Q&A: “Am I better off dealing with the listing agent?”

A quick introduction…

In real estate sales, the listing agent is the person who has been hired by the homeowner to sell their property. The listing agent is the one with their face on the signboard outside. In most situations in NZ, if you want to buy that home, you can either deal with the listing agent directly or another agent from the same company.

Note: Technically the only person who should be referred to as an ‘agent’ is the person who holds the licence for the individual real estate company. Everyone else is just a licensed salesperson. I use the term ‘agent’ in this article so most buyers will understand who I am referring to, but it is important to understand this distinction.

Does it make any difference who you deal with?

If the listing agent represents the buyer and the seller, they keep the whole commission (minus the office’s cut, of course).

If a different agent represents the buyer, then the commission is usually split between the agents involved.

How does this usually play out?

You meet Agent Sally at House A. It’s not quite right, but there are others nearby, so Sally offers to show you Houses B, C & D even though she isn’t the listing agent for them. Often other agents will try to get involved and help you with your purchase since they get paid a commission if they introduce you to the property you end up buying. Even if they are not the listing agent for that home.

Many experienced buyers believe they are better off dealing with the listing agent directly. They hope that by dealing with the owners chosen representative they will access better information or an extra advantage when it comes to negotiation.

One of my readers recently emailed me the following question on this very subject…

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Question:

“We are looking to buy and started with a wide geographical area but have now narrowed it down to a particular area.

At the start of our search, I met an agent who was very helpful and organized and she showed us a number of properties.   She has been very proactive and like every agent said: “if you see a listing from our company then I can show you the property”- obviously she gets the commission so it’s in her interest, but she has been very proactive so I was happy to oblige.

However, now we have narrowed our search down we are looking in an area which is not where she is based (it’s about 5 kms away). She’s still keen to help but I guess my question is, is there really any benefit to me to contact her every time I see a listing from the real estate company she works for to get her to arrange a viewing or take us through open homes, or am I better to simply work and liaise directly with the agent listing the property?”

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Answer:

It’s nice of the agent to offer to help. You have nailed the premise perfectly. Real estate salespeople get paid on commission so it’s in their interest to work with you on any property.

The benefit of working with her is that you only have to deal with one person, so you don’t get a whole bunch of other agents from that company phoning you and adding you to their email database. This can be attractive to some people. Also, because she is likely only dealing with you on each property, you may be able to obtain more useful info. Eg. she may give you a price guide based on her experience that the listing agent wouldn’t divulge. The listing agent may be dealing with 30 buyers on that 1 property so often can’t give much of an opinion on price due to a risk of short-changing the owner or putting buyers off.

Essentially, you could get a more genuine idea of value from an agent working only with you.

On the flipside…

The listing agent will know the property best and working with another agent can make the process slower. Eg. When you ask a question about the house, they would need to ask the listing agent and wait for them to respond before they can pass on the info to you. So it can be less efficient when it comes to obtaining information.

Most real estate offices have good processes in place so you are not disadvantaged in any way when it comes time to make an offer if you are working through a non-listing agent. So the only real negative is that the information handover can be a tad slower.

My suggestion would be: If you like the agent in question, then keep using her and ask her to show you through any listing with that company. Even in the new target area. If you don’t enjoy their company that much, or you find them unhelpful, then certainly don’t bother. Just go straight to the listing agent.

Best of luck with your search!