Here’s a question that I see consistently popping up on real estate forums, my email inbox and in conversations on the telephone:
I really like this house, do I have to use the agent that listed it to”¦ [insert one or more of these here: show me the home, represent me as my agent, write the offer].
The short answer is no, you do not have to use the listing agent for anything.
The long answer is you don’t want to use the listing agent. Here is why”¦
Any licensed real estate agent can show any home listed for sale in the Multiple Listing Service (MLS). Just because the for sale sign says, “Century 21”, “RE/MAX”, “Thompson’s Realty” or “Joe’s Generic Real Estate Company” doesn’t mean only those agents can show you the home. Most homes for sale in the Phoenix real estate market are in the MLS, and most have a lock box that allows any agent access to the home (well, any agent that pays for a lockbox key or access to the combination for agents who still use combo boxes from the dark ages).
In fact, if you use the listing agent to show you the home, you likely have just taken the first step toward enabling a confusing (and potentially expensive) agency relationship issue in what the real estate industry calls “Procuring Cause”.
The “book definition” of procuring cause is, “the uninterrupted series of causal events which results in the successful transaction”. Real estate agents get paid their commission if they are considered the procuring cause of the sale. Erroneously, many agents think simply showing a home entitles them to be deemed the procuring cause in a sale. That is not really the case, but having a listing agent show you a home can (and usually does) start the ugly spiral toward a procuring cause claim. And there are certain scenarios where a buyer (that’s you) might have to fork over a payment for commission that normally the seller would be paying for.
Don’t muck up the procuring cause. Use YOUR agent to show you homes. Don’t call listing agents, don’t go to open houses on your own, and don’t step into a new home builder showroom without first consulting with YOUR agent.
Representation / Writing Offers
The listing agent represents the SELLER. They have a contractual and fiduciary duty to the SELLER, not to you the BUYER. What do sellers want? They want the most money for their home with the least amount of pain. Fundamentally, the listing agent’s job is to get the seller the most money. If they are working for the seller, trying to get them the most money they can, how can they possibly represent you ”“ you who wants to pay the least amount possible for a home.
Oh, some will claim they can fairly represent both sides of the transaction. Many agents like representing both parties in a transaction because then they get both sides of the commission ”“ a double payday if you will.
Dual agency ”“ where one agent represents both the buyer and a seller in a real estate transaction ”“ is legal in Arizona (and many other states). But just because something is legal doesn’t mean it is right, or a good idea. Here’s an often used analogy ”“ if you were being sued in court by someone, would you use the same attorney that the guy who is suing you is using?
Of course you wouldn’t. And you shouldn’t use the same agent to help you buy a home that represents the person you’re trying to buy it from.
(Of note, dual agency ”“ in Arizona ”“ also technically occurs when the sellers agent and buyers agent work in the same real estate brokerage. This is often unavoidable, and is not as problematic as using a single agent for both parties.)
So, what is a homebuyer to do?
Find YOUR agent BEFORE you go out looking at homes. Secure your representation first, and you won’t have to concern yourself with accidently winding up being represented by a listing agent.
How do you find an agent?
In the Phoenix metro area, you literally have tens of thousands of licensed agents to chose from. Many are absolutely brilliant and will represent you competently and efficiently. But let’s be realistic”¦ with the absurdly low barrier to entry to get a real estate license and given the shear number of licensed agents in these parts there are plenty that aren’t so swift.
Ask your friends for recommendations. Look around on the Internet. For example, search for “Houses For Sale” and something’s bound to pop up. Read agents blogs and websites to get a feel of who they are and what they know. Pick three or four agents and interview them. Ask them about their philosophy toward clients, ask them for references from past clients. Trust your gut. Most people have pretty finely tuned BS meters and you’ll know when you’re being fed a line. If you want to Find a Beautiful Home, pick an agent that you feel comfortable with and let them help you.
Any agent can show any home. Any agent can write an offer on any home. Chose YOUR agent up front and let YOUR agent show you homes, mine the data, and contact the listing agent. That’s what we do. Why use someone else’s agent, especially the agent representing the person who owns the home you want?