Representing both buyer & seller: good idea? #703

#703 in a series of true experiences in real estate

You’ve been thinking of buying a house but you’re not quite ready to devote yourself to a daily search. Still, because a miracle might jump out at you, you watch what’s new for sale. Here’s one: “Huge house, huge yard, trees. Charm, good location. $650,000.”

This sounds too good to be true. You want to see this house in person, so what do you do? You call the listing agent. The person who answers is friendly, gives you her name, asks yours, then suggests you meet her at the house.

You think, “It’s her job to show me this house. Even though I’m probably not going to buy it, at least I can see it.” So, you go, and surprise, surprise, it truly is a huge wonderful house with a huge yard, and you even like the location. You are excited.

The agent gives you information – what’s on the termite report, which appliances are included, when the owners will be moving. You spend more than an hour there soaking up the atmosphere of the place, mentally arranging your furniture, exploring the basement. As you’re leaving, you say to the nice lady, “I’ve hoped against hope to find a house like this someday. Thank you. I’ll call my friend who’s an agent and, I guess, she’ll call you. Isn’t that how it works?”

Suddenly there is a chill in the air. “I wish you’d told me that you’re working with someone,” the woman says. “Your agent could have showed you this house.” You apologize; evidently you haven’t followed form. But it makes sense, doesn’t it, to see the house and then if it looks good, talk to your own agent?

It may not make sense, but here’s how real estate agents see it: you “belong” to the person who shows you the house. (Agents refer to this rule as “procuring clause”.) The idea is that if that agent has the chance to sell it to you, and then if you do buy it, she’s the one who should earn the commission. In this case the listing agent, the agent hired by the seller as the seller’s representative, showed you the house. She expects that if you buy that house, she will represent you, too.

The exception to this is open houses. Whether you have your own agent or not, you can go to any open house and, if you decide you want to buy a house you’ve seen, you are free to contact an agent other than the one who has the listing.

Some people feel just fine having the same agent represent both buyer and seller in a sale. Many agents feel fine about it, too. We don’t, and I’ll tell you why. Once, many years ago, we were holding a house open on a Sunday when a couple came in and lingered, then told us that they wanted to buy the house. They said that they had been working with an agent but were dissatisfied with him and would prefer that we write their offer.

It seemed like the right time and the right people. The sellers were unusually reasonable, non-greedy people. The buyers really wanted the house and had no argument with the price. The house had no obvious problems, and both buyers and sellers said they were happy to have us handle matters for everyone.

We thought all would go well, and it did — until paranoia unexpectedly set in. Several weeks into the sale, the buyers began to have doubts. They asked if we thought they might be paying too much for the house. They wondered if they shouldn’t have looked at more houses before committing to this one. They didn’t want to abandon the sale, but what if their inspector had missed something that would cost them money later?

And, although they didn’t say it directly, what the buyers wanted us to tell them was this: Were we on their side or the sellers’?

We were bending over backwards to be everything to both sides. But just saying that didn’t, of course, change our buyers’ thoughts. Perhaps they had a case of buyers’ nerves, something that would resolve itself as soon as the house became their own. Or maybe they’d started thinking that in a divorce, for example, the parties would do well to hire their own attorneys.

Whatever it was, we found that once an uneasiness has set it, it is next to impossible to repair or to banish altogether. We tried everything we could think of, but our relationship with the buyers had changed irretrievably. They did complete the sale and, as far as we could tell, both buyers and sellers got what they had set out to get.

But we felt bad that the buyers had doubted our impartiality, that we weren’t able to prevent their doubts from happening or to fix them once they were evident. We promised ourselves never to be in the same position again. From that time on, we have been either the seller’s agents or we are the buyer’s agents in any single sale, but never both.

So think about this: If you want your own advocate, yours alone, then you need to find, to carefully select, your representative. It is preferable that you find this good person before you start looking at houses.

One possible advantage: When you admit to her that you must have this house but that $775,000 is the top price you will pay for it – even though you have over two million dollars in a trust fund – she’ll be the only one who will be aware of this. It’ll be your secret.

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