Don't Be Tricked By Dual Agency in Real Estate
Posted: Dec 28, 2020
When people buy or sell real estate, they naturally think of using a real estate agent. Not many people like to get into something as complicated as buying or selling a house without an expert in their corner.
For homeowners looking to sell, having a seller’s agent is an important aspect of success. The agent becomes your trusted advisor throughout the sale.
When a buyer makes an offer, your "seller’s agent" is there by your side, able to counsel and provide advice. Does the offer the buyer made make sense? What should the counter offer be? Are there terms in the offer that should be changed?
On the flip side, the buyer should have a buyer’s agent. The buyer’s agent provides the same role to the buyer - a person who is there to protect your interests and provide a level of expertise throughout the transaction.
This is how a real estate transaction should be done. Each party has its own representative.Why Dual Agency is a Conflict of Interest
In real estate sales, there is a dark side, however, and it isn’t pretty. The dark side is what’s referred to as dual agency. In dual agency, the real estate agent represents both the buyer and seller. Are you laughing right now? If you are, I can’t blame you!
You might be wondering how it is possible that one real estate agent can represent both the buyer and seller in one sale? The answer is it’s impossible, which is exactly why it’s called the dark side of real estate. Dual agency is a complete and utter conflict of interest for consumers.
What do you mean, Bill? My real estate agent has told me that there is nothing wrong with dual agency. In fact, they told me that it needed to be disclosed to both the buyer and seller at our first meeting that I would be representing both.
Folks, the only thing accurate about the above statement is that it’s a requirement for a real estate agent to disclose dual agency. It’s legal to be a dual agent in some states, and in others, it’s not. The most intelligent states have banned dual agency.
Beyond that, there is nothing good about dual agency for a consumer. The only benefit of dual agency goes to the real estate agent.
Too bad the person explaining dual agency has a vested interest in you agreeing to it! You see, in dual agency, the real estate agent you hired to represent you no longer does. The agent becomes a neutral party.
What exactly does that mean? For a buyer, it means your agent can’t tell you what to offer. For a seller, it means your agent can’t help you negotiate at all.
Sounds fantastic, doesn’t it? As a seller, you are paying your real estate agent thousands of dollars, but they can’t give you any guidance. Same for a buyer - no advice - you are out of luck.
There is a reason dual agency has been banned in some states. Frankly, it should be made illegal in all of them. Key reasons exist for why an attorney cannot represent both parties in a lawsuit. It is a conflict of interest.
The same can be said about real estate sales. It is impossible to serve two masters. The buyer wants to pay the least amount of money, and the seller wants to sell for the most in the vast majority of cases. It’s common sense.
Believe it or not, there are plenty of Realtors that will try to convince you otherwise. Why do they want you to agree to them being a dual agent? The answer is real simple - they get double the real estate commission!
Do yourself a favor when buying or selling a home and reject single agent dual agency.What About Designated Agency?
You may hear a real estate agent talk about "designated agency." Please understand that designated agency is NOT the same thing as a single-agent dual agency. Designated agency is when two real estate agents, each working for the same company, represent a buyer and seller in the same transaction.
There is nothing wrong with this scenario. Each party has representation. In single-agent dual agency, they do not. It is vital you make this distinction. With designated agency, both buyers and sellers get counseling and advice from their respective agents.
Take the time and read the article linked above, explaining exactly what dual agency is and how it works.
The real estate agent you choose is one of the most central aspects of being a successful buyer or seller. There is no point forgoing having someone in your corner fighting hard for your best interests.
One of the top RE/MAX Real Estate agents in Massachusetts for the last two decades. Owner of Maximum Real Estate Exposure.