Profile picture for mrsfapd

Is having a dual agent a good thing or a bad thing? Im a 1st time home buyer.

I am a first time home buyer; I recently found a new construction house that has been on the market for over a year. The price has been reduced a few times and is now at $215. No houses have sold in that area in the last 2 years and a house next door just went up for sale for $175. I am working with a dual agent for this house and I want to know if I will still be able to get the same advice/best deal as I would with a regular buyers agent? I already made an offer and the seller turned it down and only went $3000 less than the asking price of $215. I dont feel comfortable paying any more than $205. Should I counter offer of $205 and?
  • February 08 2011 - Hickory
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Answers (24)

The only person well represented in dual agency is the agent. The Buyer and Seller have no one looking out for them and here's the thought process of the agent: "What do I need to do to get these two knucklheads to make a deal so I get to keep all the money"

Get an exp[erieced (5 years or more) Buyer Broker.
  • February 20 2011
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Profile picture for Sharon Lewis
I hope you have your answer, most everything that is being written at this stage is redundant. From reading the posts it appears most Realtor and or agents are not pro dual.
I have worked with several sellers who used the on site agent and paid high. And on site agents are wonderful, warm and fun, thats why they were hired. They are good at their jobs. Bring in your own Realtor.
  • February 11 2011
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I used to do a lot of new construction sales so I can understand what the agent and you are going through. It sounds like the agent is very up front with you and of course she wants to make a deal, but she also wants a client. She will want your business down the road when you sale. You can never ask to many questions.
Counter offer $205, why not? Just remember if you really love the home don't let it go for $10,000, it will only make a $7 a month difference on your mortgage 
  • February 10 2011
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Profile picture for sunnyview
It's great that you have a good rapport with the agent and I think that as long as your understand the limitations of her contractual abilities, you should be fine. It sounds like you know your budget so don't offer any more that you feel comfortable paying.

The only other thing that I would suggest is that you keep your financials like how high you "could" go private. Honestly, I would suggest that whether you were with a dual agent or not, but I think that it can be even more important to keep your financials private in a dual agency situation. Happy house hunting and good luck with your offer!
  • February 10 2011
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Profile picture for mrsfapd
I want to start by thanking everyone who wrote in response to my question. You have all been very helpful.
I would like to respond to Linda Walters response: Why I asked the question about dual agents was simply to get other peoples opinions, not because I have no faith in this particular dual agent. I actually really like this dual agent that I have been speaking with, she has been very honest about what she can and cant do. Besides, isn't the whole point of this "ask a question" to get opinions of other people/agents? If I knew people who were in "this profession" I would ask for their opinions... Like I said in my question, I am a first time home buyer so I want to explore all my options before committing to any one person.
With that said, I want to thank everyone who gave advice, personal opinion, and facts/web sites for me to better inform myself. I hope the answers to this question will better help other first time home buyers who want to explore all of their options.
 
Mrsfapd
  • February 10 2011
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Profile picture for hpvanc
"1. the buyer and seller are BOTH using the same agent. this agent obviously cannot simultaneously get the buyer and seller each the best deal in many ways, so they would have to think independently."

So there is at least one huge positive to Dual Agency, in that it forces the consumer to think and verify on their own, and not seek "education" from a commissioned salesperson.
  • February 09 2011
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There is a lot of confusion on here about what a dual agent can and can't do. Lets examine two cases:
1. the buyer and seller are BOTH using the same agent. this agent obviously cannot simultaneously get the buyer and seller each the best deal in many ways, so they would have to think independently.

2. The buyer's agent and the seller's agent both work for the same agency, but are different people. This is actually the far more common form of dual agency. In this situation, the two agents may not know each other at all, for example, my company has nearly 1000 agents and I know none of them, since I never go to the office. However, since it is technically the broker who represents each, this still counts as dual agency. In this situation, since I don't know the other party, or the other agent, in a practical sense, I am still representing my client to get him or her the best deal possible, and won't be giving away any secrets etc. to the other side.   
  • February 09 2011
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What drive me crazy is agents telling buyers or sellers that dual agency is no big deal. You just have to do it right - they say.

The bottom line is a dual agent CAN NOT be an advocate for either party. So, if what the consumer wants is someone that will help them get a better deal they will not get that service from a dual agent.

