The Truth About Using A Dual Real Estate Agent Or Agency

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In the world of real estate, it always helps to have a real estate agent you can trust looking out for you. But what if you are a seller, and the potential buyer of your home is represented by the same agent or agency?

In some states, this type of arrangement is illegal. But in the states where it is legal, it is called dual agency and it is something that every buyer or seller should think about before approving. Dual agency does not benefit anyone but the real estate agent which is why it has been outlawed in numerous states.

The Definition Of Dual Agency

A dual agency situation arises when the same real estate agent or agency represents the buyer and seller in a real estate transaction. For example, Bob Smith of the Smith Agency lists a property that attracts the interest of a client of Jane Doe of the Smith Agency. In this instance, the buyer and seller are represented by the same agency.

A dual agency situation would also occur if Bob Smith listed a property that grabbed the interest of one of his own clients. For most people, working with two different agents in the same firm is perfectly acceptable. In many states this is called designated agency. One agent represents the buyer and the other the seller. Each agent has loyalties to their specific client.

So the buyer's agent is trying to get the buyer the lowest price possible. The seller's agent on the other hand is trying to get the seller the most money possible. Where problems arise is when a single agent tries to represent both the buyer and the seller.

This is in fact impossible despite what some real estate agents want you to believe. The buyer and seller have conflicting goals so it is IMPOSSIBLE to represent the needs of both. Can you imagine an attorney representing both the plaintiff and defendant in a lawsuit? Sounds pretty silly doesn't it?

It is the exact same thing when it comes to dual agency. The only person who stands to gain anything is the real estate agent representing both. The agent collects a nice fat double commission. This is the exact reason why you hear so many real estate agents say dual agency is acceptable. Of course they do because they don't want more states to ban dual agency.

Setting Up Dual Agency

A dual agency situation cannot exist without the consent of the clients. Both clients must sign an agreement that indicates that they are agreeable to the dual agency situation and everything that entails.

The agent or agents involved in a dual agency agreement must still keep all information from the buyer and seller in confidence, but many of the elements of a real estate transaction are removed in a dual agency situation.

One of the myriad of problems with dual agency is the person explaining it has a vested interest in the consumer agreeing to it.

Unfortunately, it is very easy for a real estate agent to sugar coat what being a dual agent entails. Some agents will not explain the fact that when becoming a dual agent they can no longer give advice - the very reason so many people hire an agent to begin with.

Loss Of Agent Input


In a standard real estate agent-client contract, the agent is expected to give undivided loyalty to their client and do everything possible to get their client the best deal. In a dual agency situation, that part of the agreement is removed.

This means that neither the buyer nor the seller can benefit from advice from their agent because their agent is not going to do anything that would upset the transaction.

One of the worst things about dual agency is the fact you lose the very person you hired to represent you. Your paying a real estate agent a lot of money to sell your house. Why would you want them to become a neutral party?

Negotiations Will Stop

In a dual agency situation, both the buyer and the seller give up their ability to aggressively negotiate a price on their behalf. The agent or agency working to close the transaction will be more interested in getting signatures on the sales agreement than they will be in getting a great deal for the buyer or seller.

Since all commissions will go to the same place, the only desire the agent or agency has is to close the deal and collect their pay.

Trust Will Break Down

A real estate agent is bound by law to keep all information they are given confidential. When an agent knows all of the confidential information on both sides of a transaction, the clients might find it difficult to maintain trust with their agent.

This becomes especially problematic when both the buyer and the seller understand that the primary goal of an agent or agency in a dual agency situation is to close the deal, and not to maximize profit for either side.

When an agent is given confidential information, it is normal for both the buyer and seller to become suspicious when things do not go as planned. Is there any wonder why there are so many lawsuits against real estate agents who practice dual agency? As a buyer or seller in a real estate transaction, you have the freedom to choose any real estate agent or agency you want.

When the buyer and seller agree to use the same agent or agency, then that can cause a long list of problems. There is no cost savings for a buyer or seller to use the same agent, and the process is not streamlined in anyway. A dual agency situation is only beneficial to the agent or agency involved.

Do yourself a favor and reject dual agency. Work with an agent who is going to be representing you and only you! One of the bigger problems in home sales is consumers do not always know who represents whom in the transaction. When buying or selling a home it is imperative to understand how agency law works in your state. Getting a strong handle on agency law will put you in better position to have a smooth transaction.

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