Should You Buy a Home With the Listing Agent?
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by Richard Morrison
- January 2, 2020
- Buying
- 0
When looking to purchase a new home, one of the first questions buyers face is whether to work with the listing agent or find their own buyer’s agent. The listing agent represents the interests of the seller, while a buyer’s agent advocates solely for the buyer. This decision can significantly impact your home buying experience.
Key Takeaway
Working with a listing agent as the buyer typically leads to suboptimal outcomes. A dedicated buyer’s agent who solely represents your interests is usually the best option when purchasing a home.
Purchasing a property is one of the most important financial decisions many people will make in their lifetime. With housing prices continuing to climb in many markets across North America, buyers want to maximize their budget while finding the perfect home for their needs.
The stakes are high, so having skilled representation on your side as the buyer is crucial. I’ve seen many buyers new to the process get tempted by listing agents promising access to “off-market” homes or insider tips. But at the end of the day, the listing agent is contractually obligated to advocate for the highest possible sale price on behalf of the seller.
As a buyer, you need someone in your corner who will negotiate tenaciously to get you the best deal. That’s where working with your own buyer’s agent comes in. Let’s explore this decision more closely.
How Real Estate Transactions Typically Work
In a typical real estate purchase, the seller hires a listing agent to market and sell their home. The listing agent promotes the property, holds open houses, fields inquiries, and negotiates offers with potential buyers.
On the buying side, the buyer can either represent themselves or hire their own agent, known as a buyer’s agent. This agent works solely on behalf of the buyer to find the right home, negotiate the purchase, and guide them through the closing process. The seller pays both agents’ commissions at closing, so the buyer’s agent services come at no extra cost.
The Problem With Dual Agency – The Ban in 2018
In the past, some listing agents would end up representing both the buyer and seller in what’s known as “dual agency.” However, this creates an inherent conflict of interest for the agent, as they cannot ethically advocate for two opposing parties in the same transaction.
In fact, British Columbia banned dual agency for real estate agents in 2018, except in remote areas with few real estate professionals. The Real Estate Council of BC determined this practice was no longer acceptable due to the lack of proper representation for buyers.
Why Buying With the Listing Agent Is Risky
While working with the listing agent as the buyer may seem convenient on the surface, it poses several risks:
- They must advocate for the seller first: The listing agent is duty-bound to negotiate the highest possible price and best terms for their client, the seller. They cannot place your interests first as the buyer.
- Limited “inside information”: Listing agents cannot ethically guide you on how much to offer or disclose confidential details about the seller’s motivations. This would breach their fiduciary duty.
- No negotiation power: With the listing agent unwilling to compromise, you lose the ability to negotiate effectively as the buyer. Their role is to facilitate, not advocate.
- Off-market homes are overhyped: Listing agents rarely have an extensive cache of unlisted homes. Even when they do, these properties often come with strings attached or undisclosed issues.
- No comprehensive buyer representation: The listing agent’s focus is selling this one property, not finding the ideal home for your needs. Their knowledge of you as a buyer is limited.
As an agent myself, I’ve seen too many buyers lured in by empty promises from listing agents. You need someone who will be your fiercest advocate, not just a facilitator.
Key Benefits of Using a Buyer’s Agent
Having your own buyer’s agent levels the playing field and provides significant advantages, including:
- Loyalty and advocacy: They work for you and only you. Their role is to fight for your best interests every step of the way.
- Access to homes and negotiations: Buyer’s agents can leverage their relationships with listing agents to get you in homes and negotiate effectively.
- Confidentiality: They keep your financial details, motivations, and bargaining power private from the seller.
- Knowledge and counsel: Agents advise you on homes, neighborhoods, market conditions, and the realities of budgeting. Their insight is invaluable.
- Convenience: They coordinate showings, find off-market opportunities, schedule inspections, and handle negotiations for you.
- Accountability: As your representative, they are accountable for providing you exceptional service and value.
Your buyer’s agent becomes your ally, counselor, and confidante during an exciting yet stressful life transition. Lean on their expertise so you can focus on finding your dream home.
Questions to Ask When Choosing a Buyer’s Agent
Not all real estate agents are created equal. Here are some key questions to ask when choosing your buyer’s agent:
- How long have you been in real estate sales? Look for 5+ years of experience.
- What designations or certifications do you hold? Specialties indicate greater expertise.
- How many buyers did you represent last year? Look for an agent who works regularly with buyers.
- What neighborhoods do you specialize in? Local knowledge is invaluable.
- Walk me through your typical process with buyers. Ensure it aligns with your needs.
- What differentiates you from other agents? Seek out their unique value proposition.
- Can you provide 3-5 past buyer references? Speaking with them offers great insight.
Vet agents thoroughly – this is your largest investment on the line. Never settle for mediocrity.
How Using a Buyer’s Agent Impacted Me Personally
I’ll never forget my first home purchase as a young newlywed. Eager but naive, my wife and I decided to work directly with the listing agent to “save money” on commission. What a mistake that was.
The agent downplayed major plumbing issues and over-inflated the value. Without our own buyer representation, we ended up overpaying greatly. It cost us tens of thousands extra on repairs.
We learned our lesson – now we ALWAYS use a designated buyer’s agent. Our guy Jim is a former contractor who knows home construction inside out. He negotiates fiercely and has saved us bundles. I highly recommend this route to all buyers!
Key Takeaways – Should You Use a Listing Agent or Buyer’s Agent?
