What is Dual Agency and How Does it Work?
There are many things in a real estate transaction that someone who is not a professional would not know about. Most people do understand the basics of representation. A “seller’s real estate agent” is a real estate agent who represents a seller, and a “buyer’s real estate agent” is a real estate agent who represents a buyer. Pretty simple and easy enough to understand.
In these scenarios, the real estate agent is working in the best interest of their clients. They help their clients achieve their goals. Throughout the transaction they are a trusted advisor.
A third type of representation exists, but it is not attractive. The ugly side of real estate. It’s what’s referred to as dual agency.
Do you know what dual agency is? It’s when an agent represents both a seller and buyer in the same sale. You should avoid doing something that sounds like a good idea, but may not be.
Why? Sellers want to make the most money possible, while buyers want to spend the least. It would be impossible to satisfy both groups. This would be similar to an attorney representing both sides in a lawsuit. That sounds crazy right? Honestly, because it is, just like dual agency!
A dual agency is not a good idea because it can create a conflict of interest.
Many Real Estate Agents Neglect to Explain Dual Agency and a Dual Agent Relationship
It is unfortunate that many real estate agents do not explain the process adequately, making it more difficult for people.
The majority of people are aware of the advantages of collaborating with a fantastic real estate agent. An agent that works on your behalf to help you achieve your real estate goals while shielding you from any harmful situations.
Your agent is there with you through the entire home-buying process, from finding the perfect house to negotiating the price and home inspection, and closing the deal.
An agent that is legally prohibited from looking out for you and representing your interests is not ideal. With dual agency, the agent representing both the buyer and the seller cannot advocate for what is best for either party involved. There is no fiduciary duty. Fiduciary duties don’t exist.
The agent collects twice the commission but does almost none of the work that is specific to either a seller’s agent or a buyer’s agent. If you want a positive buying or selling experience, you should avoid dual agency at all costs.
Many real estate agents do not disclose that they are representing both the buyer and the seller. There are agents who don’t want you to know how bad their job is. An agent who is interested in becoming a dual agent is not likely to tell you why it is a bad arrangement. Fat chance!
If someone tells you they would love to become a dual agent, they are saying it is legal and there is nothing wrong with it. A real estate broker who only looks out for themselves is not looking out for their best interests.
Greed Induces The Desire to Be a Dual Agent
If you search the internet for information on “dual agency,” you will find articles from real estate agents that claim it is perfectly acceptable. Do you know why a real estate agent would ever tell anyone that representing both the buyer and the seller in a real estate transaction can be done with no problem? In a word, GREED!
Getting both sides of a transaction is super attractive.
Who wouldn’t want to get paid double the amount of money for doing the same amount of work? A lot of people are raising their hands in the room. The only person who benefits from single-agent dual agency is the real estate agent! In this scenario, the agent gets the entire commission.
Although dual agency can be beneficial for agents, many choose it for the larger commission rather than what is best for their clients.
A real estate agent might say that open houses are necessary in order to sell a home. Wrong! This type of marketing is outdated and only benefits the agent, not the client. When an estate agent tries to sell a property without the owner’s knowledge, it risks the security of the owner’s home as well as jeopardizing the chances of selling the property.
Dual Agency – A Departure From The Duties Of a Realtor
There are many benefits to working with a professional Realtor, including access to their knowledge and resources. Your agent is responsible for representing you in all aspects of the transaction. You will Be the one making decisions, and they will listen to you.
Your Realtor will keep your information private and be answerable to you as the buying or selling process goes on. The company will provide you with any and all relevant information.
Your agent’s ultimate goal is to find the best path to what you want as an outcome. They have a fiduciary responsibility ONLY to you.
With single-agent dual agency, the traditional rules and expectations no longer apply.
What is a Seller’s Agent?
A real estate agent may be hired by a seller to help sell their property. This is known as a seller’s agent. The agent represents the seller as a client.
An agent must be loyal to their seller client, exercise reasonable care, disclose any information honestly, obey all lawful instructions, keep all information confidential, and be accountable for their actions. The agent’s priority is to advocate for the seller and try to reach an agreement that is satisfactory for their seller client.
The agent’s primary duty is to advocate for the seller by striving to get the best possible terms. Your listing agent should help you price your home fairly, give you an estimate of how long it will take to sell, help you choose the right marketing strategies, and be available to answer your questions.
What is a Buyers’ Agent?
A buyer’s agent is a real estate professional who represents the buyer in a transaction. The buyer’s agent helps the buyer find a property, negotiates the contract, and assists with the closing. The agent represents the buyer as a client.
The agent must always be loyal to the buyer client, exercise reasonable care, disclose all relevant information, obey any lawful instructions, keep any confidential information secret, and be able to account for any actions.
The agent’s priority is to look out for the best interests of the buyer and try to come to an agreement that works for them.
Being represented by a buyer’s agent comes with certain expectations. Your agent should be knowledgeable about the area, be available when you need them, have your best interests at heart, and be able to negotiate on your behalf. Buyer representation is worth having.
What is a Dual Agent?
A dual agent represents both the buyer and the seller in a real estate transaction, but only with both parties’ express consent. A real estate agent who represents both the seller and the buyer in a transaction shall not take sides with either party and shall instead remain neutral. A dual agent is similar to a transaction broker in the fact you become neutral.
Favoritism towards either buyers or sellers should not be tolerated.
