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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Dual Agency
In most home sale transactions, the real estate agents representing the buyer and the seller are different.
This is known as a single agency where one real estate agent will represent only one of the parties.
However, in some cases, you may find that the real estate agent for the buyer and the seller is the same and is referred to as a dual agency. In this post, we will understand what is dual agency in real estate and how it works.
What Is A Dual Agency In Real Estate?
A dual agency is a situation where a real estate agent represents both the seller and the buyer or both the landlord and the tenant in a real estate transaction.
In any case, the real estate agent receives a full commission for representing both parties.
Dual agency can also occur when two real estate agents from the same agency represent both parties in a purchase or rental transaction.
You may run into this situation if you hire a real estate agent to list your house in a state that allows double agency.
The agent may ask you if you accept this type of representation and will explain the advantages and drawbacks of this process.
If you agree, you must enter the official agreement and the real estate agent will need to disclose the same to potential buyers.
This type of representation can also happen when the buyer is looking for a home without any agent and asks the seller’s agent to represent him, or the buyer who has an agent can find the house he likes that is already being listed by his agent, creating an example of double agency.
To reduce misunderstandings, ask your agent in advance if they are representing you as a sole agent or if they work as a double agent representing the other side.
Whether you are a seller or a buyer, you have the right to reject dual representation and hire another agent to represent you.
How Does Dual Agency In Real Estate Work?
When buyers research and buy a home, they often are represented and receive assistance from the buyer’s agent.
The seller of the house, meanwhile, depends on the agent who lists the home also known as the seller’s agent.
The seller’s agent may be an individually licensed real estate agent or working for a real estate brokerage.
Both buyer’s and seller’s agents act on behalf of their parties under a morality known as a “fiduciary duty.”
In a dual representation situation, the buyer and seller work with the same person representing both, rather than separate agents.
The double agency often occurs when a buyer and a seller use the same real estate agent or brokerage firm.
This can also happen when a buyer calls a listing agent directly after seeing the for-sale sign or online ad for the house, without a buyer’s agent.
For an agent to represent both parties in a real estate transaction, they must have consent from both buyers and sellers.
If the buyer or seller is not comfortable with the idea of using dual representation, they reserve the right to leave the transaction, unless they are given the option to choose their agent to represent them.
Is Dual Agency Illegal In Some States?
Though most states allow dual representation in the property sales transaction, they might have their laws and regulations.
However, dual representation is outright illegal or banned in these eight states:
- Alaska
- Colorado
- Florida
- Kansas
- Oklahoma
- Texas
- Vermont
- Wyoming
What Are The Pros And Cons Of Dual Agency?
Let’s take a look at the pros and cons if you are thinking of buying or selling a home with a double agency.
Pros:
- Quick Communication: When an agent represents both parties in a real estate transaction, there can be a little delay in negotiating a price or solving queries. Since there are no two agents, there is one less party to communicate with.
- Potential Savings: A dual agent might be open to providing a discount on the commission. The seller can save money on the commission as the seller is the one who usually pays for both the buyer’s and seller’s agent. But when the seller’s price is low, he may be willing to accept a lower price from the buyer. The seller, buyer, and agent can benefit from the arrangement.
Cons:
- Conflict of Interest: This is a major compromise to dual representation and why some states have banned it. Personality and financial motivations can make it difficult for an agent to remain neutral when representing both a buyer and a seller.
- Influenced negotiations: A real estate agent representing people with conflicting interests cannot defend either. If the dual agent suggests the buyer offer less than the listed price, the agent is against the interests of the seller. Similarly, if the agent tells the seller not to accept an offer lower than the list price, it is against the best interests of the buyer.
Conclusion
Working with a dual agent could sometimes be beneficial for all the parties involved (based on the state that allows dual agency).
You may always have your doubt if the agent is looking out for your best interest as a buyer or a seller.
It is best to hire your agent to represent your side if you want to protect your interest in the transaction.