- Listing agents must represent the seller’s interests first as their client
- Buyer’s agents offer advocacy, counsel, and confidentiality to home buyers
- Dual agency leads to conflicts of interest and poor buyer outcomes
- Vet potential buyer’s agents thoroughly and ask lots of questions
- Never waiver on having a skilled buyer’s agent in your corner
While the lure of convenience or “insider access” may be tempting, the statistics and ethics speak for themselves – buyers need their own representative during the home purchasing process. A trusted buyer’s agent levels the playing field, negotiates optimally, and provides invaluable guidance from start to finish. Don’t compromise on representation – let a pro protect your interests.
FAQs
Q: Should I buy a house with the listing agent?
A: It depends on your situation. There are both risks and benefits to buying with the same agent who represents the seller. The listing agent does probably know more about the house and the neighbourhood than you do, but it’s important to remember that they work for the seller and their primary obligation is to act in their best interests. Therefore, they cannot reveal confidential information or use it in any way that would benefit you as a customer. While you may be able to count on the listing agent to volunteer certain information, they may not have your best interests in mind either.
Q: What are the dangers of buying with the listing agent?
A: The biggest risk of buying with a listing agent is that they will be biased towards their client (the seller). As such, they may not reveal all pertinent information or disclose any potential problems with the property. Furthermore, it’s illegal for them to provide dual agency services in British Columbia, meaning that if you choose to go with this option, you won’t be working with an independent buyer’s agent who keeps your interests as their top priority.
Q: What are some advantages of working with the listing agent?
A: One advantage of working with a listing agent is that they probably know more about the house and neighbourhood than any other realtor. This means that if you choose to buy through them, you’ll have an edge when negotiating because you can more easily assess whether a property is worth its asking price. Additionally, since there are no extra agents involved in this transaction, both parties (you and the seller) could potentially save money because the agent isn’t taking a commission from both sides.
Q: What are my obligations when I am represented by a listing agent?
A: When working with a realtor who represents both sides of the transaction (known as limited dual agency), your job is mostly just to provide feedback on what type of house you need and how much money you want to spend. The listing agent should also keep all information confidential so it can’t be used against either party during negotiations. Additionally, it’s important for buyers to remember that even though there is only one realtor involved in this process, their primary obligation still lies with their client (the seller).
Q: Will I save money by using the same realtor as my seller?
A: In some cases yes – since there aren’t two separate agents involved in this transaction, both parties could potentially save money because the single realtor is only taking one commission instead of two. However, this isn’t always true – sometimes it’s better for buyers to enlist an independent buyer’s agent who looks out for their best interests rather than opting for a limited dual agency situation where only one realtor works on behalf of both parties.
Q: Is there any way I can get an edge when negotiating if I use the same realtor as my seller?
A: Yes – since most likely he or she already knows all about your house and neighbourhood from having listed it initially, they’ll have an advantage when negotiating prices which could give buyers an edge if leveraged correctly.
Q: Can I trust my listing agent if I’m representing myself?
A: It’s important to remember that while your listing agent may seem like he or she has your best interests at heart due to their familiarity with your house and neighbourhood – ultimately they’re obligated by law and professional standards to put their client first (the seller). Therefore, it’s crucial for buyers not represented by another real estate professional look out for themselves when dealing directly with a listing agent.
Q: Does my Listing Agent owe me anything?
A: No, your Listing Agent does not owe you anything. They may be willing, however, to provide certain information or advice but ultimately, they represent only one side of this transaction – namely, their client (the seller). As such, buyers should not expect nor rely upon them acting independently on their behalf.
Q: How does buying without an independent buyer’s agent affect my negotiations?
A: Without an independent buyer’s agent who looks after your best interests during negotiations, you’ll need to pay closer special attention to what is being said and ensure that the information you’re receiving is accurate and up-to-date. This means considering every detail carefully before making decisions based on what has been revealed – including details regarding the house itself as well as the neighbourhood surrounding it.
Q: Is there any downside to buying with a listing agent?
A: Yes – while listing agents are obligated by law and professional standards to put their client first (the seller), buyers may not get all of the information they need or receive accurate advice from them. Therefore, it’s important for me to interview multiple realtors before deciding which one best suits their needs and situation. Additionally, because listing agents are only willing to provide certain information or tips during negotiations, it may affect your ability to make fully informed decisions about the house and neighbourhood.
Conclusion:
Buying a house is an important and complicated decision. If you need to buy a house, it can be tempting to work with the listing agent. After all, they know the house better than anyone else. They might even have a scoop on the house that no one else knows.
However, while working with the listing agent may make the process quicker, there are risks involved which should be understood before making a decision.
The listing agent is likely to volunteer information that could be beneficial in finding you the perfect house in the next 30 days or so; however, they’re also going to make extra commission for themselves if you do buy through them.
That means they may not tell you how much it will cost them in terms of consent fees and other costs associated with closing on a house. Furthermore, they may only make appointments for the properties they want to show you and not ones that fit your needs more closely.
In British Columbia, there is basically NO limited dual agency — where both sides of a real estate transaction are represented by one person — meaning agents who tells customers too much risk losing their real estate license or even facing a lawsuit against the condo building if something goes wrong during the sale process. So it’s important to understand all of these risks before deciding whether or not to buy with the listing agent.
It’s best to work with an experienced buyers agent who can understand what questions to ask about the neighbourhood and other details about purchasing property that might otherwise go overlooked by someone inexperienced in buying houses. You don’t want to put yourself at risk of unethical behaviour and losing your real estate license due to lack of knowledge so it’s best practice to always find yourself an experienced buyers agent when looking for your dream home.
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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