Since a dual agent can’t perform the duties of loyalty, full disclosure, and obedience to lawful instruction, they can’t fully satisfy the requirements of the position. While a double agent is still obligated to keep information confidential, they must also account for any funds used. Confidential information cannot be exchanged. Buyers and sellers should both sign a written consent form for dual agency.
A dual agent is someone who doesn’t perform typical real estate services but will make a double commission.
What is Designated Agency?
A firm with a designated agency has one agent who represents the seller and another who represents the buyer. Only your designated agent represents your interests. A person who is licensed to sell real estate is typically the one who designates the agents who represent different parties in the transaction.
In this situation, the broker representing both the buyer and the seller is called a dual agent. A double agent cannot fulfill all the requirements of a seller’s or buyer’s agent, which include being loyal, disclosing everything, and obeying lawful instructions. If a buyer and seller are working with a designated agency, they need to get written confirmation and agreement from each other.
With this arrangement, each of the parties has representation. This second form of dual agency agreement is when both the listing agent and the buyer’s agent are employed by the same real estate company. This form of dual agency agreement is when both the listing agent and the buyer’s agent are employed by the same real estate company.
Why Dual Agency in Real Estate Is Bad For Buyers and Sellers
Lack of Advice
Although it’s helpful to have an expert’s advice when making decisions about your home, it’s ultimately up to you to decide what’s right for you. The terms used in real estate can be difficult to understand unless you are already familiar with them. How much should you offer on the home? Is the asking price fair? Are there any restrictions or requirements I should know about regarding the property?
You need a reliable partner to help you make well-informed decisions. You need an agent to guide and support you through every step of the buying or selling process. A dual agent cannot do this for you. Why? A Dual agent is somebody who is appointed by two opposing parties to mediate between them. They cannot favor either party. This means that the real estate agent cannot give you any advice in the real world. Sounds great doesn’t it? NOT!
A dual agent cannot give you unbiased advice because they are trying to please both the buyer and the seller. This is known as a conflict of interest.
A Departure From a Real Estate Agents Duties
This means that the agent should always try to get the best possible price and terms for the seller. It is not necessary for your real estate agent to become a dual agent, and you should not allow them to do so. While they can still help the buyer, they will remain working as the seller’s agent. The agent will show the house to the buyer but will continue to work in your best interests.
Doing this would put more money in their own pockets. Why do so many real estate agents not put more money in their own pockets? It really is simple. Both parties are tricked into thinking that dual agency is fine. What is the incentive you might ask? Well, that’s the easy part. A double real estate commission!
Bring On the Confusion
The topic of dual agency may be confusing and difficult to understand. It’s insanity to have someone working for you and against you at the same time. With a dual agent, there are great feelings of uncertainty.
Of all the terrible aspects of dual agency, having to listen to a biased explanation of it might be the worst. The person trying to sell you on the idea has a personal stake in getting you to agree to it. When real estate agents who practice dual agency explain it, they are usually talking to other real estate agents in professional settings.
One of these three things could happen:
- The agent doesn’t explain it properly.
- The agent makes it sound like there is nothing wrong with dual agency.
- The agent doesn’t discuss it at all (totally illegal).
Buyers and sellers are often misled by dual agents with inaccurate information about what they are and are not allowed to do. Some real estate agents do not understand dual agency even though it is a common concept. Many people qrongly believe that they are allowed to give advice to both sides. Many do and it is illegal!
Don’t Believe the Hype
Some real estate agents will argue that there are positive and negative aspects to hiring a dual agent. The cons are more significant than the pros, so it’s not worth discussing. A dual agent is someone who represents both the buyer and the seller in a real estate transaction. While you may be able to save some money by hiring a dual agent, it is not worth it if you end up with something you don’t want or if the agent ends up making more money than you do.
Although saving a couple thousand dollars in commission by buying a home without the help of a realtor may be tempting, it could end up costing you over ten thousand dollars more for the home. The math doesn’t sound great does it?
You need an agent who is knowledgeable and will have your best interests at heart. A real estate agent’s primary concern is helping you get what you need, rather than any sort of conflict of interest.
You should get the best possible deal whether you are buying or selling a home. Hiring a real estate agent that does not practice dual agency will help you avoid any potential conflict of interest. If you want to sell your home, you will need to find a seller’s agent. When buying, only accept having a buyer’s agent. When you’re buying or selling a home, it’s important to have an advocate on your side.
Don’t settle. Hiring a real estate agent can help you get what you need.
Designated Agency VS Dual Agency
Dual agency is confusing because it can have different meanings. In the example provided above, dual agency occurs when one agent works with both the buyer and the seller. In some states, dual agency is a situation where one real estate agent represents both the buyer and the seller in a transaction.
I think it’s okay. Each party has their own real estate agent representing their interests. Many states prohibit what is known as dual agency, where one agent represents both the buyer and the seller in a real estate transaction. This is also sometimes referred to as designated agency. The broker/owner designates one agent to work for the seller and one to work with the buyer. This allows the agents to focus on getting the best deal for their clients without worrying about stepping on each other’s toes. There is no sharing of information between agents. Each party has full representation.
States That Have Banned Dual Agency
There are some states that have made dual agency illegal because they are smart. Here is where you cannot be a dual agent:
When participating in either the purchasing or selling of a home, it is advised that you have a real estate agent to help look out for your best interests. You need someone who will be your champion and advocate. An agent who will fight hard to meet all of your objectives. An agent working under dual agency should never do anything that would compromise their legal standing.