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How do buyers agents deal with a situation where two of their clients are bidding on the same home, i.e. essentially competing with each other?
Are there regulations or code of ethics that govern realtors in these situations?
If I find myself as one of the clients in such a situation, are there clarifications I should seek, and more importantly, would the typical realtor even tell me that s/he is also representing another client putting an offer on the same home?
Our Buyer Rep Agreements cover this and say we can Represent multiple parties trying to buy the same house. It happened to me 1 time over the years and is fairly rare.
Yes they should tell you they have another client making an offer on the house.
A Buyer's Agent cannot fully represent 2 parties in a given transaction--whether that is "representing" both a buyer and a seller (a so-called "Dual Agent"), or trying to represent 2 buyers. An agent should be able to share all known information with a client...and in both of those situations they simply can't.
It is likely rare (it has never happened to me), but if an agent finds themselves in that position I believe they should--at a minimum--inform their clients and get their written consent (if it's not in the original representation agreement). It should be made clear that the agent could not help in pricing an offer, but could help in every other aspect of the transaction as would normally be the case. Or...the agent could hand-off one client to another agent.
When I've found myself in that position, I tell both clients that there are two buyers and assign another agent in my office to one and I the other. We erect a no-contact Chinese wall between myself and the other agent and treat it the same as a multiple offer scenario with another office.
Our buyer agency agreements address this, and which ever client writes first stays with the agent. The other client gets transferred to another principal broker in the office. We won't do that, although it is legal in the state of Oregon.
I'll defer to others here in quoting the law, but what's really going to happen is that the agent will do everything possible to preserve the two commissions and not lose one of the buyers to someone else. And what may happen is that you could end up with less money when the agent puts the commission above all else.
We were one of two buyers represented by the same agent and interested in the same home. The other buyers were interested only in that home and they likely would have looked elsewhere with other agents if they couldn't clinch the deal. We, on the other hand, were more flexible and had targeted another suitable home in the same complex as a backup, even though the first home would have been a better value with more upside in terms of future price.
Knowing the above and wanting to lock in two commissions for herself, the agent steered us away from the first home. Once the transactions were over, we had the chance to compare notes with the other buyers and here is what we ascertained:
1. The agent likely told us the first home we wanted was already under contract, even though it wasn't.
2. We would have paid tens of thousands of dollars more than the final selling price for the first home and we were very clear in letting the agent know how high we were willing to go.
3. We were better qualified than the other buyers because our deal would have been all cash.
4. Because the agent's highest priority was to preserve the two commissions, the sellers departed for their home country not knowing that another buyer would have paid them up to $40,000 more.
So, yes, there's the law and real estate guidelines and all that gibberish. And then there's the reality. I caution the OP and others to watch for this kind of stuff.
A Buyer's Agent cannot fully represent 2 parties in a given transaction--whether that is "representing" both a buyer and a seller (a so-called "Dual Agent"), or trying to represent 2 buyers. An agent should be able to share all known information with a client...and in both of those situations they simply can't.
Sorry but OP is in Texas and here we can represent 2 parties to buy the same house or 2 parties in any transaction with Approval by the Parties.
Sorry but OP is in Texas and here we can represent 2 parties to buy the same house or 2 parties in any transaction with Approval by the Parties.
The key here is " with Approval by the Parties".
As a buyer, I wouldn't want to put my agent in the position of even a potential conflict of interest over a transaction, regardless of the applicable laws.
I would not consent to my agent representing two buyers to a possible transaction. They either work exclusively for me or I find another agent independent of them.
I've seen too many situations through the years where money trumps ethics in the practice of real estate.
Even had listing agents take my listing only so that they had the house as a comparison to sell other listings they had .... and not make a good faith effort to market my property while they had the others in their listings portfolio at similar price points for a comparable house (same builder model, same age, similar access in the subdivision, same mountain views, comparable condition/finishes) in the same subdivision which they're selling fairly quickly via the multi-list. Yet a change in agency yielded a full price cash offer (and no contingencies, no demands for accomodations, closing costs, etc) via the multilist within 48 hours while others in the subdivision were still available; the only difference was the listing agent input for the buyer's agent. The house was vacant, clean, and ready for immediate possession and occupancy throughout the entire listing period.
Last edited by sunsprit; 05-12-2014 at 01:36 PM..
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