Listing REALTOR® vs Buying REALTOR®: Which is the Best Choice for Calgary Alberta?

Posted by Lana Waller on Wednesday, December 12th, 2018 at 11:54am

Listing REALTOR® vs Buying REALTOR®

When you’re dealing with buying a home you may wonder which is a better choice for you.  Should you deal with, the Listing REALTOR® vs the Buying REALTOR®?  It’s always advisable to have your own REALTOR® and not go to the listing REALTOR®. This is because there are aspects under the Laws of Agency in Alberta that can put buyers who go to the listing REALTOR® at a real disadvantage in my opinion.

How will this affect me?

When a member of the public goes directly to the listing REALTOR®, it puts the listing REALTOR® in a position where he represents both sides or also referred to as dual agency. The question that comes up under the law is, “How can the listing REALTOR® possibly represent both parties equally and fairly?” Because of this, when the listing agent represents both the buyer and seller, he/she becomes a facilitator, and cannot legally give advice in the same way he or she could if they represented only one party.

Two of the biggest points on this are price and motivation. A buyer always wants to know the seller’s motivation This is something the buyer’s agent can try to find out, but by law, the listing agent can’t discuss price and motivation with the buyer.

Consider the following scenario:

The listing REALTOR® shows the buyer the property and the buyer loves it. The buyer, looking for expert advice, asks the listing REALTOR®, “How much should I offer?” The listing REALTOR® has to, at that time explain that he/she cannot discuss price or motivation and therefore can’t answer the question of how much the buyer should offer or why the seller wants to sell.

The only thing the listing REALTOR® can do is provide a list of homes that have sold in the area and at what price, but can’t discuss the price on the specific home since he/she represents both the buyer and the seller.

What does this mean for a Buyer?

The inability of the listing REALTOR® to discuss price puts the buyer in a position of not knowing exactly what to do.  The buyer does not have the market knowledge and market trends and inventory levels so the buyer might pay more for the house than having an experienced agent could negotiate and advise them about.  The buyer then has to do his best to figure out how much to offer. When the home buyer decides on a price the listing REALTOR® then communicates that to the seller.

What does this mean for a Seller?

The seller then naturally wants advice from the listing REALTOR® regarding how much he/she should counter. At that point, the listing REALTOR® must say to the seller, “I cannot discuss price or motivation because I’m working with both sides here.”  The seller has been already working with the Realtor so will have discussed the selling range for the home and received more advice during the relationship so will know what similar homes in the area are selling for as well as have an understanding of the current market from their Agent.

At that point, the seller might come back and say, “OK. Well, I’ll counter with this number back to the buyer.” And then the buyer will end up trying to figure out for themselves if they want to counter back or accept the price and conditions  The buyer and seller will go back and forth until they hopefully end up somewhere in the middle. There cannot be any advice from the listing REALTOR® through that process. 

Negotiating price is a very important matter, and one of the most valuable assets you get with an expert REALTOR® working for you.

In contrast, if both parties are working with their own REALTORS®, the buying REALTOR® will come in and run all the stats. He will also investigate the market to see which house the seller used as a direct comparable in order to price the house in the first place. That important piece of information is available to Realtors and obtaining it is part of the advice that the buying agent will give to the buyer throughout the process in order to get them the best possible value and to ensure they don’t pay more than necessary.

What motivates people to want to work directly with the Listing Agent?

The thing that motivates people to go directly to the listing REALTOR® is they often think they’ll get a better price and less commission will be paid since only one REALTOR® is involved. 

However, this isn’t generally the case because there is a good chance the listing REALTOR® has already negotiated a lesser commission with the seller if they happen to bring their own buyer. I get this question all the time when listing a property as most Agents probably do.

On top of that, when the buyer goes directly to the listing agent, he/she are put in a position where they can’t receive any advice on price. Additionally, the listing REALTOR® already has some degree of relationship with the seller and in fact, the seller could be a second, third or fourth time client for them or a friend and they may naturally feel more loyal to the seller. This is a big issue under the Laws of Agency.  You can read more about this on the brochure provided by RECA (Real Estate Council of Alberta) HERE

For important information, click the link if you are a First Time Home Buyer or visit our Home Buyer page for additional information for home buyers. If you are ready to start your search, don't miss your dream home when it goes on the market. Simply fill out the short criteria form and we will get to work to send you property matches today.

 

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