Home Buying in Raleigh>Question Details

Sarah, Both Buyer and Seller in Raleigh, NC

We have found a home we like, and the listing agent has shown it to us once. We do not want to buy without a

Asked by Sarah, Raleigh, NC Sun Jan 25, 2009

contingency on selling our current home. Would we be wise to allow the listing agent to serve as both our buyers and sellers agent? We assume that she would be highly motivated to make the deal work, and we might get a better deal on the house. Are there pitfalls with this arrangement? Also, exactly how does a contingency work? Would we be given 2 months (4 months? 6 months?) to sell our home before the contract is void? Thank you for any advice.

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Sarah
You ask a really great question. First of all, when you work with the Listing Agent, beware that anything you say to them can be relayed onto their client. You do not have sole representation! You can sign a buyers agency agreement with the Listing Agent, but this puts you all in Dual Agency, and now No One has sole representation. The Agent cannot help the Seller Negotiate Nor can she advise you the buyer! She is merely the middle man, that takes an offer from you and gives it to the Seller. There is absolutely no advantage to this scenerio. Best case scenerio, the Agent passes you on to someone in her office. Please be careful most times a Listing Agent becomes a Dual Agent, one of the parties feels cheated in the process.
Find your own agent that will work for only you, one that will represent, negotiate, and fight for you and your best interest.
As far as contingency contract, the length of time of a contingent offer is between the buyer and the seller, most buyers write contingency contracts when they have an offer on their current home and are just waiting on it to close. Contingent Contracts longer than that, get tricky. Sellers know that when they except long contingencies, they are going to loose alot of showings, and viable buyers. I can tell you that most Sellers will frown on Contingencies longer than 2 months.
My best advise would be get ,your house under contract, then make your offer!
But please find your own agent, don't call the agent off the sign, their alliance is to the Seller! Call their office number, or ask your friends who they reccommend, but do not do Dual Agency!!
I hope this helps! Good Luck
1 vote Thank Flag Link Sun Jan 25, 2009
Hiring the listing agent of a house you are interested in buying to also sell your house is a clear conflict of interest for the agent. That agent represents the interest of the seller of the house you are interested in purchasing. That agent owes that seller absolute confidence and fiduciary responsibility. How can the agent offer both of those to a seller AND a buyer at the same time.

There are those on this forum who will try and argue that the two transactions are in fact separate and a professional agent can and should handle representing both parties. I say this type of attitude is exactly why our profession is on occasion not held to a high esteem.

As a professional Realtor, I will never take that sort of liberty with my clients trust.
0 votes Thank Flag Link Sun Jan 25, 2009
Hi Sarah
If I understand you correctly, your home is not on the market yet and you have viewed another home with the Agent that is representing the seller of that home? is that correct? If so then I would reccomend getting your own Agent to list your home and then let them represent you as a buyers Agent as well. If you want some further advice as far as contingency's please email me.
Thanks, Michael
Web Reference: http://www.colvinm.hpw.com
0 votes Thank Flag Link Sun Jan 25, 2009
Hi Sarah,
I'd recommend that the agent you choose to list YOUR home also serve as your buyers agent. That person will have your best interests at heart. In addition, the agent that lists your home will be a person that you develop a trust and rapport with...and will subsequently have a good understanding of your needs.
As far as contingency, when you sign a purchase contract for the home that you'd like to buy, a contingeny on the sale of your home can be for any period of time. The other party has to agee, of course. I'd recommend that your price very competitvely in this market and a qualified agent can give you an idea of pricing strategies for your property. Please note that many sellers who accept contingencies, would prefer to deal with someone who already has a sale pending on their home. That's why it's really important for you to consult with a realtor and get your home on the market sooner than later.
If you have other questions or would like a Comparative Market Analysis to determine pricing on your home, please don't hesitate to contact me.
I wish you the best!
Tania
tlittle@fmrealty.org
0 votes Thank Flag Link Sun Jan 25, 2009
Hello Sarah,

You always want to have your own agent, the listing agent has signed a contract to work in the best interest of the owner and they are working hard for the seller and you want someone working just as hard for you. Plus if you have been working with a buyer's agent and they have been taking you around looking at houses, I'm guessing you haven't paid them anything and they are under the assumption they are already working for you. I would stick with your agent and let them help you negotiate with the seller. In some states it is illegal for the listing agent to do both sides of the transaction. I don't know what the rule is in North Carolina.

As far as the contingency goes if I was the listing agent I would ask the following questions before advising my clients to accept a contingency on their property...

1. Is your house priced right?
2. How many showing have you had since it was listed

Asking a seller to take their house off the market to "wait" for your house to sell is a tough sell in this market unless the houses are still selling in a reasonable time.

