Who’s Agent are you anyways?
On April fools, as would be appropriate, the Real Estate Cafe had a great blurb on the meaning of agency in real estate. It’s an often misunderstood subject that has little in common with the advertising agency, for example, that most of us are familiar with. In real estate, agency is basically about who you are working for - ie are you a buyer’s agent, or a seller’s agent?
Wouldn’t you know that this seemingly simple idea is greatly complicated by the common practices of the real estate industry, in which it is not uncommon for an agent to be both a buyer’s agent AND a seller’s agent in the same transaction… a conflict of interest, perhaps?
Ok, so you’re thinking that you just need to make sure that you have your own agent, right? Unfortunately, the potential for a conflict of interest doesn’t end there. The problem is that the general practice of the buyer’s agent being paid a commission out of the selling price is actually incentivizing the buyer’s agent to encourage the buyer to pay a higher price because then they get a higher commission.
So what do you do? As is often the case, there’s no easy answers, but a good please to start is the association of Real Estate Agents for Real Agency’s pamphlet on the subject.