Business

What is limited agency?

Most people understand that a buyers agent is the agent representing buyer through a real estate transaction and the seller agent represents the Seller during the transaction. Buyers often don’t understand exactly what”limited agency(sometimes called dual agency) and how it will affect your sale or purchase. In Utah, the exact definition of limited agency taken directly from a Utah Association of REALTORS┬« limited agency consent agreement reads:

“A limited agent represents both the seller and the buyer in the same transaction and works to help negotiate a mutually agreeable transaction. A limited agent has fiduciary duties to both the seller and the buyer. However, those duties are “limited” because the agent cannot provide for the undivided loyalty of both parties, total confidentiality and full disclosure of all information known to the agent For this reason, a limited agent must remain neutral in representing a seller and a buyer, and cannot disclose to either party information that could weaken the other party’s negotiating position, such as the highest price the buyer will pay or the lowest price the seller will accept However, a limited agent must disclose to both parties information known to the limited agent regarding a defect in the property and/or the ability of each of the parties to perform r with the agreed obligations, and must disclose information given by either party to the Limited Agent on a confidential basis, if failure to disclose would be a material misrepresentation with respect to the Property.”

In Utah, it is it is legal to act as a limited agent, but is it in the best interest of the buyer or seller allow a limited agency? If you work exclusively with a buyers agent, that agent should be working to locate your home and negotiate the best offer on your behalf. They need to be aware of your financial situation and how much you ultimately plan to spend on a new home. The seller’s agent is hired by a seller to market the property with the intent of producing a buyer. This agent usually knows where the sellers stand and how much they would be willing to accept for the property.

This is where conflict can arise. If the Agent represents both the buyer and the seller in the same transaction, he is bound by fiduciary duties to both clients. It would be impossible to get the best deal whether the representative should remain neutral. The negotiation will only result in a mutual “acceptabledeal. This may or may not be the “best deal.”

A buyer’s agent, representing a client’s interest, may share relevant information that they learn that may result in a lower offer than the client initially submitted. Alternatively, a seller’s agent may discover that the buyer is likely to accept a counterattack that results in a higher net for the seller. Learned information can be shared during exclusive agency, however, when limited agency is a factor, this information cannot be shared. In Utah, each client has the option to decline or accept limited (or dual) agency. The Exclusive Buyer Broker Agreement has a designated section that fully explains (and requires a signature to accept) Limited Agency. Also, if the Limited Agency situation really arose, the client would again have to sign an agreement for this. Each party (buyer or seller) has the right to obtain an independent agent.

Many clients often point to the fact that the Agent will earn double the commission. This should not be a consideration for any of the parties involved in the Limited Agency. You must remember that this agent will charge a commission for your listing no matter WHO sells it, and if the Agent is already working with the buyer, whatever the buyer buys, the Agent will charge a commission for that as well. Essentially, any deal could be a “double commission” when an agent works with buyers and sellers independently. Therefore, it is unfair to make the Agents’ commission a factor or a negotiating tool for either party.

Limited agency… should you participate? I guess it depends on how well you know your Agent. Will you get the best deal? Possibly. You may have to rely on some of your own instincts and research to determine what the best deal will be, since you won’t have full disclosure and advice from your limited agency real estate professional.

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