Realtor question - Dual agent? (Hope: real estate, broker, gated)

[APNY]

When we started house hunting, we were advised to avoid dual agents...

If our realtor shows us a house which is listed by another agent from his firm (it's a big agency), is that considered "dual agency"?

What if we want to buy a house that is listed by our agent and shown to us by him... Then he's definitely a dual agent, but how can we get another broker involved at that point?

Hopefully someone can help us answer these questions! THANKS!

[4StanleyCups]

My first question is, what is your contractual relationship with the realtor you're now working with? Did you sign a Buyer Agency representation agreement or not?

If you did, then your realtor is working for you (he/she is your Buyer Agent). If you find a house that was listed by someone else in the same realty office as your Buyer Agent, it's not a TRUE dual agency (true dual agency is if the house is a listing belonging to your agent) but it's still an in-house dual agency. Theoretically as long as your agent "Mary" represents your best interests and her co-worker "John" whose listing it is, represents the seller's best interests, it's not supposed to be true dual agency... but.... in reality, let's face it, they both work for the same boss (the broker) and the commission money is going to go into the same pot.

If you did not sign a Buyer Agency agreement, then ANY agent you deal with (all listing agents AND also the agent who is working with you) is going to be working on behalf of the seller(s).

Oh, about the house both listed by and shown to you by YOUR agent? If that happens, you need to ask the broker for "designated agency". That means another agent has to be temporarily brought into the transaction, either to represent you or to represent the seller. Naturally everyone has to agree to the arrangement ("Okay, who wants to give up their agent? Buyer or seller?").

p.s. - Watch out for those terms "agent" and "broker". "The broker" in this sense means the person who owns/runs the real estate office itself. "Agent" means the various real estate salespeople who work for that broker. "Realtor" is a catchall term for both agents and brokers.

A broker can also be an agent, but not all agents have broker's licenses. (My buyer agent is also a Licensed Associate Broker, but she is not THE BROKER, meaning the broker who runs the office she works at).

[ihateny]

Real estate agents are sub agents of the broker who they work under, so if you have an agent showing you houses, and the house you want to buy happens to be listed by his office, that is dual agency. There are rules for dual agency, it's a tricky area, just google it and do some reading.

"What if we want to buy a house that is listed by our agent and shown to us by him... Then he's definitely a dual agent, but how can we get another broker involved at that point?"

That agent is going to get paid either way if you buy, since he is the listing agent, so you can just tell him you don't feel comfortable working with him as a dual agent and find another agent at some other office, just keep in mind unless you do a buyer agency agreement, which is rare, every agent works for the seller of the house, not you. You are just a customer.

Also, an associate broker is just an agent who has taken all the classes and tests to be a broker, and could open his own office but has chosen not to and works as an agent under another broker.

[4StanleyCups]

ihateny, I agree that it's technically dual agency as long as the listing is "in house" but I was guessing the OP meant "dual agency" to be the situation where his buyer agent is also the listing agent for a particular house.

But I disagree with you that buyer agency agreements on LI are rare anymore. In fact I think they're becoming more and more common. I agree that as recently as a year or so ago they were almost unheard of but at last LI realtors are finally "getting with the program" in line with how things are done in most other states regarding agency/representation agreements. IMO that's a very good thing for buyers, and for agents as well. Seller sub-agency was always fraught with potential pitfalls for both.

Now, if you meant BUYER BROKERS are rare (real estate firms or brokers that represent only buyers and don't take listings) on Long Island, I do agree with you 100% there.

[ihateny]

I'm an agent, and in my office in the 3 years I've been there, I have never seen any buyer agency. The average person has no idea that the agent works for the seller usually in the first place, or this was the case until last year. That's why now they have those forms that disclose this upfront. Like you described, if buyer agency all of a sudden in the past year has grown, I would correlate that with the disclosure form that puts it in clear basic writing about who the agent represents.

"ihateny, I agree that it's technically dual agency as long as the listing is "in house" but I was guessing the OP meant "dual agency" to be the situation where his buyer agent is also the listing agent for a particular house."


I disagree, to me it sounds like what I described, but we'll let him or her clear it up.

[4StanleyCups]

Oh I wholly agree, the new disclosure forms are what's providing the impetus for the shift to buyer-representation agreements.

I do wonder sometimes if many agents aren't still kind of glossing over the new forms without a detailed explanation, or many buyers aren't yet really reading/understanding them.

