It’s the realtor’s ideal situation. They hold an open house for an existing client and you walk in. You love the house and are ready to make an offer but you haven’t hired an agent yet. The seller’s agent explains that he can be a dual agent. It makes sense since he can expedite the process and the savings on commissions he will negotiation might work in your favor when making an offer. With that said, there are risks of not hiring a buyers agent in New Jersey.
Too Nice in Compromise
When it comes to negotiating both the offer and the credits after inspections, you want a realtor who is ready to be a bulldog and make certain the other party understands your position. It is possible that a realtor in a dual agent scenario is not as aggressive in negotiating since he wants to keep both clients happy and get the deal to go through. After all, even if he isn’t thinking about the larger commission check, his subconscious is well aware that he makes more on the dual agent scenario than he does just representing the seller.
The dual agent usually has loyalty to the seller first. Again, this might not be fully conscious, but the seller trusted this person to list the house and put it on the market. His relationship is stronger since he has been working with the seller for a longer period of time. You are coming in as a third wheel to the relationship in a lot of ways. You need to be clear with the dual agent about his goals and your goals. Clarity prevents a lot of conflict from occurring.
Your dual representation agent could very well be performing to every real estate standard there is and maybe even exceeding it. But if something doesn’t come back in your favor, it could seem like the agent is favoring the seller over the buyer. For example, buyers often get very aggressive with requests after inspections demanding that everything is fixed or credited. In many cases, buyers agents explain to their clients that they are being unreasonable. If this happens in a dual agent scenario, the buyer can easily interpret this as the agent taking the seller’s side and not fully representing his interests.
No Negotiation Strategy
When in a dual representation scenario, the agent isn’t really able to give advice on how to approach a sale or negotiate the offer. After all, he can’t play the buyer and seller against one another. That would be unethical. When you have a buyers agent, you are able to get strategic advice on how to approach the purchase based on market conditions, the information you have about the house and even the sellers. You lose this type of advice when you don’t have a buyers agent working exclusively for you.
Not Always Legal
Because of the potential conflicts, many states don’t allow dual representation. You may want to check your New Jersey board of real estate agents to see if this is even an issue you need to consider in your area. If you are being told an agent can represent you and the seller in a state where it is illegal, this is even greater cause to run and file a complaint.