WHAT IS A DUAL AGENT

Most sellers and buyers if asked to define what a dual agent is wouldn’t have a clue. But they should know what it is and the pitfalls of such an arrangement. Simply put a dual agent in a real estate transaction an agent that represents both the seller and the buyer. Some buyers and sellers may not give this arrangement a second thought. They just want to buy the home or sell the home. But there are some serious limitations for either a buyer or a seller to agree to such a relationship.

Let’s suppose that seller A lists his home with agent Smith. Agent Smith holds an open house and in walks potential buyer B. After talking with agent Smith, Buyer B decides to make an offer on the property. Buyer B asks agent Smith to represent him. Agent Smith tells buyer B that he has to talk to the seller A first to get their permission to represent both the seller and the buyer. Seller A states it is ok with them and Buyer B also agrees. Thus a dual agency has been created. Agent Smith now represents both the buyer and the seller. Is there a problem with this type of arrangement? The answer is yes. It must be first stated that dual agency is legal in the state of California; however most sellers and buyers would like to think that the agent representing them is doing so with their best interest coming first. When you think about it an agent really can’t serve two masters. A seller should have an agent that works just for them and the same goes for a buyer. A single agent representing the seller and a single agent representing the buyer do not always mean that dual agency has been eliminated. If an agent from a brokerage is representing the seller and another agent from the same brokerage is representing the buyer, dual agency still exists. That is because the agents work for the same brokerage. The only way to avoid dual agency is for the seller to be represented by one brokerage and the buyer represented by an agent from another brokerage.

There are many reasons not to be involved with a dual agency. One such reason is that an agent representing both buyer and seller or a brokerage representing both buyer and seller will know a lot about both the parties. Information that is acquired should not be divulged to the other party. Divulging that information may be accidental or on purpose. But it puts either the buyer or the seller at a disadvantage. Sellers would like to think they are getting the highest price possible and buyers would like to think that they are purchasing at the lowest price possible. The best chance of this happening is for the buyer to be represented by their own agent and the seller represented by their own agent.

There is only one advantage to dual agency. And that is to the dual agent. If the listing agent represents the buyer, that agent will now receive a full commission. If a home was listed for 6%, the agent will now receive the full 6%. Or if the buyer is represented by another agent in the same brokerage as the listing agent, then the brokerage will now receive the full commission. The difference to them is huge. Instead of receiving a 3% commission as a single agent, they now will receive 6% as a dual agent. They are going to be very happy if they receive the full 6%, but are you going to be?

If you are either a buyer or a seller, don’t let dual agency happen to you. You should be represented by an agent that is working only for you with your best interests their primary concern.