Image by Kathy McGraw via Flickr
We skip weekly roundup for this more important topic.. - dewita
Buyers: do you know if your agent "only" represent you exclusively, as your buyer agent?
Or, does your agent also work for the sellers as their "listing agent?" Sellers: the same question goes to you.
If your agent is working both sides of the transactions, we call this 'dual agency' or 'dual representation'. Many states, including Virginia, allows dual agency. Most agents only represent one side at a time, but, there are agents out there who are doing both sides.
The 'dual agency' transactions might not happen so much in resale. But it's not so with the new homes.
Before you walk into any new homes' sales office, you need to understand this: that builder's sales reps work for the builder to represent the builder - and "not" you, the buyer! Their sales agents work exclusively for the developer to protect builder's interests. So, if a builder sales rep writes a sales contract for you, and you are not represented by any Realtor - that means you have "NO" representation - at all! Nothing. If they write contracts, they're just doing admin stuff for you. And they have no fiduciary responsibilities to you, other than "you are" the company's customers. Yup- you read that right.
To put it in perspective, here's something worth reading. (I'm putting it in its entirety). Via MarketWatch e-newsletter (subscription):
When home prices are rising and houses are selling like hot cakes, realty agents don't have to worry so much about where their next commission check is coming from. In the boom times in the middle part of the decade, the market pretty much maximized incomes.
Not so today. Commission checks are much harder to come by and they are way smaller when they do come, given the drop in home prices across most of the country. That can lead to shenanigans among unscrupulous agents as they try to pocket as much cash as the can from deals, including the unethical practice of favoring buyer offers from their own clients or their brokerage-represented buyers, practices that let them keep both sides of a commission split.
That's why this is a good time to remind home buyers -- and sellers -- what the concept of agency means and why it is critical that you know who your real estate representative really works for. That's especially important when you are dealing with situations of dual agency, in which a broker is acting for both sides -- a situation ripe for abuse. (emphasis added)
Not that there weren't plenty of nasty tricks going on in the boom, too, especially in the sale of mortgages. But in the bust the financial incentive to stray can be boosted by desperation as well as greed.
-- Steve Kerch, assistant managing editor/personal finance