CAUTIONARY ADVICE FOR BUYERS USING A LISTING AGENT AS REPRESENTATION
CAUTIONARY ADVICE FOR BUYERS USING A LISTING AGENT AS REPRESENTATION
This specific experience demonstrates the risks of not hiring a buyers agent and instead opting for a direct relationship with a listing agent, and this case highlight the importance of educating Boston condo buyers. Thus, I wanted to share this story in order to bring awareness to the subject as part of today’s blog post. Prior to discussing the potential perils, I would like to impart our customer’s narrative with you.
THE INITIAL ENCOUNTER
We encountered each other for the first time at a gathering we had organized, where she articulated her discontentment with the current challenging situation in the market and undesirable encounters with other real estate agents in Boston. From being outbid by other purchasers of apartments in Boston during bidding battles, being outdone by cash backers, to coping with unresponsive and intimidating agents in a market with feeble stock of properties; it would be an understatement to say that she was dispirited.
Sadly, this is a fairly typical experience for condo buyers that our team meets. Often, customers have ended their relationship with their previous real estate agent because they are displeased with them. We listened to her requirements, promised to assist and assured her that we could supply a better experience.
As the association between us and her strengthened, she was highly enthused and proactive in her hunt for a Beacon Hill condo. Eventually, she located a condominium that wasn’t being offered yet but was going through renovations and should be put on the market shortly. She conversed with the builder who was present and received immediate contact information for the estate agent, who in addition was the proprietor/ financial backer carrying out the upgrades.
THE ISSUE OF PRICING
The representative communicated that if the purchaser had an interest in the property and was ready to work together, they would be prepared to sell it at a price of $15,000 under the amount they were initially intending to list it for. This proposal seemed very appealing to the buyer, and her reaction was understandable. Although it seemed advantageous to get a condo with an attractive $15,000 reduction, after looking deeper we noticed that it would mostly benefit the real estate agent rather than our customer.
The dwelling had been splendidly refurbished, however our customer saw a few areas where it seemed like shortcuts were taken. As we had not been engaged yet, she dealt with the listing representative/ vendor without our assistance. She questioned the representative regarding multiple details of the residence and was received by an unfriendly and persistent attitude. Through various telephone conversations, the agent was evidently pressuring our potential buyer into agreeing to a contract while having herself take the role as both parties in a transaction known as ‘dual agency’. This is when the purchaser reconnected with us.
CUES THAT THE RELATIONSHIP WAS STILL IN ITS INFANCY
At the outset of our connection, we hadn’t yet started collaborating with her when she made contact. She gave us the rundown of the scenario and a handful of major warning signs became apparent to us.
- A representative should never be forcing you into decisions that make you feel uncomfortable.
- If you employ the same agent to act on your behalf as is listed, there is no assurance that they prioritize your needs.
- Not just the listing agent, but the seller and capitalist too, providing them a maximum benefit and putting our consumer on the losing end. We pointed out the hazards and allowed the customer to make their own conclusion.
Following successive arguments and stalemates between our client and the seller’s representative, our customer started becoming uneasy and appointed us to take action. With our assistance and negotiations, we were successful in securing the home for the same cost ($15,000 less than the asking price), however, the greatest gain was that she had someone fighting her corner with absolute commitment.
THE END RESULT WAS SUCCESSFUL FOR OUR CLIENT AS WE WERE ABLE TO OBTAIN THE DESIRED CONDO AT THEIR DESIRED PRICE WHILE SIMULTANEOUSLY UNCOVERING POTENTIAL ISSUES THAT COULD HAVE BEEN EXPENSIVE IN THE FUTURE.
Not only did we manage to acquire the Boston condo for the sum our client wanted, but during a thorough home inspection, we found various issues that the seller seemingly tried to hide. These could have been expensive if not discovered beforehand. Despite the seller/representative’s firm stance that no repairs would be completed or bargains/incentives provided, we managed to haggle for many of the vital repairs we wanted.
Things may appear to be going well, but don’t be so sure! Upon receiving confirmation from the seller that the repairs were done, we took a follow-up assessment with a home inspector during our last walk-through and unfortunately two of the most crucial repairs had not been finished! One of these issues would have been impossible to discover by ourselves since it was in an unreachable area of the condominium.
All of this occurred only a few days prior to the predetermined closing date. We firmly declared that the repairs be finished before the closure and that our buyer be compensated for the reevaluation. In the long run, all of our customer’s expectations were met, permitting her to move into the ideal home that she was envisioning with only a two-day delay. If we hadn’t been her representatives, it is uncertain what may have been missed.
