Just wondering. In what circumstances can an agent represent both the buyer and the seller, and is the agent required to disclose this information to both parties?
If I (buyer) work with an agent with whom I have NOT signed any contract, is the agent free to approach the seller and work out some arrangement....in other words, the agent makes money from me (buyer) AND the seller?
It is also legal in my state. Full disclosure, whether you are a client or not. The agent will make money from both sides. After all, they are doing work on both sides.
As others have mentioned, it depends on the laws of the state...and it also depends on the rules of the brokerage. Some brokers will not allow their agents to do dual representation, some will...
Here's the important point to keep in mind: If you don't have a contractual agreement with your agent specifically indicating that your agent is representing your best interests, then by-definition, the agent is responsible for ensuring the seller's best interest.
Yup, doesn't sound like it makes sense, but that's the case. So, if you work with an agent, make sure to sign a Buyer's Agreement.
While it may be legal there is no reason to do it. It is impossible for an agent to impartially represent both parties. As mentioned earlier, absent an agreement to be a buyer’s agent the agent’s fiduciary responsibility is to the seller. You should absolutely have your own agent if you are the buyer. If you are the seller and the buyer is naïve enough to allow your agent to double-side the transaction it is to your advantage. It is a great deal for the agent because he collects commissions on both sides of the transaction.
I would have to disagree Richard. So long as you are an experienced investor and capable of looking after your own interests as far as the purchase of the property and the knowledge of the PSA, there does come a time when it is beneficially for you and the agent. When buying REO properties, I will often have the list agent/broker (who of course is representing the bank), right up the contract and represent both sides so that they can double dip the commission. I do this so that they get a "bonus" so to speak and it gets me higher up on their list of investors who they will call when a propety is soon to come down the pipeline.
As far as someone buying a personal residence, or an inexperienced investor, I would agree you should have a "buyers rep" as they are required to look out for YOUR interests and not the sellers. (Do keep in mind that while legally and morally they have this "best interst for you" stipulation, that is not the case many times. In reality, they have THEIR best interests at heart via commissions.)
When buying REO properties, I will often have the list agent/broker (who of course is representing the bank), right up the contract and represent both sides so that they can double dip the commission. I do this so that they get a "bonus" so to speak and it gets me higher up on their list of investors who they will call when a propety is soon to come down the pipeline.
There's an even better way to do this as well...
Get your real estate license, so then you can still give the REO listing agent both sides of the commission, but you can also:
- Let yourself into the property without the listing agents help;
- Write the offer without the listing agent's help;
- Deal with the closing, title company, and any lenders without the listing agent's help;
- Show up at closing without the listing agent needing to be there;
- Get the listing agent's check at closing and take it to him/her.
This way, the only thing the listing agent needs to do is submit the offer to the bank, and once it's accepted, the listing agent just sits back and waits for you to bring them their check after the closing.
This is what really gets REO listing agents excited, and ultimately we get a lot of great deals by doing this...
When buying REO properties, I will often have the list agent/broker (who of course is representing the bank), right up the contract and represent both sides so that they can double dip the commission. I do this so that they get a "bonus" so to speak and it gets me higher up on their list of investors who they will call when a propety is soon to come down the pipeline.
REOs are a completely different animal. My response was in reference to the typical retail transaction. I absolutely agree with you on REOs.
All great points J, the only thing is, I don't want a license. There are several things I can do as an investor now that I could not do as an investor with a sales license.
The other thing is, for 6% commissions, certainly an agent is willing to put forth the effort to write up the PSA (it only takes a few minutes anyways. Also, while I am not an agent, I still am given access to the properties because I form a relationship with them and they give me the lock box codes.
Picking up and delivering the commission check is really not high on MY list of items I would like to do. I feel that the double dip, and teh repeat business are more than enough to get the agent excited enough to do biz with me.
Why would I need to show up at closing when buying an REO?
From your points, the only one that could be beneficially to me is being able to speak with escrow/title without the agent. The lender is not an issue for me as I pay all cash.
Not trying to argue with you as I stated before, you made some great points. I am just not sure that would be beneficially for the way I do biz.
When buying REO properties, I will often have the list agent/broker (who of course is representing the bank), right up the contract and represent both sides so that they can double dip the commission. I do this so that they get a "bonus" so to speak and it gets me higher up on their list of investors who they will call when a propety is soon to come down the pipeline.
Gotcha Richard. You didn't reference only retail buys, hence my response, but we are now on the same page!
REOs are a completely different animal. My response was inreference to the typical retail transaction. I absolutely agree with you on REOs.