When someone decides that it is time to sell their home, they usually interview several real estate agents from different companies, to determine which one is best for them. They want someone who will be able to represent their best interests and someone that will be able to do an effective job at marketing their home.
But when someone decides to buy a home, they usually end up with their real estate agent through sheer accident. Homebuyers usually end up with a real estate agent as a result of answering an advertisement of some kind. The advertisement would usually give a brief summary of a home available for sale, along with the price, but it says nothing at all about the real estate agent. Very few people actually buy the house they call about.
Why don't homebuyers search for the best real estate agent for them, in the same way that home sellers do?
Why Real Estate Agents Advertise
Real estate agents place ads for several reasons. They need to show their sellers that they are doing something to sell their homes. By showing how much they advertise, they can also attract other individuals who are thinking of selling their homes.
They point to their ads to show their clients that they are aggressively marketing the property. When other home sellers constantly see ads from a particular real estate agent, they are inclined to want to list with that real estate agent, too. So even though the ads look like they are directed toward homebuyers, they often have another purpose: To attract home sellers.
What sellers don't realise is that a listing agent's true marketing emphasis is often directed toward other real estate agents, not the general public. Their main goal is to convince the selling agents (buyer's agents) to find buyers and make offers. Much of a listing agent's marketing efforts toward other real estate agents are invisible to the general public, but it is where an effective listing agent can do a home seller the most good.
Real estate agents (buyer's agents) do advertise homes for sale in order to attract buyers, too. Although the ads do market a specific property, they are mostly intended to attract buyers in general, not a buyer for that specific property. The agent would be happy if you did buy the property you called on, but it happens so rarely that they do not expect it. Real estate agents know this. So they like advertising properties in the mid range of their available stock properties. This improves the chances of matching buyer "leads" with a suitable property.
What happens when you call on a real estate ad is that you often schedule an appointment to go look at the advertised home. While you are out looking at that home, you will probably want to look at others, so the agent will show you a few other homes, too. Eventually, you and the real estate agent will zero in on what you need and like, in the proper price range, and you will make an offer to purchase. That is how most buyers find their real estate agents, by "accident".
Two "sides" to every sale
There are two sides to every property sale. The listing agent, the real estate agent that is employed by the seller to market the property, represents the seller's side. A listing agent obtains a mandate from the seller to find a buyer for the property. This real estate agent is obliged to represent the seller's best interests, not the buyer's.
A selling agent should in my opinion, represent the buyer's side. The selling agent may also be referred to as the buyer's agent. Selling agents (buyer's agents) should not have a mandate to market the property. They should represent the best interest of the homebuyers, and even obtain a mandate from the buyer, to find a property that fits their specific criteria.
If you call a real estate agent from a classified advertisement in a newspaper, an ad in one of those home selling magazines, a listing on the Internet, or from a "For Sale" board in front of a house, you are most likely calling the listing agent.
For argument's sake, suppose that you call the real estate agent who is advertising the property you might be interested in, and it turns out to be absolutely perfect property. And suppose the property is quite affordable to boot, and you want to make an offer. Do you really want the same agent who represents the seller to also represent you?
Conflict Of Interest
I think that property buyers and sellers are often not even aware about the conflict of interests that a single real estate agent deals with in representing both the seller and the buyer in a real estate transaction. When you make an offer to buy a house, you are entering into negotiations with the seller. The seller wants as high a price as possible, and the buyer wants the lowest price possible. Can you spot the conflict of interests?
There is more to buying a house than just settling on a price, though. Things like occupation dates, occupational rental, fixtures and fittings and tons of other aspects of buying and selling property play an important part in negotiating the sale.
Let's face it; real estate agents aren't exactly priests or judges. They have a vested interest in the sale of a home. To expect them to truly protect the seller's interest above that of the buyer, when their commission is in the balance, may be too much to expect of many a person. And buyers should be really concerned, because the real estate agent works for the seller, not the buyer, even though they will get paid from the price the buyer forks out for the property.
If a single real estate agent has to represent both parties, there is clear a potential for conflicting interests, although an ethical real estate agent should be able to protect the sellers interests, while giving due regard for those of the buyer. But this is a long way from representing both parties equally. Even if the real estate agent manages to represent both parties equally, without breaching the real estate agents code of conduct, the agent becomes more of a transaction facilitator than a real estate agent working actively on behalf of either the buyer or seller.
You must keep in mind that there are times when it might not work out, too well. The listing agent may choose to represent only the seller in negotiating the sale, and that would leave you without your own advocate.
Agent Reality
Most real estate agents concentrate primarily on one side or the other, anyway, but real estate agents, by definition, normally represent the seller. There is no "hard and fast" rule that their own real estate agent should represent each party, but doesn't it make sense?
There would be two different agents, with different skills and training, who would be able to spend their time exclusively on the buyers or the sellers. I mean, if you are buying a home, whom do you want on your side? A real estate agent who deals primarily with sellers, and with lots of experience looking after sellers' interests, or one who deals mostly with buyers, with lots of experience in protecting buyers?
Sharing Commission
The commission paid at the sale of a property is often shared between more than one real estate agent, or agency, anyway. So, nothing would prevent a two-agent model like this being implemented, except the practice of excluding other real estate agencies from introducing a potential buyer to a property under a sole mandate, or exclusive mandate.
Use Your Own Agent
Most real estate transactions generally go down fine, even without an agent to represent the buyer's interests. But almost every last one of the real estate transactions has a challenge or two. These challenges are often routine, but sometimes they are not. Because the agent has divided loyalties, one side or another may doubt where those loyalties truly lie. Mistrust develops and this can blow a small problem way out of proportion. At that point, the conflicting interests become a crisis, and lawyers get drawn in, because deep down, buyers realise that it is better to have someone with extensive knowledge of real estate transactions on your side.
Having an agent on your side as your advocate removes the mistrust and helps keep things on an even keel. If a challenge develops, you'd know where your real estate agent stands.
