Can You Use The Listing Agent To Buy A House?
Can You use the listing agent to buy a house? Before we spell out the reasons why you shouldn’t let’s look at the background. The Toronto market has gone mental. Multiple offers, bidding wars and crazy prices are the new normal. Everyone is feeling the real estate pinch. People will do anything to get an edge or gain the upper hand. If they think they can get a deal they will act on it. Then the listing agent at the open house says “work with me and I’ll help you get the house”.
It’s happening more often as buyers are reluctant to sign a representation agreement because they want to leave their options open. In reality they’re leaving themselves open to be double ended by the listing agent.
Listing Agents act in the best interests of the seller, not the buyer.
Personally I find it astounding that buyers are prepared to use a real estate agent who is not acting in their best interests to buy a property thinking they might get a deal. In order to understand this better we need to lay out the definitions. For more background please read this blog about Buyer Representation.
Who Is The Listing Agent?
The “Listing Agent” works for the Brokerage that a seller uses to help sell their house. Remember, the term agent has lost its true meaning. The brokerage is the agent.Please read this post about the differences between brokerages, brokers, and sales reps. Sales Representatives and/or Brokers work on behalf of the Brokerage. It is a client based relationship where fiduciary duty is owed to the seller client. This means that the seller or vendor is owed:
- Fiduciary duty.
- Acting solely in the Seller’s best interest.
- Negotiate the best terms possible for the seller
- Complete confidentiality with regard to reasons for selling, motivation and price expectancy.
Can The Listing Agent Act On Behalf Of The Buyer?
There are two possible relationship agreements available to a potential buyer who wants to use the listing agent. It’s commonly known as Duty Of Care.
- Providing accurate information
- Answering questions
- Fiduciary duty, acting solely in the Buyer’s best interest.
- Reasonable disclosure.
- Negotiate the best terms possible for the buyer
- Complete confidentiality with regard to reasons for purchasing, motivation and price expectancy.
It’s extremely important to know the difference between the two options. As a buyer you will be asked to sign documents showing that you understand this. Customer service is a much more limited form of “Duty Of Care”.
What Is Multiple Representation?
Multiple Representation occurs when an Agent (aka The Brokerage) provides service to both the seller and the buyer. One brokerage can have dozens of Sales Reps and Brokers working in any given area. Even with two separate Reps there can be Multiple Representation. In this case though the buyer has met the selling representative at the open house and wants to put in an offer using the same agent. This is automatically a Multiple Representation situation.
Is Multiple Representation A Bad Thing?
More often than not it’s totally fine. It’s when only one Sales Rep/Broker works both sides that problems may arise. It is impossible for one intermediary to act in the best interests of two competing sides.
Can I Save On The Commission If I Use The Listing Agent?
Commissions are negotiated between the Brokerage (the Agent) and the Seller. They are signed before a property goes to market. A buyer has no say in what a seller agrees to. This is one of the most misleading logical fallacies in Real Estate in Toronto.
What Can The Listing Agent Tell Me About The House?
The Listing Agent is there to sell you that house, not the best house for your needs. If you are a Customer they are are bound to the best interests of the seller. You’re not going to find out about termites, terrible neighbours and police activity. They can’t recommend a price to pay. As a Client they can’t disclose anything to anybody let alone discuss money.
The Listing Agent Promised Me He’d Make Sure I Get The Deal
Put the shoe on the other foot. If I was selling my house or condo and found out that my agent had promised complete strangers who walked in off the street that they could cut a deal on my house I would fire him or her on the spot. It’s against the code of ethics that binds the profession. It’s gross misrepresentation. The agent is not allowed to discuss the price of the house with you, they’re not allowed to come to any arrangements unless they are asked to by the seller.
Recap – Can You Use The Listing Agent To Buy A House?
At Pat Simmonds Real Estate Services we eschew multiple representation unless directed by our clients. We guarantee our clients that we are working solely in their best interests and their’s alone. We would absolutely advise against this. It is fraught with pitfalls. Find a great agent to represent your best interests.