Do I get a Better Deal If I Buy a Home Through the Listing Agent?

Do I get a Better Deal If I Buy a Home Through the Listing Agent?

There is an often misinterpreted myth in the real estate world amongst would-be home buyers that if they offer on a house for sale to purchase, they will get the home at a lower home sale price if they use the listing real estate broker.


Understanding The Listing Agreement Between the Home Seller and Listing Brokerage


The listing agent (Listing Brokerage) has a Listing Agreement with the seller of the home. Which means they have a fiduciary duty to the seller to act in their best interest throughout the home selling process – including the negotiation of best terms and price in favour of the seller.


Some fiduciary duties are: 

  • undivided loyalty to the client
  • acting in the best interests of the client at all times
  • the duty to avoid all conflicts of interest the duty to disclose all conflicts of interests when present


A buyer has the right to pick any licensed real estate agent of their choosing. It does not have to be the listing broker who represents them when submitting an offer to purchase. 


Some listing brokerages will charge a low commission or give a better commission rate if they can bring their own buyer. As a home seller just be careful that does not interfere with your best interests. 


What Fiduciary Duty Is There To A Buyer


When a home buyer engages a Realtor to purchase a home, they must sign a number of provincially regulated forms.


These forms spell out the fact that if the home buyer uses the home seller’s agent to purchase the home, the Realtor representing the seller as an obligation to the home seller to protect their best interest.


This type of situation is what’s known as dual agency or multiple representation. This can create a conflict of interest if the rules are not followed during the real estate transactions.


In most dual agency situations, the duty is to the seller and not to the buyer.


Are You A Home Buyer That Prefers To Deal With The Listing Agent?


If you’re a home buyer that just prefers dealing with the listing agent, not necessarily looking to get a better deal, you should know what your rights are.


Under the Real Estate Council of Ontario’s code of ethics, there are certain things that a realtor should explain to you. One of the forms you will sign is called working with a realtor as well as a buyer representation agreement. These forms are in place to protect a buyer’s rights.


There are two types of representation that a buyer could seek. Although the terms “client” and “customer” are typically used synonymously in some businesses, they mean different things in real estate transactions and can have separate implications for a potential buyer and seller.


Make sure when you engage the listing agent that that listing agent has made clear to you what type of representation they will offer to you.


When Does A Conflict Of Interest Arise


Most conflicts of interest arise when a homebuyer interacts with the listing agent who already is under contract with a home seller. The conflict of interest usually lies around negotiating a better price for the buyer.


In a real estate deal, there is a purchaser and there is a seller. They have opposing interests. 


As a home buyer it’s important to know what your rights are so ask a lot of questions to the agent before submitting an agreement of purchase and sale to a home seller.


An ethical agent will follow the Real Estate Council of Ontario rules and regulations. They will walk you through the necessary paperwork and explain to you what the different types of representation you are entitled to. 


An ethical agent will also explain to you what the listing agreement actually means as it pertains to their obligation to the seller.


Included in the listing agreement is the real estate fees and how the Realtor and Listing Brokerage get paid. 


Advice In A Nutshell


  • Nowhere in any of the documents to be signed does it say the buyer stands a chance of getting a better deal.
  • In fact, it is the opposite as the listing agent’s fiduciary duty is to the seller
  • A home buyer should understand what the difference between customer service is and client
  • A realtor is held to a strict code of ethics governed by The Real Estate Council of Ontario and other provincial jurisdictions. 
  • If the listing real estate agent is found to be in a conflict of interest, an ethical agent will always default to their fiduciary duty to the seller