I'm interested in the OP's response too (as to whether he/she opted for a Buyer Agency agreement or not)... and if not, why not?

IMO there's no reason not to go that route, given an understanding of how agency/representation works.

[TomMoser]

As an agent, I prefer acting as a "Buyers Agent" when I am showing homes. I believe that most buyers believe, wrongly, that their agent works for them, when really they work for the seller. I believe that this is unfair to the buyer. As consumers become more educated we will begin to see more Buyer Agency practiced on Long Island.

[APNY]

We have not signed any contracts whatsoever with our real estate agent. Like most people, we simply got a referral for a good agent, made an appt, and started looking at houses. To be honest, I don't know much about "buyer's agents", "dual agents", or "dual agency". That's why I asked the questions on this forum...

I assumed that, when the seller has his own listing broker, and my agent shows me the house, my agent would help to watch out for me, even though his commission technically comes from the seller... Is that true in most cases?

TomMoser - Should I switch to a "buyer's agent"? (We like our current agent a lot.) What would they do for a buyer that regular agents don't? Do their commisions still come out of the 6% that sellers pay, or does the buyer pay the buyer's agent separately?

Thanks!

[4StanleyCups]

Originally Posted by APNY

We have not signed any contracts whatsoever with our real estate agent. Like most people, we simply got a referral for a good agent, made an appt, and started looking at houses.

I assumed that, when the seller has his own listing broker, and my agent shows me the house, my agent would help to watch out for me, even though his commission technically comes from the seller... Is that true in most cases?

I can see both ihateny and Tom going "oh man" right now...

The first time you met your agent and looked at a house (this is called "first substantive contact" I believe) he/she was required BY LAW to give you a disclosure statement, which you were to read and then sign to indicate that you read and understood it.

If your agent did not do this, IMHO you've got a huge red flag right from the get-go. Anyone with an agent's license knows that it is required.

If you were given a disclosure statement, read it, didn't understand what it was all about, didn't ask the agent to explain it, but just signed the paper anyway ... .... what can I say but why would you do that??

I can't put it plainer than this:

The agent showing that is showing you houses is not, repeat NOT, required to "look out for you" or for your interests in any way, shape, manner or form -- UNLESS you have signed an agreement saying that he/she is to REPRESENT YOU as YOUR BUYER AGENT. But if this was never done, the agent is LEGALLY REQUIRED to "look out for" the interests of the SELLER. The technical term for this is called being a "sub-agent" of the listing agent and by extension a sub-agent of the seller.

If you sign a buyer agency agreement, the agent your working with will still "technically get his commission from the seller", meaning that it will come out of the total percentage that was agreed upon between the seller and the listing agent. But where the commission comes from has nothing to do with fiduciary duty ("looking out for best interests"). That level of fiduciary duty is determined by the agreement/contract of representation that exists.

Suppose your buyer agency contract says that the agent representing you will receive 2% commission. You end up buying a house on which the agreed commission between the seller and listing agent was 5%. The commission split offered in the listing says that the procuring agent (the one who brings the buyer, no matter who that agent represents) will get 2%. The closing takes place, everyone is happy, and your buyer agent gets his 2%.

Now suppose your buyer agency contract says that you agree to your agent getting 2.5% comission. But the house you want has a listing commission split that gives only 2% to the agent who brings the buyer. One of two things may happen: (1) Your agent may agree to take only 2% as commission, or (2) Your agent may want the 2.5% specified in your contract with him, or perhaps settle for something between 2% and 2.5%. In that case yes, you would be responsible for paying him the difference, because that is what you legally agreed to do.

If I'm wrong on any of this, I'm sure the local agents here can correct any goofs I made, or expand on it.

As it stands right now, your agent does have a responsibility to be honest with you (not to lie to you about listings, etc). But because you did not sign a buyer agency agreement, his job is to get the best possible deal for the seller, not for you. Also, he is obligated to pass along anything that you tell him regarding your financial or personal situation as it affects the process of buying a house, to the listing agent and that listing agent is obligated to tell the seller.

For instance if you tell your agent "We will go up to X dollars for this house", guess what? Unless he's your buyer agent, that information is required to be passed along to the seller. That is NOT in your best interests, is it?

This is an object lesson in why no one should sign any document that they don't understand...

[ihateny]

You really should goto google and do some research, most of the info you could want is on google. I rest my case about what I said, most people are clueless. Most listings don't offer much for buyer agency... give me the mls number to a house you're interested in and I will post what the listed commissions are.