Atlanta, Georgia – This weeks most viewed question on Trulia Voices come from Fred B., a home buyer from Atlanta, Georgia, who asked – Help! Isn’t this a serious conflict of interest?…..Fred found a home he loved which happened to be an REO, a bank owned home, and contacted Jack & Jill from the listing agency to make an offer. After making an offer, Fred was confronted by what he thought might be a conflict of interest situation – his agent knew of other offers, didn’t share them with him and Jill’s partner Jack, was the sellers agent. Later, we find out that Fred signed a designated agency agreement.

Let’s check out some feedback our community members provided Fred.

Feedback from our Trulia Voices Community

Before we had more clarity on the issue, Lisa Crowder, a real estate agent from Decatur, Georgia asked, “Did you sign a buyer brokerage agreement with this agent, or did she simply help you fill out a purchase agreement for the property?”

Vicky Chrisner, a real estate agent from Dulles, Virginia said, “Here’s how it works… the seller hires a brokerage, who appoints an agent. In some cases, the BROKER and listing agent are the same person. If you do not employ your own, separate BROKER, and instead go through the listing agent, then you don’t have representation, you don’t have an agent. At best, the BROKER can appoint another agent to be your representative – that’s called “designated agency”; or the same agent (or agent team) can work with you either strictly as the seller’s agent (which is what this sounds like) OR under “dual agency” meaning both parties give up true representation. You need to check your paperwork and ask Jill who she represents. You may have a potential for a complaint or even law suit; but first you need to really know the deal.

This is another great example of why you should have your very own agent.”

Then Fred clarified the situation, “Lisa, I signed a purchase and sale agreement that contained a designated agency assignment. “Jill” is supposed to be working exclusively with me as my designated agent and “Jack” is to be working exclusively as the Seller’s designated agent. Is this what you meant?

Deryk Harper, a real estate agent from Alpharettam Georgia said, “You could have used ANY Georgia licensed REALTOR/Broker to represent you and submit this offer to the listing Broker. The listing Broker has a legal responsibility to submit all offers to the Seller…in this case the bank/lender.

The listing Broker also has the responsibility to treat all offers “equally” in a multiple offer situation. In other words if they tell you and your agent that there are multiple offers and ask that you resubmit your highest and best offer within a certain timeframe then they have to give the exact same information to anyone else that has submitted an offer. We are in the middle of 3 multiple offer situations with Buyers that we represent right now. Here is how all three have gone:

1. We submitted an original offer.
2. We were notified IN WRITING that there were multiple offers received on the property and that we had until a certain time…usually 24 hours to notify the listing agent and either
A. Withdraw the offer—some Buyers don’t want to get in a bidding war
B. Keep the original offer in play
C. Change the offer and resubmit
3. We changed the offer and resubmitted
4. We got a message from the listing agent that our new offer had been received in time and would be considered along with the rest.
5. Within a couple of days we were informed, again in writing from the listing agent, that they had chosen to counter one of the other offers and that we would be contacted again if those negotiations did not work out so we could have put our offer back in the mix if we wanted……….”

Hank Miller, an Associate Broker from Atlanta, Georgia and a Trulia PRO said, “There’s no point in rehashing the agency points, those made are on target – bottom line is that Jack & Jill are probably a “team”, the team holds the listing and the seller is their client – you are their customer. You are not represented to the highest level and their loyalty has to be to the seller. They should “do no harm” – nothing illegal or unethical – but they will have the seller’s best interests at heart.

The “issue” with these distressed properties is that often it’s like playing three card Monty. A home can site for a year, you call about it and suddenly there are multiple offers and your “highest and best” is needed ASAP. The other game that is getting very popular is listing for significantly less than they’ll go for and the bidding war starts. Then the old standby – it’s under contract…it fell through…under contract….fell through…all the while it’s listed as active until the last possible second.”

Fred selected real estate agent  and Trulia PRO Bill Eckler from Sarasota Florida for having the Best Answer, “Sometimes the best approach is to be direct and play all your cards.

Jill, I have to tell you I’m more than a little uncomfortable with what has happened recently. These are my concerns. Trust is a big issue for me and from where I stand this is what II see. I’d like to buy this house but I’m not willing to get caught in the middle of some kind of game that is going on here.

Jill’s response should clarify what your next move should be: either “all in” with your best offer, take it or leave it or walk away and look for another opportunity. There are plenty out there.

What do you think they are saying to the other two offers? Essentially, they have or so they are trying to make you think they have, several serious buyers and they are creating a behind the scene promotion to get the highest price for the property.

This is not a comfortable position to be in but this is the process when there are multiple offers. This is one of the reasons banks will post a ridiculously low price on a property….they know it will get the real attention they are seeking.

Unfortunately, this is when the “Great Deal” becomes an “OK Deal”……..Your task here is to determine when it is no longer a deal for you.  Good luck”

My Thoughts

Whether dealing with an REO or not, having a local experienced real estate agent working in your best interests is so important in today’s fast changing market. It’s also crucial to understand the types of agency agreements that exist so you can make the best choice as to which way to proceed. Generally speaking, if you don’t have an exclusive agency relationship with a buyers or sellers agent, you may not have that agent working 100% in your best interest. When you sign an exclusive agency agreement, that agent is now working with you as a fiduciary. Otherwise, you’re pretty much just a customer. As a customer, the agent works with you, not for you. They still have to deal honestly and fairly with you but are loyal to their client – whomever they have a signed exclusive agreement with.

When it comes to making winning offers on a home, having a skilled buyer’s agent to guide you can make all the difference in the world. Buyer’s agents do this for a living. They have a pulse on the market, active and sold listings, and other agents. Having one in a situation like Fred’s can make the offer making/ bidding process less painful. Having a stress free transaction is what we all desire. Have you ever used a buyer’s agent?