Here are five tips to help you sell and buy a house at the same time.
What is a designated agency?
A designated agency is one that represents both buyers’ and sellers’ interests. One agent, working for the broker or agency, represents the seller and another stands in for the buyer. It’s a requirement that certain procedures are put in place to ensure that client information is kept separate. This is important because the broker is placed in a fiduciary relationship and the agents acting for the seller and buyer must retain the ability to act in the best interests of their respective clients.
When you want to buy a property, you contact a real estate agent and discuss your needs. You tell the agent what you are looking for and how much you are prepared to pay. You sign an agreement allowing that agency to represent you.
When you sign that agreement, you will notice that it’s with the agency and not with the agent you are dealing with. It is the responsibility of the agency to represent your interests.
The seller also appoints an agent to represent their interests and, in most states, this will be a different agency. The reason is that each agency is supposed to represent the best interests of the person who appoints them.
In some states, it’s possible for one estate agent to act as a designated agency and to represent the interests of both parties. From a legal point of view, this is a difficult concept because when an agent is appointed to act for you, you are actually appointing the entire agency or brokerage. So how does the same brokerage act in the interests of both parties?
Buyers should be careful to guard their interests when working with designated agencies.
Designated agency example
Jane is keen to buy a property in a new development. She contacts the real estate agent to make an appointment to see some properties and decides to purchase one. When she is preparing her offer, she is made aware that the real estate broker is acting as a designated agent representing both the buyer and seller. Jane is not happy with this arrangement because she does not fully trust the agent to look after her interests and cancels the sale.
Do you understand who the real estate agent really represents? Read this guide from Bankrate on who represents your interests as a buyer.