Limited Agency...Should You Participate?

Most people understand that a Buyers Agent is the agent that represents a buyer through a real estate transaction and the Sellers Agent represents the Seller during the transaction. Often, buyers do not understand exactly what "Limited Agency" (sometimes referred to as Dual Agency) is, or how it could potentially impact their sale or purchase. In Utah, the exact definition of Limited Agency taken directly off a Limited Agency Consent Agreement from Utah Association of REALTORS® reads:

  "A Limited Agent represents both seller and buyer in the same transaction and works to assist in negotiating a mutually acceptable transaction. A Limited Agent has fiduciary duties to both seller and buyer. However, those duties are "limited" because the agent cannot provide to both parties undivided loyalty, full confidentiality and full disclosure of all information known to the agent. For this reason, a Limited Agent must remain neutral in the representation of a seller and buyer, and may not disclose to either party information likely to weaken the bargaining position of the other; such as, the highest price the buyer will pay or the lowest price the seller will accept. A Limited Agent must, however, disclose to both parties material information known to the Limited Agent regarding a defect in the Property and/or the ability of each party to fulfill agreed upon obligations, and must disclose information given to the Limited Agent in confidence, by either party, if the failure to disclose would be a material misrepresentation regarding the Property."

In Utah, it is legal to act as a limited agent, but will it be in a buyer or sellers best interest to allow a Limited Agency? If you work exclusively with a Buyers Agent, that agent should be working to locate and negotiate the best deal on your behalf. They should be somewhat aware of your financial situation and how much you ultimately plan to 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 is usually aware of the sellers position and how much they would be willing to accept for the property.

This is where the conflict may occur. If the Agent is representing both the buyer and the seller in the same transaction, they are bound by fiduciary duties to both clients. It would be impossible to obtain the best deal if the representing agent must remain neutral. The negotiation will only result a mutually "acceptable" deal. This may or may not be the "best deal".

A Buyers Agent who is representing their clients interest, will be able to share pertinent information they learn that can result in a lower offer than the client would have initially presented. Alternatively, a Sellers Agent may discover the buyer will likely accept a counter offer resulting in a higher net to the seller. Information learned can be shared between Agent and Client during an exclusive agency, however when Limited Agency is a factor, this information can not be shared.

Occasionally buyers and sellers point out the fact that the Agent will be making double the commission. This should not be a consideration for either party involved in Limited Agency. You must remember, this agent will make commission on their listing no matter WHO sells it, and if the Agent is already working with the buyer, then anything the buyer purchases the Agent will make commission on that as well. Essentially any deal could be a "double commission" when an agent works with both buyers and sellers independently. So it is unfair to make the Agents commission a factor or a negotiation tool, for either party.

Limited Agency...should YOU participate? I suppose 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 full disclosure and advise from your limited agency real estate professional.

 For additional real estate news and opinions visit my St George Utah Blog.  Here you will obtain area information, news and real estate advise.

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