Now that the tale has concluded, let’s examine the dangers of enlisting the listing agent to act on behalf of you as a purchaser!
THE RISKS ASSOCIATED WITH ENLISTING A REAL ESTATE AGENT WHEN PURCHASING A HOME
In a highly-competitive Boston condo market, purchasers are seeking out all possible approaches to raise their chances of attaining the ideal property as well as–if achievable–to acquire it for a reduced price. After all, this is what every buyer desires, isn’t it? It is not unexpected that potential purchasers express their desire for the listing realtor to do the bidding for them – as this would mean the negotiator is on their side and could potentially lead to favorable conditions or an economical deal. Although the concept may appear appealing, it can be dangerous in actuality.
Purchasing a property in Boston is a significant accomplishment for many individuals and typically requires extensive planning and saving prior to beginning the home search process. After purchasing a home and obtaining the keys, it is a huge accomplishment. You do not want to be taken advantage of due to the lack of having someone who can stand up for you and make sure that your interests are placed first. It is for this reason that we always advise someone purchasing a property to enlist the services of a knowledgeable real estate agent; this can help them stay clear of potential dangers and give support throughout the whole buying process.
WHAT IS THE ROLE OF A REAL ESTATE AGENT IN A TRANSACTION?
In a real estate deal, there are usually four people involved – a purchaser and vendor, as well as a listing representative and a buyer’s agent (also known as a selling agent). When an agent is tasked with representing both the buyer and the seller in a transaction, this is known as ‘dual agency’ and they are bound to act in the interest of both parties. This is much simpler to talk about than to execute.
DISAGREEMENT DUE TO DIFFERING INTERESTS
What I observe to be the most problematic when purchasers converse about joining forces with the listing representative to get their proposal accepted is the clash of interests. Here, there is an agent with a contracted responsibility to represent the seller’s best interests, probably having been spending some weeks or months preparing their house for selling, and now the buyer, somebody who this agent has just met and has no connection with, is demanding that the agent also put forth their best efforts. Do you notice an issue here? Who do you believe will receive more of the recognition?
Would you appoint the lawyer accusing you to become your legal counsel? Regardless of how morally upright the representative is, it’s a difficult balancing act.
THE POWER OF MONEY IS UNDENIABLE
It is a known fact that wealth has the potential to influence individuals, and when a real estate broker can take on both the seller and the buyer, they have an opportunity to acquire double remuneration. Can acting as both buyer’s and seller’s agent truly be conducted with a moral code? When facing the situation of having to present an offer from the buyer to the seller, if the seller requests that the agent attempt to get the buyer to increase their bid, who is the representative then protecting? It is probable that the seller would be the one dishing out the commission, as the higher the sale price is, the greater sum of money the realtor has access to. So why would a negotiator working for this same seller want to demand a lower cost for the purchasers if it could mean less revenue for them?
Boston condos
NAVIGATING A DELICATE BALANCE
Besides the cost attendant to a transaction, one must also consider the time necessary to undertake necessary assessment and investigation as a purchaser. Should an issue arise during the Boston condo evaluation, it may be difficult to negotiate concerning repairs when dealing with the listing agent. The realtor could minimize problems to make them appear trifling or typical matters for the region. This puts you as a purchaser in an uneasy state. Is the representative being genuine? Are these matters insignificant and not something you should be concerned about? Are they possibly attempting to get away with avoiding any extra charges for the owner? It’s difficult to be certain, since they are the experts in the field with probably more knowledge compared to yours.
THE PERMISSIBILITY OF CO-REPRESENTATION IN REAL ESTATE TRANSACTIONS
Across the United States, the practice of dual agency is allowed with a few states imposing extra regulations. For instance, Massachusetts permits this type of agreement provided it is clearly disclosed. It is essential for all involved to be aware and informed if an advocate is acting on behalf of both sides in a deal; disclosure is an absolute requirement in such circumstances. Not revealing dual representation is a breach of the law and can result in the agent’s credentials being taken away.
CONCLUDING REFLECTIONS ON DUAL REPRESENTATION IN REAL ESTATE TRANSACTIONS
Generally speaking, dual agency is not recommended unless you are a highly experienced and educated Boston condo buyer or investor. If you decide to go this route, be sure to thoroughly investigate it first. If you are feeling uncertain or need clarification on any aspect, don’t hesitate to contact us! We will be happy to support you through this thrilling and important experience!
