Traditionally in residential real estate, the listing brokerage represents the seller, and facilitates the needs of the buyer; however, they do not represent buyers. The fatal condition known as dual agency creates legal problems for real estate brokers, as well as parties to the transaction.
Solution: Buyer’s broker
A Buyer’s broker can access MLS listings, conduct a property search and negotiate terms of purchase like any other real estate agent. They just do these things from a buyer’s perspective rather than the seller’s.
So, who pays the commissions? Ultimately, commissions do not exist unless the buyer pays the seller for the property. Traditionally, the seller then distributes a commission to their listing broker, who distributes the money to participating brokers and agents. Often, if two brokers are involved, the commission is split within the closing documents and disbursed separately. The same process occurs with a buyer’s broker.
Dual agency occurs when one broker represents both sides of a transaction. The conflict of interests places the broker in the awkward position of negotiating a compromise when they are intimately knowledgeable with the emotional and financial states of both parties, and the broker has both sides of the commission at stake.
The listing broker may assign two different agents to represent the sides of the transaction, and all real estate agents and brokers must treat both sides fairly and honestly.
The buyer’s broker, however, represents only the buyer. This practice has gained respect over the past decade. Buyers are now more aware of their options, responsibilities, and the brokers qualify them better since they need to bring legitimate buyers to the table to get paid.
Home selling or buying can be an emotional transaction. Specialist brokers have the experience to deal with problems associated with obtaining financing and the purchase process, or letting go of the home.