Monday, July 30, 2007

Open Response to Article: Discounters are Changing Ways of Doing Business

exclusive buyer agent, exclusive buyer's agent, exclusive buyers agent, real estate, real estate industry

This is in response to an article dated July 29, 2007 entitled, "Discounters are changing ways of doing business."

In particular, to the following:

"The primary source of contention between the rest of the real estate industry and Redfin is that the company lists 'days on market' and price reductions on its Web site - information that agents do not offer until they have an exclusive contract with a buyer."

There seems to be some confusion here, because the majority of real estate professionals do not use exclusive buyer agreements with buyers. However, exclusive listing agreements are regularly used with sellers to list their properties.

Exclusive buyer agency agreements are mostly, if not totally, used by exclusive buyer agents and brokers, who work for companies that only represent buyers. These companies never take listings. The exclusive buyer agency option helps buyers avoid dual agency completely. There are some exclusive buyer offices that will offer FULL service and representation to buyers for the same amount of money a company like Redfin charges for limited services.

A company like Redfin also takes listings, so when a buyer makes an offer to buy through such a company, and the same company holds the listing of the subject property, the company becomes a dual agent. Dual agents are required to remain neutral between buyers and sellers in the same transaction. This can become a problem when a conflict arises between the two parties. Buyers and sellers must give their mutual consent to dual agency, which is unwise because it is a conflict of interest.

Dual agency is a conflict of interest, because when a buyer chooses an agent, they will expect their agent--and their agent's company--to represent their financial interests. Buyers want the lowest price possible, at the best possible terms in their favor. Conversely, a seller will expect their agent--and their agent's company--to negotiate for the highest price possible, at the best possible terms in their favor.

When a buyer and seller are represented by the same agent, or respectively by two different agents of the same company, these expectations are conflicting. This is dual agency, aka. dual representation. More consumers are becoming aware of the risks surrounding this agency option.

More Information Sources About Dual Agency:

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