Who’s Looking after Whom?
Q: We have recently sold our house and bought another. Dealing with different sides of these two real estate transactions has been a little confusing. When we sold we dealt exclusively with the agent we were selling with, but when we bought we used a buyer’s agent and yet we still had dealings with the seller’s agent? I’m interested in whose best interest’s agents are meant to represent.
A: Great question Danny. Real estate salespeople tend to operate in three ways:
- Representing only you.
- Representing another party (a prospective buyer) involved in your sale.
- Representing both sides – the buyer and seller.
Also called a listing agent, the seller’s agent works for the person selling the home. The agent will list the home, hence the name, and will work to find buyers and eventually sell the home. The owner of the home typically pays the seller’s agent a commission in the form of a portion of the sales price.
In this case, the agent owes the seller undivided loyalty, reasonable care, obedience to lawful instruction, disclosure, confidentiality, and accountability. A seller’s agent must put the seller’s interest first. They must attempt to negotiate the best price and terms acceptable to the seller. While doing this they must treat all potential buyers fairly: They cannot be dishonest or misleading in their dealings with prospective buyers.
Kiwis tend not to use true buyers agents: A buyer’s agent works exclusively for the buyer, not for the seller, and most importantly, is paid a commission or fee by the buyer. Buyer’s agents can be quite helpful for buyers who are out of town, or not resident in NZ.
What often happens in NZ is that a buyer will see a house they like and will ask a real estate salesperson who they know and trust if they can show them the property. The salesperson will then contact the listing agent to see if they can do a conjunctional (i.e. split the listing agent’s commission). This is usually at the discretion of the listing agent, but in the interests of getting their client’s home sold most will agree. If successful the agent representing the buyer will then be paid a portion of the listing agent’s fee. They have a responsibility to both buyer and seller but will obviously be focused on making your purchase of the property as simple as possible.
I hope that helps – the main thing is that all agents have a responsibility to treat everyone in a real estate transaction fairly and honestly, whatever their role in the transaction.