Sean Willis

Chief Evangelist & Sales Representative

Posted on May 19, 2016 in Buying, Real Estate Advice


As buyers become more savvy, we’re seeing a new trend emerge:  Buyers who want to work directly with the listing agent.  The two most common reason that we’re hearing from buyers is that they believe they will:


(1) Get insider information from the listing agent. A misconception that they will tell them how much they need to pay to get the property without over paying.

(2) The listing agent will charge less commission to get the business.

This is simply not true.  Albeit, there are unethical Realtors out there and it is possible they will break the rules and risk their license to double end a sale.  Even if they do — and get away with it — it is still not in your best interest to work directly with the listing agent.


Here’s Why and How It Works:

The seller pays the commission, not the buyer. That’s right. When you buy property, the seller pays 5% of the sale price in commission (2.5% to the listing agent and 2.5% to the buying agent).  If you have ever wondered how Realtors are able to offer cash back as part of their “buy with me and save” gimmick, now you know that they’re paid by the seller, not by you.

A listing agent’s loyalty is to the seller, not the buyer. When you sell a property, you are required to sign a listing agreement that is legally enforceable.  Once under contract, the listing agent is obligated to work solely for the seller. They owe fiduciary duty to the seller and must disclose any all material facts. Remember, the ultimate goal of the listing agent is to sell the house for the highest price, not help a buyer get a deal.


What happens if a buyer needs to be represented by the listing agent?  If the listing agent has a buyer for a property they are selling, one of two options are available:


(1) Buyer Signs a Customer Service Agreement (not a Buyer Representation Agreement). If you are a customer (not a client), the brokerage does NOT owe you fiduciary duty, which promotes and protects your best interests in the real estate transaction. While the brokerage is obligated to treat you with fairness, honesty and integrity, and to provide you with conscientious and competent service, as a customer, they are not obligated to take reasonable steps to determine and then disclose to you, all material facts about the property.  They simply only have to tell you what they might already know, not what they should know.

A customer’s interests are not protected in the same fashion to that of a client.

Scary Scenario A: Let’s say that you’re married and in your third trimester. You decided to sell your condo before purchasing a house, which is closing in the next 45 days.  As you and the listing agent quickly get to know each other, you disclose that you’re almost due and desperate to get a house. Owing fiduciary duty to his seller client, and knowing you are desperate, he discloses this information to the seller and uses it to negotiate against you. As a customer representative, the agent is not allowed to advise on price or negotiate on your behalf.

Scary Scenario B: Let’s say that the sellers have decided to list without a home inspection, which would uncover the fact that there is a crack in the foundation and mould in the basement. You walk in off the street and decide to put an offer in on the house. If the listing agent is not made aware of any issues by the seller, then they are under no obligation to point out that a home inspection was not done and to advise you to do a home inspection before you make an offer. If you were under a buyer representation agreement with a trusted Realtor, it would be their fiduciary duty to provide due diligence and uncover these issues, saving you from purchasing a $40,000 problem.


(2) Buyer Signs a Buyer Representation Agreement and is represented by a different Realtor. Under buyer representation, your Realtor owes you fiduciary duty and duty of care, which is everything that is done (or ought to be done) by the agent.  Under buyer representation, your Realtor is working solely in your best interest and is legally responsible for delivering a specific level of service.  Misrepresentation as a buyer agent can lead to hefty fines, law suits and potential loss of license.


Here’s The Good News

In a case where the listing agent is part of a real estate team (like us), they will have another professional on their team who will represent you.  An iron curtain will exist where no information will be shared between the buyer and listing agents. While it may appear tempting and advantageous to let some information slip to try to “double end” a deal, there are repercussions to doing so.  Aside from being brought in front of the board and risking the lost of their license, Realtors also lose that buyer as a future client.  Simply put, if a Realtor is willing to screw their seller over to help you, are you going to trust them when you’re sitting on the other side of the table?


Still not clear on the differences between a buyer representation agreement and a customer representation agreement?  Leave me a note below.


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My lovely agent Karina helped me find our perfect family home when I was very pregnant and quite stressed!!! She helped negotiate a deal for our parking & locker that we didn’t even know was possible. She also helped me to both buy and sell my condo with a good profit. Thanks Karina!!!!