It is essential to know the distinction between the different types of agents. We have discussed exclusive buyer’s agents, but it is worth understanding the other types of agents and which parties they represent. There are three types of agency relationships you should know. Below we discuss buyer’s agents vs. listing agents as well as dual agents.
What is a Buyer’s Agent?What is a Buyer’s Agent?
As the name suggests, a buyer’s agent represents the home buyer, and that is who they owe a fiduciary duty. Therefore, the National Association of Exclusive Buyer Agents comprises solely brokers and agents representing buyers while following a strict Code of Ethics and Standards of Practice.
In representing a buyer’s interests, a buyer’s agent scours listings searching for those appropriate for their client, schedules showings, and conducts a comps analysis to help you formulate an offer if you like the property. They also negotiate the final price and advises you when it is appropriate to move on.
A home buyer does not pay the agent directly. Instead, their Buyer’s Agent split with the seller’s agent.
What is a Listing Agent?What is a Listing Agent?
It is important to remember that the seller has their representation. This person is called the seller’s agent or the listing agent. The listing agent and seller have a contractual arrangement. As a seller, if you do not like your agent or feel they are not doing the job properly, you are stuck with them for some time. The only way out before the contract’s expiration is for the seller’s agent to agree to end the relationship.
The listing agent is seeking the highest price but will consider other factors in consideration of their client’s interest. These include the buyer’s ability to pass the board’s interview and the strength of their financials.
What is a Dual Agent?What is a Dual Agent?
Now, this is where things get murkier. A seller’s agent can also serve as a buyer’s agent, creating a dual agency. In this case, the agent owes their fiduciary duty to both parties. While this creates inevitable conflicts, New York allows it to exist. The agent must inform the buyer and seller of the dual agency, but it raises questions on if they can genuinely maintain impartiality.
They are putting the buyer at a disadvantage. Remember, the seller compensates the agent with the payout based on the sales price. The agent has an economic incentive to enter into a dual agency since they collect the entire commission, typically splitting it equally with the broker. This contrasts with the usual situation where the listing agent divides their commission evenly with the buyer’s agent.
Buyer’s Agent vs. Listing Agents Final ThoughtsBuyer’s Agent vs. Listing Agents Final Thoughts
We recommend buyers have their exclusive representation. This way, there are clear lines, and it leaves no question of where the parties stand. Your agent, while collecting a commission, works solely for your interests. Similarly, if you are a seller, you want to ensure your agent has undivided loyalty to you.