequently hear of buyers mentioning that they would like to have the listing agent represent them when submitting offers. The thought process here is that if the agent who is listing the property is also representing them, it will make that offer more appealing to the agent and they may even be able to get a discount. While it is a great idea in theory, in practice it can leave you susceptible to some major risks.
For most people, the purchase of a Boston condos for sale is a big deal. It often takes years of planning and saving just to be able to afford a home, and that’s before you even begin the home search process. When you do close on a Boston condominium and are given the keys, it is a major milestone and achievement in your life. The last thing you want to have happen during this time is for you to get screwed over because you had no representation, no one in your corner to fight for you and represent your best interests. That is why we always suggest that a buyer work with a strong Realtor who can protect them from these risks and provide guidance through the transaction from start to finish.
WHAT IS REAL ESTATE AGENCY?
In a Beacon Hill real estate transaction there are always two parties involved, the buyer and the seller. Along with the buyer and seller, there are typically 2 Realtors involved, a listing agent and a buyers agent (also referred to as a selling agent). A listing agent is contractually obligated to represent the seller’s best interest in the transaction whereas the buyers agent is contractually obligated to represent the buyer’s best interest. When you have one agent that is representing both sides, you have what is called “dual agency” and that particular agent is contractually obligated to represent both sides. This is easier said than done, though.
CONFLICT OF INTEREST
What stands out to me the most when buyers talk about working with the listing agent to help their offer get accepted, is the conflict of interest. Here is an agent who already has a contractual obligation to represent the seller’s best interests and has likely been spending a few weeks or even months working with the seller to prepare their home for sale, and now the buyer, someone who this agent has likely just met and has no relationship with, is asking the agent to also represent their best interest. See a problem here? Who do you think is going to get more of the attention?
Think of it this way. If you were defending yourself in court, would you hire the prosecuting attorney to defend you? No matter how ethical the agent, it’s a tough line to walk.
We’ve all heard the term “money talks” and have likely seen firsthand what money and greed can do to people. When a listing agent has the opportunity to also represent the buyer in the transaction, they have a chance to grab both ends of the commission. Obviously this is very attractive as an agent, but as with the conflict of interest in the paragraph before, can it really be done ethically? If, when presenting the buyer’s offer to the seller, the sellers then ask the agent to try and get the buyer to come up in price, who is the agent now fighting for? More than likely the seller, as they are the one who is paying the commission, and the higher the price, the more money the agent stands to make. Why would that same agent want to fight for a lower price for the buyers if it means less money for them?
WALKING A FINE LINE
Aside from the money involved in a transaction, there is also the time for your due diligence as a buyer where you can conduct your inspections and do your research. If anything is found during the home inspection, when working with the listing agent, you may find it hard to negotiate the repairs. The agent may downplay issues making them seem insignificant or common issues for the area. This leaves you as a buyer in an uncomfortable situation. Is the agent telling the truth? Are these issues really minor and something you shouldn’t worry about? Or are they trying to pull a fast one and save the seller’s money? It’s hard to really say, after all, they are the real estate professional with likely much more experience than you.
THE LEGALITY OF DUAL AGENCY IN REAL ESTATE TRANSACTIONS
Dual agency is legal in all 50 states, with some states enforcing some additional restrictions. Here in the state of California, it is legal as long as it is properly disclosed. This is very important! Should an agent be representing both sides of the transaction, it is an absolute must that all parties in the transaction be aware through proper disclosure. Failure to disclose dual agency is illegal and can lead to the agent’s license being revoked.
FINAL THOUGHTS ON DUAL AGENCY IN REAL ESTATE TRANSACTIONS
Although there are both buyers and sellers that have had positive experiences with dual agency transactions and situations where it can make sense, as a general rule it is not advisable unless you are a very seasoned and experienced homebuyer or investor. If you are considering this approach, be sure to do your research. If you are having any hesitations or questions regarding the process, reach out to us! We are always here and happy to help you through one of the biggest and most exciting transactions of your life!
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