Home Buying in Dayton>Question Details

Gary, Both Buyer and Seller in Dayton, OH

Home buying in Dayton Ohio - possible double dip scenario

Asked by Gary, Dayton, OH Mon Oct 13, 2008

My wife and I have been house hunting for quite some time and we are now using a realtor that we picked because we liked her rental knowledge/portfolio (we need to rent our home to buy). This agent has a home that we originally ruled out due to price range however now it is very possible that it competes with what we are finding we like. So, we haven't addressed her listing with her yet but we may want to at some point. I've always heard that you shouldn't allow a realtor double dip if at all possible. My question is what are the main threats/vulnerabilities and what are some ways to mitigate them. It seems to me that if in the end I get a great price for a great house I'm good-to-go, but I realize there is more to the issue. Feel free to comment or ask questions, I'll be checking in regularly.

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Answers

7
Great question Gary. It all comes down to trust and responsibility. Allowing an agent to participate in "dual agency" (double dip) is not necessarily bad. But understand that in dealing with her listing, she becomes limited in her ability to fully negotiate and represent you or the seller. Her role becomes more of mediator than negotiator. So, do you trust her to remain impartial? All agents have a fiduciary responsibility to their clients - putting their clients' interests above their own. Do you believe her to possess that sense of responsibility?

Even if you have a Buyer Agency Agreement- which I hope you do- the agreement is actually with her broker. You can ask to have another agent from her company represent you in this particular transaction. In most brokerages, the agents can operate as exclusive agents and only the broker, in this scenario, would be a dual agent. It is possible, however, that all of the agents in her company become dual agents in any transaction. The answer to that lies in their Consumer Guide to Agency which you should have been given before she showed you the first property.

While all agents appreciate the opportunity to receive compensation from the occasional "double dip," great agents are more interested in upholding their fiduciary responsibilities to their clients and doing the right thing by them. You are more likely to work with her down the road and refer others to her if she does so. And yes, in theory, all parties receive the best representation and negotiating focus when represented by exclusive agents from competing firms.

Good luck in your decision and your home search. What a fantastic time to be a buyer!
1 vote Thank Flag Link Mon Oct 13, 2008
The disadvantages to working with a dual agent are listed below. To put it simply, the agent must remain neutral and cannot offer advice to either party that would put either at an advantage over the other during negotiations, disclosure or inspections.

Only with the Seller's consent can they inform the Buyer if the Seller is willing to accept a lower price.

The agent is prohibited from disclosing any information that may inform the Buyer of the motivation of the Seller, unless the Seller gives permission.

The agent cannot put the Buyer at an advantage when negotiating any repairs.

Without the Seller's consent, the agent cannot disclose any confidential information that would place the Buyer at an advantage over the Seller.

You can work with a buyers agent who will act exclusively on your behalf in this transaction. That way, your best interests will always be first.

Best of luck,

Brittany Simonelli
Revealty
Buy. Sell. Understand.
614.940.3067 Phone
bsimonelli@revealty.com
:
0 votes Thank Flag Link Tue Oct 14, 2008
I am a Realtor and am qualified to be a buyer's agent and a seller's agent. With my knowledge and experience, if I were buying my own home, I would not allow an agent to represent both sides of my own transaction. Some will disagree with me, but iI feel if one agent represents both sides, there is either no representation on either side or representation on only one side.
0 votes Thank Flag Link Tue Oct 14, 2008
Hi Gary,

It is okay to work with an agent on a listing he/she has listed. There are a couple of things you can do to make sure the transaction goes smoothly.

The first thing I would do is get an appraisal from a third party if you don't trust your agent. If you do trust your agent, ask them to provide you some comparable sales. You can also hire an appraiser to give you a value. If you are getting a mortgage, the bank will also do an appraisal. The bank's appraisal will not happen until after you have signed a purchase contract, but it will verify the purchase price. The banks are going to be very careful in the foreseeable future about appaisals.

The second thing is to get the home fully inspected before purchasing. Don't depend on the Realtor or the homeowner for assurances. A home inspection will provide you valuable information about the condition of the home you are purchasing.