Dual Agents have to be fair.  Big deal. That only means they are not to cheat you.  Fairness is not representation - it is the law.  Look for someone who can be an advocate.  Dual Agents can NEVER be advocates if the result is calculated to help one party at the expense of the other.  And that is what you want - a lower purchase price.
  • February 09 2011
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I have done many transactions as a dual agent and have not had any issues arise. The key is having the trust of all parties involved. As long as both the Buyers and Sellers are confident that the agent is honest and up front there is nothing to worry about. I am always clear with both sides about where the boundaries are and so far everyone has respected them.
The best part about being a dual agent is that I don't have to track myself down for answers to questions, etc. making it a much smoother transaction.
  • February 09 2011
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The fact that you are asking perfect strangers for advice just underscores what you already know.  This agent is not able to be your advocate in this trtransaction.  You have no faith in this person. Your choices may be limited if you have signed a contract. But I suspect you may not be legally bound--just a guess.  I would try calling the local RE board and asking them what your rights are.  You should be able to interview your own agent and have the builder/seller decide how to split the compensation between them.  Maybe if you offer a bit more on the express condition that they pay a 1% or other acceptable amount to your agent, you could get this to work for you. That builder wants the deal.  Just hold out for what you want.  I am an exclusive buyers agent and an attorney, and this kind of thing just DRIVES ME CRAZY!
  • February 09 2011
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I agree with all the other agents here. Having a dual agent almost anytime is not a good thing. I was a dual agent on one of my listings and it is not a good position for anyone involved. The agent cannot give advice or opinion to either party and this makes the transaction a more difficult one especially being a first time buyer. Best wishes to you.
  • February 09 2011
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Profile picture for Sharon Lewis
Not to interfere with your relationship with your agent, hopefully you have not signed but in some states, Dual Agency is not allowed. I am not a fan and will not do it. I dont think my client is served well.....I tell my friends in other states when they are buying new homes to bring in their own realtor. I have saved clients money by solely representing their interest in the purchase of a new home.....the on site agent is there to represent the builders interest, don't you think? Thats why they are working there.
Hickory is a beautiful place,we go there on weekends. I hope you get the home of your dreams.Click on my name if you need anymore advice about this. Thank you and good luck
  • February 09 2011
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Profile picture for sunnyview
I would not recommend that a first time buyer use a dual agent. There is just too much that most in their first purchase does not know. Good dual agents are fair and professional to both sides, but as a new buyer you would know what you don't know so it is best to have someone working for you that has one loyalty,

If you do decide to use the listing agent as your own, make sure that you understand that their higher obligation is to the seller than it is is to you in most cases. Play your qualification numbers, your love of the house and your willingness to negotiate on repair items close to the vest. You need to act like you could take it or leave it and keep your financials private. If you are too excited (understandable) to do that, I'd probably find a different agent for this deal.
  • February 09 2011
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Dual Agency is a bad thing.  Since there are few Exclusive Buyer Agency or Exclusive Seller Agency firms it is a necessary evil for the time being.  That is the reason for state laws requiring disclosure.  For NC read:
http://www.ncrec.state.nc.us/publications-bulletins/WorkingWith.html

Also, see HUDs recommendation to buyers that they use an exclusive buyer agent on page 6 of their settlement cost booklet (discussing selecting an agent) at:
http://www.hud.gov/offices/hsg/rmra/res/settlementaug17english.pdf
(an Exclusive Buyer Agent is an agent working for an Exclusive Buyer Office ie the firm takes no listings)

and more info from HUD here: http://www.hud.gov/offices/hsg/ramh/res/sfhrestc.cfm

For buyers already working with a dual agent don't just assume you can switch after they have already shown you a home. This may raise "procuring cause" issues.  See: http://www.procuringcause.com 

If you are unable to switch now make sure the agent you are using knows you are considering other homes - he/she has no motivation to suggest you see more so you have to take the initiative.  (By the way, Why would you offer over $175,000.  -- if that.  Will it appraise? On what basis? Have the agent show you comps that will support your offer.)
  • February 09 2011
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Profile picture for SWahle
In Colorado, we no longer have dual agency. I don't think it is wise, it is best to just have a Buyer's Agent working just for you. The agent ultimately is working for the Seller. I don't see how they can work for both, its really not possible. 
  • February 08 2011
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Profile picture for travisjrealty
Obtain a Realtor to represent "you".  The conflict of interest comes in the negotiation phase or no negotiation from a Dual Agent for your side.  The Seller pays the Realtor commission anyway, so why not get a Realtor to represent you and one that knows the area.  Have do some comparable sales of like homes and make an offer.  If one sold for $175,000 and was a similar home why are you sarting your offer at $205,000?
  • February 08 2011
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Profile picture for the_country_hick
Here it is plain and simple.