If I was you I would have your agent present the contingency to the sellers with a stipulation that

1. they can leave there house on the market
2. do increments of 30 day contingencies and just extend every 30 days

Hope this helps... Coni Otto
Web Reference: http://www.coniotto.com
0 votes Thank Flag Link Sun Jan 25, 2009
Hi Sarah,

Keep in mind that the listing agent only represents the sellers' interests, so they would be much less likely to negotiate the best deal for you. Agents that represent the seller are required to be honest and disclose any material facts about the home; however, they want their sellers to get as much money for the home as possible. Sellers typically pay the commission for homes listed in the MLS, so having a buyer's agent who can do all the research for you for "free" in this current market would definitely be to your advantage. There's also the chance that the seller is unwilling to accept a contingent offer in the first place since most homes that switch from "active" to "contingent" have less showings. I have a listing in North Ridge currently where the sellers OK'ed a contingent offer, but since changing the status to contingent, there have been no showings at all.

There's also no guarantee that the sellers would allow "their" agent to work the buyer in the transaction since some see it as a definite conflict of interests. Many listing agents automatically refer that buyer (for a referral fee) to other agents they work with because it seems more fair to both sides of the transaction to have their own representation. In some cases, it is true that the listing agent could tinker with his/her commission in negotiations if there is an unrepresented buyer, but many will not. Also, it's important to keep in mind that the listing agent would be doing the work of 2 agents if they also work with the buyer and would want to be compensated for his/her efforts. When it comes down to home inspections and repair requests, the listing agent could be more likely to negotiate those on behalf of the seller as well.

While a sellers' agent working with a buyer has to serve both sides fairly and honestly in the transaction, it would serve your interests better as a consumer to have someone who just represents your interests in the transaction and will help you navigate the process smoothly. If you decide you'd like to work with a buyer's agent, feel free to give me a call or send an email.

As far as the contingency goes (if accepted), there's no set timeframe for it...only what the sellers will entertain. Your offer is stronger if the house you're selling is already under contract before you submit a contingency offer...a little weaker if your home is listed but not under contract...and even weaker if you haven't listed your home yet and plan to after they accept the contingency offer. Basically, the home you're buying won't be listed as "under contract/pending" until the home you're selling goes under contract.

The home you want to buy is still showing up as active on searches, so it can still be shown and receive other offers. If the sellers accept your contingent offer (let's say you think the home you're selling would go under contract by March 31 and you want to close by April 30), the home stays contingent until your home goes under contract...at which point the contingency on the house you want to buy is removed. If, for some reason, your home does not go under contract by that date, then you have the right to waive the contingency and move on with the purchase of the house you want to buy or the seller can say, "No thanks...we're not waiting any longer."

Another situation that may occur is that the seller receives a better offer than yours during the time it's contingent. At that point, they'd notify you that an offer has come in and you have x amt of days (whatever was in the contract) to decide if you're going to buy the house anyway or withdraw, in which case the other person's offer would move to the primary position.

Depending on the location, price range, market activity, etc. in the area (if it's slow), the seller could agree to extend your contingency to another mutually agreed upon date. If the home is in an area and price range that tends to move quickly, then many sellers would be advised by their agents not to accept a contingency offer.

Contingencies can have a domino effect...if you can't buy, then they can't sell, and they also can't buy where they were moving...that seller can't sell because those folks couldn't buy, etc. etc. An offer is much stronger without a contingency attached, but if you do find a seller who will accept one (and there are more of them these days in the current market), then it's really best to have your current home listed and under contract before submitting the offer.

As far as using money/both sides of the commission to motivate the seller to accept a contingency, the listing agent can't ethically do that since it's "self dealing" in a sense. Of course we'd all love to earn more in a transaction; however, a my primary job as a Realtor is to put the clients' interests first.

Hope this info helps! Please feel free to contact me with any questions...thanks and have a great evening!
0 votes Thank Flag Link Sun Jan 25, 2009
Sarah,

You will be well served with a buyer's agent who will be sure to completely explain the situation to you and assure your best interests are represented. The contingency period (i.e. period of time from contract effective date until proposed closing date) can last as long as both parties agree to. Obviously, a long period of time is advantageous to the buyer, giving him/her more time to sell his/her own home. During the contingency period, if the seller receives another acceptable offer, you will be notified and have some period of time (usually 48 or 72 hours, but once again, whatever period is agreed to by both seller and buyer), to either remove the contingency and move forward with the purchase, or give up the house and receive a full refund of your earnest money. If you'd like additional information, please feel free to contact me.

Craig.
Web Reference: http://craigfox.PruYSU.com
0 votes Thank Flag Link Sun Jan 25, 2009
Hi Sarah,

I would recommend that you have your own agent (buyer's agent) to represent you. You need the guidance of a professional and someone who'll be looking out for your best interest.
A contingency period is agreed upon among both parties and can be for any number of days or months. Essentially if your house does not sell within a predetermined amount of time you are no longer obligated to purchase the home you made an offer on.

Good luck!
Lizete
Lizete
Web Reference: http://www.LizeteSantos.com
0 votes Thank Flag Link Sun Jan 25, 2009
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