Why Your Real Estate Agent Fails at His Job 9 Times Out of 10

avatarthumbnail.jpgThis is what happens when you find yourself parsing sentences at well past 11 p.m. in the evening

Continuing the line of thought from Tuesday’s post, here is the basic premise on which the argument against dual agency – the act of one real estate agent representing both buyer and seller in the same sale – is built:

“My job as the listing agent is to get the highest dollar amount possible for the home. My job as the buyers agent is to get the house for the lowest possible cost. Since these conflict, I can’t do both successfully.”

Except … if you’re job as a buyers’ agent is to help your buyers purchase a home for the lowest amount possible, you’re going to fail 99 times out of 100. And the flip side goes for the listing agent.

Follow my logic if you will:

A home is listed for $200,000. Your agent writes an offer for $180,000 and submits it to the listing agent. The seller counters back at $190,000. You gleefully move to the middle ground, accept the counter offer and everyone’s happy.

Did the agent who says her job is to help you purchase for the lowest possible amount do their job? Perhaps. Perhaps not. Let’s say this seller would have gone as low as $187,500 had then been pushed. Whether it was because your agent didn’t suggest countering back or because you decided $190,000 was fair, you didn’t purchase the home for the lowest possible price.

In short, your agent failed – at least if she positions her role as helping you purchase for the lowest possible price.

The truth is as a buyer you’re rarely going to purchase for the lowest possible price. And as a seller, you’re rarely going to sell for the most the market will bear. At some stage of the negotiations, the level just shy of the “highest/lowest” will become “good enough.”

Relating this back to dual agency, there is nothing in the process of one agent representing both buyer and seller that inhibits both buyer and seller from arriving at a price that’s “good enough.” In fact, it’s possible that by limiting the variables by having only one agent in the mix, the process goes more smoothly – both buyer and seller are staring at the same set of data, the same comps, the same interpretation of market condition.

How important can this be? Check recent answers on Trulia Voices and you’ll still see some agents proclaiming that the Phoenix real estate market is a buyers’ market when that hasn’t been the case for months. Not everyone has the same read on the market.

Of course, if an agent is out of touch with market reality, that theoretically disadvantages  both buyer and seller equally so at least both sides are equally blind as they negotiate.

Is there opportunity for unscrupulous behavior on a dual agency transaction? Absolutely. Does that reality doom everyone who dares practice dual agency to an eternity trapped in the charred walls of the damned? Absolutely not.

[tags]Phoenix real estate[/tags]

About Jonathan

Jonathan Dalton is a 30-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

  • Very interesting take Jonathan. Haven’t heard this particular take on dual agency before. As always, thanks for the thought provoking discussion.

  • It just struck me, Tiffany, that the debate always is framed as the two positions as being at crossed purposes but it’s really not. The buyer wants to buy what the seller wants to sell. Both want possession to change hands, which is the same goal even if the particulars are a bit different.

  • Yes…I am totally going to ‘mull’ over this. I have never practiced dual agency myself; have always referred out…but I am going to have to think on this for sure. Thanks –

  • Who says the job is defined as the highest/lowest price? Value measured by price may well be, and often is, foolish. If price was the only factor, everyone would buy the cheapest home by the railroad tracks, under the flight path by the airport, in a flood zone with termites, mold and a bad roof. View of the jail is a bonus.
    We must find and use the client’s values.

  • It’s always hard to see how low someone will go on a home, and how high they will go for property that someone will even nibble at. It’s a tough department!

  • Jim – I agree. I just see the highest/lowest argument used the most.

    Claremont – huh?

  • I don’t practice dual agency and haven’t since I started as an agent 5 years ago. The reason is that the nice agent we hired to help us buy and sell a house (before I was an agent) did do dual agency and we of course ended up in that situation.

    It wasn’t until I was in the middle of it, that I appreciated how skilled someone has to be to walk that line. I was completely displeased with the situation, felt we got poor advice, and felt she favored the buyers when we were the sellers. I think the problem is that most real estate agents don’t have the skill to walk that line.

    I know it is banned in CO and Oregon is heading that way too. I think that is a good thing.

  • If it ends up being banned then, naturally, there’s no debate. And I can see where personal experience leads you one direction or the other … for me, it’s new builds.

    Our first agent essentially drove us out to the builder, registered us and that was it. Didn’t do much of anything when we wrote the contract, never heard from her again. Even checking in once or twice or suggesting professional home inspection would have been nice.