Don't say another word!
I attended a very good seminar on dual agency this morning, Practical Advice for Realtors given by William J. Weber Jr. Esq., and Gregory S Liero, both of Connor, Weber and Oberlies in Paoli, PA.
In Pennsylvania in 1998 our legislature passed real estate agency laws that affect how Philadelphia Masin Line Realtors interact with the public. Before 1998 a Main Line home buyer might believe they were being represented when in fact all agents involved were representing the seller. This 1998 legislation introduced buyer agency, and at the same time allowed dual and designated agency as well as transaction licensees who represent neither party. Buyer agents owe their loyalty to their buyer and their buyer alone. The selling agent owes their loyalty to the seller alone. Both must place their client/principal's interests above their own. Not only is this discussed in legislation but also in the Realtor Code of Ethics.
Many consumers today are mistaken in thinking that if they deal with the listing agent they can negotiate a better price on the house they are interested in buying. The reason they are mistaken is that the seller has already negotiated with the listing broker/agent on how much commission they will pay and how that commission is going to be divided. It is in the listing agreement and this is a confidential contract between seller and listing brokerage/agent. The only part that is shared is by the listing broker who notifies other brokerages and agents how much commission the listing broker will pay a buyers agent who represents a buyer client from the total commission being paid.
This is actually the main purpose of the Multiple Listing Service, (MLS), for one broker to make known to others how much commission is being offered. It is not a matter of displaying housing data or having pretty pictures, it is just one avenue of marketing a property and primarily to other brokerages and agents. With the increase in the use of the internet data is now everywhere and most buyers find the homes they are interested in themselves.
Having found a home they are interested in seeing they have a choice. They can visit the home at a public open house, call an agent to show them the house or call the listing agent. What is best?
As noted above, many consumers mistakenly believe that using the listing agent will enable them to get the house for a lower price. As we mentioned the commission has already been decided when the house was listed. So, why would you as a buyer want to deal with the listing agent, whose sole loyalty is to the seller. Don't say another word to the listing agent, even at an open house. Consider if what you are sharing is something you want the seller to be aware of. Because, anything you say can and will be passed on to the seller and if it helps them in negotiations you have just weakened your negotiating position.
Far better to have your own representation, a buyers agent, whose loyalty is to put your interests above their own and who has a legal obligation to you. The buyer's agent has both a legal obligation and a loyalty to you to place all other interests aside and place your above all else. This means anything they know or discover they can share with you.
But, if you insist on going through the listing agent, you must also understand the seller must agree, if they don't want their listing agent to represent you, they cannot. Also, both you and the seller must agree in writing that the agent can be a dual agent and you both must understand what that means to you both. Whilst Pennsylvania law allows this dual agency, very few welcome it and many states do not allow it. For example, the agent can do nothing that injures either party. Common law states that dual agency is an exception because you are asking an agent to fufill two different opposing roles and it is imposible for the agent to fufill both fully. It is a very hard position to hold both ethically and uphold the law as well. Dual agency automatically limits the role of the agent in the transaction in advice given to either party. For example, if the listing agent knows a seller will accept $275,000 for a house but it is listed for $325,000 because that is what the market analysis indicates, he cannot share this with a buyer because it harms the position of the seller. Likewise, if the listing agent knows the buyer is willing to pay $350,000 for the same house he cannot disclose this to the seller because he can do nothing to harm the position of the buyer. During negotiations the agent must be very careful what he hears and says and to whom for fear of harming either or both buyer and seller.
Far better for both parties, buyer and seller to be represented by different agents whose loyalty and legal obligation is to them alone.
So, don't say another word to the listing agent if you don't want the seller to know what you are saying. Find your own buyers agent and discuss your wants and needs with them and get your advice from them on how to proceed. So, next time you callan agent to show you a house and an agent meets you and explains the Consumer Notice and asks you to sign a buyer agency agreement don't turn away thinking you will just deal with the listing agent because it puts you in a much weaker position both for negotiations and legally.
If you need listing or buyer representation along the Philadelphia Main Line we handle both but prefer to do it on different properties so we can give you our undivded loyalty.
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