The homeowner and buyer alwasy assume the home is in good condition. When issues arise from inspection results, my suggestion is to go 50/50. This makes good sense for owner and buyer. The owner will have to disclose the inspection results to all future buyers, and most buyers are going to want the issues fixed. The buyer benefits by seller paying for half of the repairs needed. The future owner is the one that will benefit the most from the repaired items. This 50/50 things is not always the best way, but it is a good place to start from.

The last thing I will suggest is talking to the agent. They may be willing to lower the commission. Commission reductions will vary according to each company and agent. Some companies may allow it, other ones may not. It does not hurt to ask.

My final thought for you is to think about your Realtor. Your Realtor is a hard working professional that deserves to be paid for their efforts. Realtors provide valuable help and experience to home buyers. If you have any doubts about your Realtor, then by all means find another one to represent you on the purchase.

Take care,

John Baker, GRI, e-PRO
0 votes Thank Flag Link Mon Oct 13, 2008
Hi Gary,

It is okay to work with an agent on a listing he/she has listed. There are a couple of things you can do to make sure the transaction goes smoothly.

The first thing I would do is get an appraisal from a third party if you don't trust your agent. If you do trust your agent, ask them to provide you some comparable sales. You can also hire an appraiser to give you a value. If you are getting a mortgage, the bank will also do an appraisal. The bank's appraisal will not happen until after you have signed a purchase contract, but it will verify the purchase price. The banks are going to be very careful in the foreseeable future about appaisals.

The second thing is to get the home fully inspected before purchasing. Don't depend on the Realtor or the homeowner for assurances. A home inspection will provide you valuable information about the condition of the home you are purchasing.

The homeowner and buyer alwasy assume the home is in good condition. When issues arise from inspection results, my suggestion is to go 50/50. This makes good sense for owner and buyer. The owner will have to disclose the inspection results to all future buyers, and most buyers are going to want the issues fixed. The buyer benefits by seller paying for half of the repairs needed. The future owner is the one that will benefit the most from the repaired items. This 50/50 things is not always the best way, but it is a good place to start from.

The last thing I will suggest is talking to the agent. They may be willing to lower the commission. Commission reductions will vary according to each company and agent. Some companies may allow it, other ones may not. It does not hurt to ask.

My final thought for you is to think about your Realtor. Your Realtor is a hard working professional that deserves to be paid for their efforts. Realtors provide valuable help and experience to home buyers. If you have any doubts about your Realtor, then by all means find another one to represent you on the purchase.

Take care,

John Baker, GRI, e-PRO
0 votes Thank Flag Link Mon Oct 13, 2008
I have not signed an agreement with the agent, so no, I'm not contractually obligated to use her. As far as our current home, we would rent it out, and I believe I could get as much as $100 - $150 more than the mortgage and still be one of the cheapest in the paper or craigslist for my area. As far as the purchase of the next home, we have been considering all 3 types of loans (conventional, fha, and va). I've been working with a mortgage broker and she is pretty confident in our ability to borrow (we lived below our means for a while).

My concern is in the fact that you hear that a "double dipping agent may not be working in your best interest", and I definintely see that vulnerabilities exist. So I'm wondering where she might have the most influence. Could it be in the price negotiations, inspection reports, disclosures/problems? I'm sure the answer is all three and then some, but I'd love to here some details.

I'm also sure that someone is going to ask,"why not just get a new realtor". I guess I'm somewhat too nice in this area. I feel that if she has been good so far, and I've taken her time, I owe her the best oppurtunity at making a sale. I also am not convinced that her listing is the best house for us. Its just that it is competitive with about 4 others so far.
0 votes Thank Flag Link Mon Oct 13, 2008
Gary,

First, did you sign an exclusive agreement with the agent you are working with? That is like a listing agreement when you sell that says you will use this agent to buy... If so, then you need to use them. If not you have options. But, if you are talking about doing a lease purchase agreement on the new home it could be helpful to only have one agent... Or, are you just renting your existing home? If that is the case you need to consider that you will HAVE to put more money down if you are using a conventional loan to buy... underwriting guidelines have changed for renting out your existing home in the same area you buy...

This is really such a wide ranging question... IF you are not under an exclusive agreement why don't you give me a call and I can answer your questions better in person. If you are exclusive then we can not interfere with your existing client agent relationship.

Hope this helps, you are smart to have your eyes open.

Mark Ryan
0 votes Thank Flag Link Mon Oct 13, 2008
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