What You Need to Know About the Seller's Agent
If you're a home buyer you need to understand the different types of agency & how they affect you. Learn about seller's agent, dual agency & sub-agency.
If you've been to an open house then you've met a listing agent, also known as the seller's agent. They were helpful, provided substantial information and may have even asked about what you were looking for in a home.
But make no mistake about it, the listing agent is working for the seller, not you the buyer.
The Seller's Agents Has Fiduciary Duty to the Seller
First, buyers need to understand what fiduciary duty is. Fiduciary duty is a legal obligation to act in the best interest of another person with the obligated individual being the fiduciary. In real estate the listing agent is the fiduciary for the seller and their legal obligations are owned to the seller exclusively. They have signed an agreement that says the seller comes first in all their considerations.
That is why it's so important for buyers to have their own buyer's agent that is legally obligated to act in their best interest. In fact, the Oklahoma Supreme Court found that:
“Sellers agents and dual agents do not and cannot by law give a buyer the same degree of loyalty as an agent who acts on behalf of a buyer…A buyer who relies on the seller’s agents or on dual agency does not receive the same degree of legal protection as that afforded by an agent acting solely on behalf of the buyer.” (Kenneth Snider v State of Oklahoma Real Estate Commission No.88,197, (Oklahoma State Supreme Court, June 1, 1999.)
The Role of the Seller's Agent
Put simply the listing agent's job is to sell a home.
- They market the home and advice the seller on pricing during the listing phase.
- They present offers and negotiate exclusively on the behave of the seller.
- The seller's agent handles any additional amendments while making sure that all deadlines and requirements are met so the contract will make it to the closing table.
Everything the seller's agent does is working towards getting their client the best possible price and conditions on the sell of their home. They won't divulge information that might hurt the sell of the home and isn't legally required to be disclosed.
They will, however, take note of anything you tell them that may help them get a more favorable purchase agreement for their client.
Dual Agency Difficulties
Perfect case scenario for some seller's agents is to represent both the seller and buyer as a dual agent. This isn't allowed in some states because of the conflict of interest it can create. The seller was their original client that they have been working with, possibly for months. Chances are a dual agent's allegiance is going to lie with the seller, not the buyer.
Unless you don't mind getting caught in a dual agency situation, it's best to not take any actions that could lead to the seller's agent claiming that they were the procuring cause of a sale. John F. Sullivan, Vice-President & Associate Broker of Buyer's Edge Co., Inc. explains that:
He goes on to discuss this in relationship to the open house scenario used at the beginning of this article. "The efforts of the agent at the open house may be seen as part of the series of events setting the foundation leading to a sale. By going to an open house [without having a buyer's agent already] the buyer may lose their option to be fully represented in the transaction. This entitles them [seller's agent] to the full commission of the sale."
The Sub-Agent Pitfall
If you're working with a buyer's agent but haven't yet signed a buyer's agent agreement then in actuality that agent owes you no fiduciary duty. You are a customer, not their client. Technically they are a sub-agent of the seller's broker which is a serious disadvantage for the buyer. As sub-agent their fiduciary duty is to the seller not the buyer and they would have to disclose information you have shared with them to the seller's agent/broker.
If you would like more information on how to avoid these issues read our article on finding and working with a buyer's agent.