Home Buying in 19438>Question Details

Mark, Home Buyer in 19438

Pitfalls of Dual Agency?

Asked by Mark, 19438 Mon Mar 29, 2010

My wife and I were very casually looking for new construciton homes. We found a lot we loved that was very private and not marketed much. I tried to look online for info and was hitting roadblocks. Finally, I called the builder directly based on the signage. He got me in touch with his realtor and before we knew it we were designing a house to build. I am now at the point of an Agreement of Sale in hand but am worried I should have representation. The agreement of sale seems fair but I am not agent and worried about hte fine print. It is a very small builder and real estate agency. They have somewhat convinced me that they could represent me in dual agency. Also, to add a layer she wants to sell our current home as well. I feel like this is all wrong and they cant possibly be looking for my best interests. Any feedback? What if I tell her I am now working with a new agent? Will we have to work out new agreement of sale?

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Dual agency can be very simple, you want to buy the home and the builder wants to sell it to you, if you are using a standard PAR agreement of sale they are usually pretty straight forward but most builder do not use the standard PAR agreement they use their on agreement of sale which is usually very builder friendly. Which agreement is the builder using?
0 votes Thank Flag Link Wed Apr 21, 2010
Thanks to all for the great support. If we decide to buy it looks like the most logical option is to hire a lawyer to review the contract. If we decide not to buy, I now know the proper channels to work through. I agree, I would like nothing more than to establish a relationship first with my own preferred agent and get them working for me in a positive manner.
0 votes Thank Flag Link Tue Mar 30, 2010
Dan, I think that just going out and getting an agent to "represent" you in a circumstance like this isn't really much of an advantage. The incentive for the new agent is just as narrow - if Mark doesn't buy this house, the new agent doesn't get paid, doesn't get to list Mark's old house, not much difference.

The thing about starting out with a "good" agent is that the agent realizes that their job isn't just to sell you "A" house, but to help you find the "right" house. So if this deal doesn't work out, well, we'll just go on to the next.

But, Mark didn't start out with an agent, so, here he is, in a less-than-ideal situation.
0 votes Thank Flag Link Mon Mar 29, 2010
Dual agency makes as much sense here as it would in a boxing ring.

Can you imagine having the same coach for both players? Do you think they would really give both of you the information needed to win?

Same thing here, your agent is in the other fellows corner and that could really hurt you.
0 votes Thank Flag Link Mon Mar 29, 2010
Dual agency can work and work effectively if a relationship has been developing over a period of time. It sounds to me like this is the eleventh hour. If you want to continue with the deal, and I see no reason why you shouldn't, now is the time to get proactive. If I were you I would start doing some of my own homework. Like going to town hall in the area you intend to buy the property. The people there are generally very helpful and will give you information about your area of interest. If this is a subdivision with unsold lots, as protection for yourself you want to be sure there are stipulations for houses of like kind/value being built around you. As far as the realtor for the builder goes, at this point you have leverage because she'd like to sell your house, use it to your advantage...then she too will be working for you. Expect some concessions.
0 votes Thank Flag Link Mon Mar 29, 2010
Well, Mark, it's kind of late to find someone who will even understand what your best interests are.

The thing about shopping WITH an agent is that you get to learn a lot about each other; the agent gets to learn what your objectives are and is able to distill strategies to help you get there.

Right now, you're kind of in the position where nobody cares as much about you as they care about the deal, however, that isn't the worst thing in the world.

The agent isn't going to be able to sell your home unless you buy this one, so they do have some incentive to keep the first deal together. If you "go and get your own agent," they may have different incentives; one risk is that they elect to play The Knight On The White Horse, "save" you from this deal, and lead you down a path to who knows where.

I do suggest you hedge your bet here, and consult with an attorney with experience in new construction, to help you understand the builder's addenda, your warranty rights, and advise you on matters that the agent may not be able to.

All the best,
0 votes Thank Flag Link Mon Mar 29, 2010
You have a valid point and the agent may not be looking our for your best interest. I would like to think that they are, though. However if you are concerned with any fine print of the Agreement of Sale then I would advise you NOT to sign anything until you have a real estate attorney review the contract. Any sensible builder will understand that. Alot of builder contracts are let's say heavily geared to protect the builders interest not yours. An agent can not advise you on matters of contract law, only an attorney can do that. Again the agent very well may have all the best intentions in the world but the fact that you question some of the fine print on a legally binding document warrants legal counsel. Good luck.

Jason Stevens, GRI,ABR
Kevin Flynn Realty, Inc.
email: jasonstevens@embarqmail.com
0 votes Thank Flag Link Mon Mar 29, 2010
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