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Traditionally, buyers will stop at a house for sale and be shown the property by an agent sitting there. The problem with that approach for buyers is that the broker sitting there is almost always the listing broker. And the listing broker represents the seller.
Buyers must be careful what they say to a listing broker. The listing broker's role is not only to find a buyer, but to get the highest price and best terms possible for the seller. This broker is required to inform the seller of any facts that could influence the seller's decision about whether to accept an offer and at what price.
For example, a buyer who mentions to the listing broker the amount of mortgage the buyer can obtain may as well consider that he's told this information to the seller directly. The listing broker is usually obligated by law to pass along this information to the seller.
In some cases, a listing broker will say that he can represent both the buyer and seller fairly. This creates a situation called "dual agency."
Dual agency is a legal term that describes a situation where one agent represents opposing parties to a transaction. Dual agents are required by law to keep each party's information confidential from the other. However, it is difficult to understand how a dual agent can negotiate to a buyer's best benefit when any compromising information the agent learns about the seller's bargaining position must be concealed from the buyer.
Instead of being a negotiator, the dual agent's role is really more that of a liaison or facilitator, someone whose job it is to simply fill out paperwork and act as a "go-between." It seems fairly obvious, then, that no agent can represent a buyer or seller more effectively than a broker who declares for just one party or the other.
Some buyers opt for this "dual agency" approach thinking they will shave money off their favorite home's purchase price because the dual agent will receive a reduced fee from the seller. However, commission is not normally affected by how many agents are involved in a transaction. The fee is a fixed percentage or amount that is determined by the seller's listing contract. In Oregon, listing contracts are not owned by individual agents or brokers, but by their firms. Getting a firm's
owner or manager to agree to renegotiate the contract and reduce the fee after a legitimate offer has been tendered is often difficult, if not impossible.
It is almost always more effective and prudent for a buyer to approach saving money in his or her purchase through getting the lowest possible price and best possible terms. These can only be obtained through skillful negotiations. This is not the job of the broker whose sign is in the front yard. If that broker is not working solely for the buyer, then the value of that broker's representation is really questionable.
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