What is limited agency?
Most people understand that a Buyers agent is the agent that represents buyer through a real estate transaction and the Sellers agent represents the Seller during the transaction. Buyers often don’t understand exactly what “Limited agency“(sometimes referred to as Dual Agency) is and how it will affect your sale or purchase. In Utah, the exact definition of Limited Agency taken directly from a Limited Agency Consent Agreement from the Utah Association of REALTORS® says:
“A limited agent represents both the seller and the buyer in the same transaction and works to help negotiate a mutually acceptable transaction. A limited agent has fiduciary duties for both the seller and the buyer. However, those duties are” limited. ” because the agent cannot provide undivided loyalty of both parties, full 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 buyer, and cannot disclose information that could weaken the negotiation to either party. position of the other; for example, the highest price the buyer will pay or the lowest price the seller will accept. However, a Limited Agent must disclose material information to both parties known by the Limited Agent with respect to a defect in the Property and / or the ability of each party to comply with the obligations agreed upon, and you must disclose the information provided to the Limited Agent in a confidential manner, by either party, if the breach of sclose would be a material misrepresentation with respect to the Property. ”
In Utah, it is legal to act as a limited agent, but in the best interest of the buyer or seller allow a limited agency? If you work exclusively with a buyer’s agent, that agent should be working to locate your home and negotiate the best deal on your behalf. They should be somewhat aware of your financial situation and how much you plan to ultimately spend for the purchase of a new home. The Sellers Agent is hired by a seller to market the property with the intention of producing a buyer. This agent generally knows the position of the sellers and how much they would be willing to take for the property.
This is where the conflict can present itself. If the Agent represents both the buyer and the seller in the same transaction, they are subject to fiduciary obligations to both clients. It would be impossible to get the best deal whether the representative should remain neutral. Negotiation will only result in a mutual “acceptable“Deal. This may or may not be the” best deal. “
A buyer’s agent, representing a client’s interest, will be able to share relevant information that they know and that may result in a lower offer than the client initially submitted. Alternatively, a Sellers Agent may discover that the buyer will likely accept an accountant that results in a higher net profit for the seller. The information learned can be shared during an exclusive agency; however, when limited agency is a factor, this information cannot be shared. In Utah, each client has the option of declining or accepting a limited (or dual) agency. The Exclusive Buyer Broker Agreement has a designated section that fully explains (and requires a signature to accept) Limited Agency. In addition, in the event that the Limited Agency situation actually occurs, the client will have to sign an agreement in this regard again. Each party (the buyer or the seller) has the right to obtain an independent agent.
Many clients often point to the fact that the Agent will be earning double the commission. This should not be a consideration for any of the parties involved in the limited agency. You have to remember that this agent will charge a commission on your listing no matter WHO sells it, and if the Agent is already working with the buyer, then whatever the buyer buys, the Agent will also charge a commission for that. Basically any deal could be “double commission” when an agent works with buyers and sellers independently. Therefore, it is unfair to make agents’ commission a factor or bargaining 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, as you will not have the full disclosure and advice of your limited agency real estate professional.