I met with the managing broker of another firm with about 70 agents last week. I think we do what we do best but having blinders on would be ill advised. One of the things that I can’t get over was our conversation around the firm’s goal of “double-siding” as many transactions as possible. It can be an agents dream come true but we won’t do it. By double-siding a listings, the agent gets all the commission offered in the transaction. The TurnerRealtors team firmly believes that the buyer and the seller should be represented by different Realtors.
It is a simple theory. An agent lists a property and is therefore under contract with the seller and should be working for the seller’s best interest. The agent markets the property (just as we would) and then the agent happens to find a buyer that is not represented by another agent that wants the listed house. Rather than enlisting another agent to represent the buyer (as we would), the agent writes the offer on the buyer’s behalf. Disclosed agency is perfectly legal if all sides agree but how can an agent be working for the seller’s best interest if they also represent the buyer?
In some cases, the seller and listing agent agree up front that if the listing agent writes an offer, the listing agent will reduce the overall commission and therefore save the seller some money. I can’t help but wonder if the commission savings is worth the risks. An actual discussion of commissions here might violate anti-trust laws.
As a buyer most real estate transactions involve a co-op “Buyer’s Agent Commission.” This means the seller is paying the buyer’s agents commission, or at least a portion of it. In some cases if the seller is offering less commission than the agent will work for, the buyer may be asked to make up the difference. I think this will be the future model of real estate rather than the exception that it is now. Why would a buyer want to be represented by the agent that is representing the seller? Buyers will enter into contracts to work with the best agents.
The agent can’t tell the buyer, “the house is listed for $300,000 but I know they will accept $290,000.” The agent can’t advise you what you should offer. You think the agent is going to say, “We overpriced the house just to see what would happen.”? Why? Why? Why not use a buyer’s agent?
So what happens if we find a buyer for one of our listings? We will show the property and let the buyer decide if it is the property for them. We always explain up front that we are the listing agents and work for the seller. If they like the house, we will refer them to another agent in our office that is not a part of the TurnerRealtors team. The buyer can then work towards what is best for them and we can work for our seller. If the buyer isn’t interested in the property, we will try to work with them to find the right home for them as their buyer’s agent.
The real estate industry has a tarnished image of greed that may have been earned. No industry is ever going to be perfect but I think Realtors would take a large step towards cleaning up the image by referring buyer’s on their own listings to another agent. Oregon doesn’t use attorneys in standard residential transactions until someone is sued. If there is one agent between the seller and buyer, I can guarantee who is getting sued if something goes wrong. I also think that the barriers to entry to real estate are too low but that is another story.
To bring this full circle, when I finished explaining my position above to the managing broker, she said she’d never heard another agent say that. I think that’s scary.
Good points. As a mortgage consultant I have seen too many situations where my clients have been put in that situation of not being able to really negotiate. It also puts me in a funny position of not really being able to have open discussions with the buyers realtor about the financing when it could make the buyer look like a weaker candidate to the seller. Double siding really puts the realtor in the position of not helping either client. It would appear that they would be reduced to the position of a mediator in the transaction.
I’ll be more radical than you, even. I don’t think that buyers should be represented by commisioned salespeople.
If my representative is really looking out for my interests, he/she should make more money the less I spend. My representative’s rewards should be aligned with my interest as a buyer, which is to get what I want for the least amount of money.
I’m thinking a flat fee plus a bonus based on how far below whatever price I’m qualified for I actually spend. But that’s just one idea. On a commission basis, the closer I can be worked up to the most I can spend, the more money “my” agent makes. Does this really reflect my best interests?
I think not.