An Opinion by Al & Jenny

Real Estate Basics: The Buyer

The Real Estate Agent “Protocol”:

Agent Relationship: The “general” rule is that the agent showing the property becomes the “procuring cause” or sales agent. Because of this “protocol”, people should make it clear at “open house” visits that they are visiting on behalf of their chosen agent. This issue can become important if you sign a registration booklet and the open house agent calls you later or, at the time, you seek extensive information from the showing agent without politely disclosing you have an agent.

So, polite, first name identity, from a person attending an open house, is the most that is expected. Listing agents want their property shown. Often, an agent other than the listing agent conducts open houses to establish new clients.

For sale by owner property: I have never met an agent that becomes upset if a customer of theirs works directly with a non-listed Seller. We feel we have to earn the respect of our buyer through effective work. That said, from our biased position, from our experience, we have observed better “terms” of sale developed through an agent, even in this situation.

Another comment on this matter should be mentioned. Almost always, especially in this market, a by-owner property Seller wants to share a commission—they just do not wish to pay a full commission. We find splitting with Seller is almost always accepted, and the Buyer, in our biased opinion, gains more through effective agent representation and better property “red flag” disclosure.

A Controversy:

California law requires full disclosure of agency relationships between agents and clients. The public policy is to have the customer be aware if their agent also represents the other party. (I will not speak technically here, and it does get technical; I will only speak broadly since this issue is complicated.)

The theory spins around “conflict of interest”. For example, if the listing agent also represents a Buyer, they have knowledge of private information with both parties, thus putting them in a position to materially benefit one party over the other in negotiations.

For example, taking the open house situation once again: If the listing agent is holding the open house, which frequently happens, and if the unrepresented Buyer visits the property and develops an offer through that agent, there is a “dual agency” situation. If a low “offer” is made, the Seller may think his agent is biased against them; if the agent suggests a higher offer than the Buyer proposes, the reverse may occur.

This is a choice the Buyer must make at first contact with any “listing agent”. Simply making an offer with another agent in the same listing office may not solve this problem. Ideally it is always best to have separate buyer and seller agents from different real estate companies!