Welcome to “conflict of interest”
Recently a prospective client declined my services.
He said that that he never uses real estate agents because they only look out for themselves.
Well, this is not the first time I’ve heard this. Many people believe the real estate industry is a rigged game in favor of the agent. Fact is, because of the conventions of the real estate industry, people who retain agents to help them buy or sell property are faced with a dilemma. That is, it can always be argued that an agent has a conflict of interest (competing interest) with their client!
Whether you are buying or selling
For example, when a land owner retains a Listing-agent, the agent is paid only if the property sells. So, it can be argued by the seller that the agent may push for a sale even when it is not in the seller’s best interest. When a land buyer retains a Buyer-agent, the agent is typically paid from the Listing-agent’s fee (they share the seller-paid fee). So, it can be argued by the buyer that their agent is being paid by the very party the buyer seeks protection from. But, if the buyer pays the Buyer-agent fee, the buyer’s transaction cost go up (the Listing-agent will gladly keep ALL the seller-paid fee).
Also, real estate agents are typically paid a percent of the sale. So, the higher a property sells for the more the agents get paid (good news for the seller, but bad news for the buyer). But, even if the agents are paid an hourly fee, it could be argued that the longer it takes the more they make, so the agents may inflate their time. If the agents are paid a flat-fee, it can be argued that once they are paid they may stop working hard.
Using an agent or not
So, if you are a purist about all this we suggest you never use an agent and only buy property directly from the owner. But in the real world, agents bring real value to their clients. The best advice we have for people shopping for rural land is to work with agents in a way that compliments your abilities, and find an arrangement that contains the fewest conflicts of interest. For example, if you have the skills, contacts and specialized knowledge about land (finding buyers and sellers, understanding timber & land value, contracts & negotiating, etc.), then doing it yourself can work well. If not, then an experienced agent can make sure you complete your project with the fewest regrets.
Fact is, when it comes to using an agent there is not a right or a wrong. It depends on your abilities!
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