They aren’t all crazy! The conventional wisdom is that the buyer needs to be properly protected in a real estate deal and have their own agent on their side. Anything else is risky. Then, we have the comparisons to lawyers etc.
However, there are some good reasons why a Buyer would want to choose the Listing Agent.
- Nullify the Agent’s role.
The Agent for the Seller starts out solely and only protecting the Seller’s interests. Naturally, if this Agent were a particularly astute and experienced negotiator, it would make utmost good sense for the Buyer to completely eliminate them from this role.
That’s simple. All the Buyer has to do is hire them and become a client. Now, the agent is just like a courier or messenger between them, and cannot prefer the interests of one over the other.
- Require Increased Disclosure.
The Agent must investigate, determine and verify the material facts on behalf of their client. This means that if the Listing Agent knows something about the property they must disclose it, and if they don’t then they have to find out.
- Ensure there are no Hidden Defects.
Let’s assume that the property was a remediated marihuana grow house. The Seller told the Agent not to tell, simply let prospective buyers find out on their own. If they don’t discover this, then, that’s their problem.
If the Listing Agent were prepared to take on the Buyer as a client, then, obviously, they are not trying to hide anything. Otherwise, if they were, the Listing Agent would tell the prospective Buyer to retain their own Buyer’s Agent.
- Secure a Financial Advantage.
There might be some extra money in the deal somewhere. Frequently, the overall commission will be reduced if the Listing Agent double-ends the deal. This might permit the Seller to reduce the price. The Listing Agent might pay for something on behalf of the Buyer or offer the Buyer a cashback incentive.
Changes to REBBA
All in all, it’s quite possible for a prospective purchaser to be better off using the same Agent as the Seller.
This is an issue which will be addressed in the upcoming changes to the Real Estate and Business Brokers Act, 2002. RECO wants multiple representation to be eliminated. OREA wants it to remain as a possibility, with some additional paperwork. In due course, we will look at the changes introduced under the new Act.
Brian Madigan LL.B., Broker