If my listing agent has a potential buyer for my house, should he represent both the seller and the buyer?

February 15, 2016

You have representation, so the question is; will the buyer seek representation, and if they do want representation, can they use the same agent that listed your home? Ultimately that decision will be yours. Here is information to help you make an informed decision.

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Reader Question: If my listing agent has a potential buyer, can he represent a buyer as well as the seller? Michelle G.

Monty’s Answer: The agent that listed your home contracts with the broker who is your agent in the sale. You have representation, so the question is; will the buyer seek representation, and if they do want representation, can they use the same agent that listed your home? Ultimately that decision will be yours. Here is information to help you make an informed decision.

Agency overview

Every state has laws about agency and agency relationships. These laws vary in theory and specificity by state, so this answer assumes you are selling Wisconsin property. You can seek specific advice from your listing agent’s broker if you are in another state.

Wisconsin listing and sales agreements ask both buyer and seller to make an agency decision at some point in a transaction with this language:

“Check only one of the three options below:

______ 1. The same firm may represent me and the other party as long as the same agent is not representing us both (multiple representation relationship with designated agency.)

______ 2. The same firm may represent me and the other party, but the firm must remain neutral regardless if one or more different agents are involved (multiple representation relationship without designated agency.)

______ 3. The same firm cannot represent both me and the other party in the same transaction (I reject multiple representation relationships.)

Note: All clients who are parties to this agency agreement consent to the selection checked above. You may modify the selection by written notice to the firm at any time. Your firm is required to disclose to you in your agency agreement the commission or fees that you may owe to your firm. If you have any questions about the commission or fees that you may owe based on the type of agency relationship you select with your firm, you should ask your firm before signing the agency agreement.”

The devil in the details

Multiple representation pertains to clients, not customers. Multiple representation cannot exist unless both the buyer and the seller are clients of the same real estate company. If a buyer does not seek an agency relationship, then the buyer is a customer, as opposed to a client, who relies on the seven duties all brokers and agents have to all parties in Wisconsin transactions. These duties are:

  1. Fair and honest treatment. Answer questions honestly.
  2. Reasonable skill and care. Market conditions, real estate law, third party recommendations.
  3. Disclosure of material adverse facts. Facts a consumer cannot detect unless prevented by law.
  4. Any facts asked to be kept in confidence.
  5. Provide accurate market condition information. Un-skewed statistical market data. No value opinions.
  6. Safeguard all funds and account for them during a transaction.
  7. Objective presentation of offers. Unbiased presentation of pros and cons.

In the circumstances you describe, if the buyer decides they want an agency agreement, then you must choose between Option one, two or three above. Only Option two allows your agent to represent his buyer.

The issues with agency are complex. Agency law about duties to each party, timing of disclosures and agency choices can be difficult to apply. The law is complex, circumstances that arise in a transaction are complex, and many real estate agents, including buyer agents, cannot adequately explain agency. Add crucial deadlines requiring very quick responses to this recipe and an elixir for confusion and misunderstandings is possible.

The broker’s agent

A good listing real estate agent (ethical, knowledgeable, efficient) can deal with both sides to a transaction in an equitable fashion. The best defense a seller has against being treated unfairly is to choose your agent wisely. While buyer agency is gaining in popularity, exclusive buyer agent companies represent a small percentage of the market.

Buyer agency has circumstances in which it can be useful, and in other situations, not so much. It is the buyer that decides the type of agency they will utilize to purchase a home. Depending on the state and the buyer’s choice, the seller may also then have to make a choice.

For twenty-five years agency questions have been debated in the real estate industry. The industry is slowly incorporating the concept. The answer to your question depends on your trust level with your agent and the circumstances of their relationship with the buyer.