Do not use a dual agent unless you know exactly what you are doing. You said you are a first time buyer who does not know much. The problems far outweigh the advantages for you. The dual agent has their first and highest duty (legally) to the seller. They may not tell you some things that could influence you to offer lower or to avoid that house. This is a bad idea. What you need them for most when they are a dual agent they can not legally give you.
  • February 08 2011
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Regarding dual agency, the real estate agency and agent that is listing the property should designate an associate within that company to represent you as a buyer's broker.  It is very difficult to represent both parties and not something I would do as a listing agent. 

I explain up front to all buyers when they sign a buyer broker contract with me, that this situation may come up and that I will always represent the seller and choose an agent within my office to represent them just for that particular house. I will introduce them in advance to the agent I have in mind before this situation comes up, so they will have met them previously and feel comfortable with them.

Regarding your offer, I would first go back to the seller with a counter offer that you'll split the difference.  See what that response gets you and then if you have to go up to the $205.

Good luck!!

  • February 08 2011
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When an agent works for both buyer and seller they end up being a messenger between two parties. They can't advise either party because doing so would compromise their relationship with one party over another.

The best example of this scenario outside of real estate is if an attorney for AB and C attorneys at law represents Ford Motor, it is sometimes seen as a conflict of interest for another attorney in the same office to represent General Motors. Needless to say the same attorney wouldn't represent both Ford and General Motors.

If you don't feel the home is worth more than you have offered, walk away. No matter what the agent tells you, it's your money, it's your home and you will have to live with the decision.
  • February 08 2011
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Good advice so far!

You have a lot of things going on here.  You should not pay more than you are comfortable as long as you have a good understanding of pricing in your market place.  Dual agency is okay like others have said they only get paid if the deal goes through.  They have an obligation and duty to represent you and also the seller and sometimes it becomes sticky.  If it helps, you can also get another agent to represent you if you have time to find one. 

Good luck with the home.
  • February 08 2011
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Dual agency is never a good idea in my opinion. Why would you limit the fiduciary responsibility owed to you by your real estate agent/ brokerage when the listing agent is already compensating a buyers agent for you? Certainly you may get the buyer's side of the commission knocked off the deal but wouldn't you rather have a negotiator acting on you behalf to get you a lot more than that reduced from the asking price? 
  • February 08 2011
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mrsfapd,

I found a web posting (via Google search) which adequately summarized (in my opinion) both the fiduciary responsibilities of buyer and selling agents as well as articulated the notification requirements for an agent who is acting as a dual agent.  Additionally, the article highlights (on a macro-level) the potential conflict of interest that an agent may be subjecting themselves (and their clients) to.

http://www.demesne.info/Mortgage-Real-Estate/Real-Estate/Dual-Agency.htm

While it is a matter of preference and subject to the specific relationship you have with your agent (and is certainly a topic to be reviewed on a transaction-by-transaction basis) I would think that you should look out for your best interest and ensure that the agent is doing the same.  If you are comfortable that the agent can act effectively on your behalf, while knowing that s/he is acting simultaneously on behalf of the seller, then that may provide you with the level of comfort you need to proceed under a dual agency relationship.

However, it is certainly well within your right to find an agent to work exclusively on your behalf and most agents are willing to do so (I would think!).  Additionally, I worked for a merchant/builder that had its own sales staff and still recognized and cooperated with buyer agents when selling newly constructed units.  Asking whether the new home developer (in your case) cooperates with outside agents may influence your decision to obtain exclusive representation for your purchase.

I hope this helps.
  • February 08 2011
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Profile picture for Connie Klemme
If you don't feel comfortable paying more, then it might be time to find another house.  Spring is coming, more houses usually come on the market.  If you can't work out a negotiation that you agree with, then look around.  as for the dual agent, while it's not legal here in OK, i don't particularly think it's a bad thing.  Just like Pasha said below, the agent only gets paid if the deal happens, it's in their best interest to get you a deal that you will take.  They know that.  If the builder won't budget and you aren't interestedin budging and they won't negoitiation upgrades or other options...there's other houses or soon will be.
  • February 08 2011
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excellent question, usually an agent is to work in the best interest of their client and if they are working for both buyers and sellers, that may be a sticky situation.  however you have to remember that the agent won't get paid unless there is a deal out there, and a deal can only happen if both sides are happy. 
  • February 08 2011
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