Buyer Beware Dual Agency

I have noticed a new trend of Multiple Representation – buyers wanting to buy only with the listing agent.  Popular opinion seems to recommend that dealing with the seller’s agent would be advantageous.  The thinking is that if the buyer uses the listing agent, they will get a deal as the commission might be less if the agent is acting on both sides. Also, the buyer’s agent will have inside info on the Seller and that will help make a better offer.  Let’s have a look at the reality and the pitfalls of buying with the Seller’s agent.

In Ontario, it is legal for a realtor to represent both the buyer and the seller in a real estate transaction. This representation is called multiple representation. When undertaking multiple representation, the agent is obligated to confirm in writing that both parties understand and consent to this representation and that they will do their best for both the Buyer and the Seller in the transaction. Your realtor® is called upon to wear two hats and have two equally divided loyalties.  Confusing and not an easy task.

To be clear, the listing agent represents the Seller’s interests. The responsibilities to the Seller include negotiating the best price and terms for the seller. The buyer’s agent is representing the interests of the buyer.

The idea that a buyer will benefit from using the Sellers agent as they will achieve a better sale price because the agent will reduce commission as they are acting for both parties ) and ultimately this will benefit the buyer is not true. The Seller pays the commission. Buyers cannot negotiate the commission. That agreement was arrived at when the Seller and the real estate salesperson signed the listing agreement stating the terms of remumeration. If the seller’s agent also represents the buyer, it is the Seller that benefits (more cash in the Seller’s pocket).

When the buyer is looking at comparable property sales trying to establish values, remember that it was the listing agent that worked with the Seller to establish the listing price. They have skin in the game so to speak. The Seller’s agent will in all probability not point out the traffic noise, boat traffic on long weekends and that the neighbours host rentals all season.  The goal of the listing agent is to do the job they were hired to do – sell the property. It does not necessary mean selling the buyer the right house, it means selling this house.

From the real estate salesperson’s perspective it is difficult, if not impossible, to get the most money and make the best deal for the Seller while trying to help the buyer get the lowest price and the best deal.  This complicated balance can make things very tricky. An experienced realtor® tries to create as much transparency as possible, but this is a difficult tightrope to walk.

As an experienced Broker I have represented many buyers and sellers in dual agency over the years. I do this with caution and with lots of documentation. I do my best to stand back and become a facilitator for the transaction.  It does place me as the Seller’s agent in a complex situation. Dual agency doesn’t mean that a buyer will buy the wrong spot or pay too much, but it does add multiple complexities. If considering using the Seller’s agent, a buyer must ensure that the agent is very experienced, ethical and knowledgeable. In dual agncy, your buyer agent cannot give you the advice they may provide if they were not the listing agent.  Be aware and understand dual agency and discuss your expectations with your agent right at the beginning.  Buyers need to be wise and to understand the implications of using the Seller’s agent.


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