Quote:
Originally Posted by 4X4
I've got to say that (as a licensed realtor) dual agency is a shaft job for both the buyer and seller when it comes to average homes. The same is not true when talking about investment properties, high end homes or commercial.
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Just for the heck of it, I'll elaborate on why dual agency is not so bad when it comes to investment properties and commercial.
An average home has limited use. It is for living in, usually by the owner. Since house prices fluctuate based on many things such as economic conditions, neighbourhood conditions, and condition of the specific house, the only good way to value an average home is to compare it to other houses in the area that have sold recently. In other words, average home prices are subjective.
Revenue properties usually follow the same line of thinking when they're being valued, but there are many more things to consider when valuing an investment property.
A good investment property would be an older house in an inner city neighbourhood that is on a higher density lot (sub dividable) and with more than one suite in it.
Because it has the potential to generate income, it is easier to say that it is worth a certain amount. It is still prone to comparison to other lots, but the numbers tighten up. These houses are not bought and sold to live in, they are bought and sold because they generate income and have higher upside in the future, thus making them investment properties. Nobody walks up to a 50 year old house in Altadore and sees their dream home. They see a future development that may be their dream home or someone else's.
Commercial is a whole other bag of beans. Commercial properties are valued strictly by their income potential and the highest and best use of the land. The income potential is determined through formulas. Cap rate and gross rent multiplier are the ones I use. Combined, these two formulas will tell you what a commercial or multi family is worth. There is some leeway when considering location, but location has already been considered to a large degree when calculating the gross rent potential of the building.
Because of all those things, a dual agent is quite common because there really isn't a heck of alot of room for negotiating actual price. The true negotiation is usually on the terms of payment, the posession and many things that are not present in a typical residential deal. And because of that, a dual agent is often better for such deals. Also notable in these types of deals is that the buyer and seller are usually quite savvy in real estate and they don't really need the "advice" and "input" of the realtor. All they really need is someone to do the deal for them because who really has the time to do the footwork involved in a large deal like that besides a professional that makes a living doing it? The people that own this kind of real estate are successful at something else, which is why they have money to invest in real estate and why they understand that a professional is useful and necessary.
As for high end homes, it has already been said in this thread why dual agency is common.
So again, OP, good job talking to a realtor. It really is in your best interest.
