Mistake #7 - Not Working with the Right Agent
Home buyers can choose to work with agents who represent the seller, agents who represent the buyer, or agents who try to represent both the seller and the buyer (dual or designated agents). There are also agents who represent neither the seller or the buyer (transactional brokers or facilitators).
Agents who represent the seller must by law look out for the seller's best interests and work to get the highest price and best terms for the seller.
Agents who attempt to work for both (dual or designated agents) must remain neutral and can't provide undivided loyalty or full disclosure to either party.
Agents who represent neither the seller or the buyer (transactional brokers or facilitators) work for neither the buyer nor the seller. They merely work to bring the parties together and to facilitate the transaction. They cannot offer advice to either party to help them get a better deal.
None of these situations is in your best interests as a home buyer.
Agents owe fiduciary duties, client level services to their clients. As a buyer, you should seek out the services of an agent who will guarantee to give you these full duties no matter which property you are interested in.
These duties include: Confidentiality, Accountability, Reasonable Skill and Care, Undivided Loyalty, Obedience to Lawful Instruction, Advocacy, and Disclosure of all known material facts pertaining to your purchase.
As noted above, an agent who represents the seller cannot provide any of these duties to you, the buyer. An agent operating as a dual or designated agent can only provide limited fiduciary duties and can't provide you with undivided loyalty or full disclosure of all material facts.
A true buyer's agent, on the other hand, acts like a consultant and never tries to "sell" you a home. Who is the better advocate for your best deal? An agent who represents the seller? An agent who tries to represent both you and the seller? Or, an agent who will represent only you in a transaction?
A word of caution: Nearly all traditional listing agents now call themselves buyer agents. In other words, you could work with a "so-called" buyer's agent who also takes listings, represents sellers, and is with a company that takes listings and represents sellers.
This isn't necessarily a problem unless you are interested in a so-called "in-house" listing. That is when the so-called buyer agent who you are working with, and to whom you have given confidential information, will want to switch to being a dual or designated agent and provide you with limited fiduciary duties.
As noted above, the agent should be indicating that they now will only be able to provide you with "limited" fiduciary duties and that they can't provide undivided loyalty, full disclosure or advocacy. They should be discussing the negative effect this will have on you. But, don't expect that to happen. It generally is business as usual, as if the dual or designated agency doesn't exist.
Working with a seller’s agent or dual agent is not in your best interests
Working with an exclusive buyer’s agent or a true single-party agent is in your best interests as the home buyer.
A true exclusive buyer’s agent: Never takes listings. Never represents sellers. Doesn’t work for a company that does. Never operates as a dual or designated agent.
A true single-party agent: Works for buyers and sellers, but never both in the same transaction. Never operates as a dual or designated agent.
Always interview a true exclusive buyer’s agent or a single-party agent before deciding to work with an agent. It costs you nothing extra to hear about what these agents do. MABA members are all exclusive buyer agents or single-party agents.
Read the Next Tip: Mistake #8 - Not Having a Negotiating Strategy