Calling a listing agent to see a house can present a variety of problems. The agent will usually anticipate that you're going to make the offer through them, not another agent, at least in states where agents are allowed to practice this type of dual agency. The agent will receive both the listing side and the buying side of the commission when this happens (sometimes referred to as "double-ending").
- A dual agent has a fiduciary duty to both seller and buyer, which can create a conflict of interest.
- You can end up in a dispute over commission and procuring cause if a listing agent shows you a property but you make an offer with a different agent.
- If you see a home with a listing agent but make an offer through another agent, this can damage your chances of getting your offer accepted.
- However, seeing a house with the listing agent can help you if they share more about the property than they would tell another agent.
The Problem With Dual Agency
A dual agent is one who represents both the seller and the buyer, and who should—at least in theory—have a fiduciary duty to each party. Fiduciary duty covers six major areas, according to the National Association of Realtors:
- Reasonable care and diligence
A dual agent is obligated to provide the "utmost care, integrity, honesty and loyalty" to both the buyer and the seller, and this can certainly be a conflict of interest if a listing agent who already has a fiduciary duty to the seller should take an offer to that seller on your behalf as the buyer. How can the agent attempt to simultaneous get you the best possible price and the seller top dollar as well?
The Issue of Procuring Cause
The issue of "procuring cause" is the main problem here. "Procuring" is a matter of which agent brought the buyer to the table in a successful transaction, and this agent receives the buying side of the resulting commission. Disputes can arise as to who this actually was when a listing agent shows a home to a prospective buyer who then turns around and makes the offer with a different agent.
Proving procuring cause can be a long, complicated process, but agents who sue over it are typically those who first showed the home to the buyer.
You might wonder, "Isn't that the job—to show their listings?" Yes, an agent is obligated to show their client's homes, but they typically show them to prospective buyers and their agents.
It only compounds the problem when there are two offers on a home. Which will be accepted? Will it be your offer or the other offer from another agent?
Listing agents tend to orchestrate offer acceptance with their sellers. Your chances of offer acceptance can suffer if the listing agent is peeved at you and at your agent for "stealing you" because the listing agent showed you the home, and your buyer's agent ultimately submitted your offer.
It takes a smooth-talking, fast-thinking buyer's agent to iron this tiff out and gain that agent's cooperation at this point.
A Buyer's Options
In most states, you have a right to choose and consent to the type of representation you want. You can work with:
- A seller's agent, who handles the list and represents only the seller and has no duty to the buyer
- A buyer's agent, who would only represent your best interests and has no responsibility to the seller
- A dual agent
- A facilitator, who doesn't represent anyone but steps in only to provide logistical advice, such as how to prepare a purchase agreement
You might be obligated to purchase the home through an agent if you sign an exclusive agreement to work with them under dual agency capacity.
The first thing a listing agent should ask you when you call to see a listed property is whether you're working with another agent. You can respond in a number of ways:
- "We're not working with an agent at this time, but we'll find a buyer's agent to represent us when we're ready to make an offer."
- "Yes, we're working with an agent."
- "No, we don't have an agent. Would you consider representing us?"
Agents ask this question to establish an agency relationship, so any other answer is likely to get you into hot water. The listing agent should back off if you say that you have an agent.
The One Upside
There is one positive aspect to looking at a home with the listing agent. The agent might tell you more about the property than they would disclose to another agent, either intentionally or by accident. They might even slip up and tell you whether the seller will accept less, although that's against the law in most states, because it's a violation of fiduciary duty.
Your best bet might be to be upfront and let the agent know whether you intend to work with them if you like the property. Don't make the mistake of leading the agent on, even unintentionally, because it can come back to bite you.
Frequently Asked Questions (FAQs)
What is a co-listing agent?
Sometimes listing agents work with partners or teams. In that case, each agent is a co-listing agent that shares responsibility for the home. This is common when family members work together, such as siblings or a parent-child duo.
What is the difference between a listing agent and a selling agent?
Listing and selling agents usually represent opposite sides of the transaction. The listing agent focuses on selling the home (unless they're a dual agent), and the selling agent represents they buyer. Listing agents are also called "seller's agents" because they represent the seller. Selling agents are also called "buyer's agents" because they represent the buyer.