Why Buyers and Sellers Should Avoid Dual Agency

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A real estate agent can be one of your most significant assets when buying or selling a home. The best real estate agents will work hard for their client's interests. A true professional will be someone you can lean on before, during, and after your transaction. Someone you can look to for guidance and expertise.

In most real estate transactions, there will be buyers' and sellers' agents. Each will represent their party to the best of their ability. Most often, the number one goal of a buyer is to get the best deal on a property, while a seller wants to get the most money possible.

Each party may have other goals as well but coming out on top financially is usually paramount. While buyer and seller agency are commonplace, there is a third type of agency in some states called dual agency.

If you are a buyer or seller, you should avoid dual agency like the plague. It offers you no benefits whatsoever. Dual agency in real estate should be banned throughout the United States. In some states, it already has been.

Let's comprehensively look into dual agency and why it is bad for buyers and sellers.

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Single Agent Dual Agency in Real Estate is Bad For Buyers and SellersDeposit Photos

The Definition of Dual Agency - There Are Two Types

Many consumers want to know what dual agency is and how it works. There are two types of dual agency. One is an acceptable practice, and the other is not.

When two real estate agents who are working for the same company represent a respective buyer and seller, that is referred to as dual agency. There is nothing wrong with this arrangement as both the buyer and seller have a representative that is working for their best interests.

The fact that the two agents work for the same franchise is meaningless. Dual agency occurs in this fashion daily without problems. It is entirely normal and serves the interests of the clients well.

The second type is what should be avoided at all costs. It is referred to as a single-agent dual agency. Single-agent dual agency occurs when one real estate agent "represents" both a buyer and seller in the same transaction.

The word REPRESENT is silly to be used in this context because the real estate agent becomes a neutral party in dual agency. They do not represent nor perform the same functions a buyer's agent or seller's agent would.

When you want to make an offer on a home, a dual agent cannot give the buyer advice on what to offer. Likewise, they cannot give the seller suggestions on what to counter offer.

It is illegal for an agent to give advice in a single-agent dual-agency situation. Doing so is a conflict of interest. An agent cannot give a buyer advice because it would be in conflict with the seller. Giving advice to the seller would be in conflict with the buyer.

Folks, you have no representation in dual agency. You are on your own. A dual agent cannot help you the way you should expect them to. The only party that makes out in single-agent dual agency is the real estate agent.

Illegal Dual Agency

Illegal dual agency occurs when a real estate agent provides guidance to the buyer, seller, or both. A lot is riding on the sale happening for the real estate agent. They will make a double commission by having both sides of the transaction.

Unfortunately, some agents will turn a blind eye to doing the right thing and instead do what's best for their wallet or purse.

Disclosing Dual Agency Doesn't Make it Acceptable

Practicing dual agency is a choice for a real estate agent. Real Estate agents who don't think it is a morally acceptable practice reject it. Those who practice usual agency will say I disclosed it to Mr. and Mrs. Jones, and it's legal in my state; therefore, it's perfectly fine.

When dual agency gets explained to consumers, it's done by someone who has a vested interest in you accepting it. What do you think happens when a salesperson who practices dual agency explains it?

If you're thinking it will be glossed over or explained away as perfectly fine, you're one-hundred percent correct. Rarely does an agent who wants you to agree to dual agency say it's horrible. It's all unicorns and candy canes.

Think about this for a minute. You are selling your home and agreeing to paying a real estate agent tens of thousands of dollars to sell your home. A Realtor's commission is one of the most significant costs for home sellers. You are surely wanting them to be working for your best interests and not becoming a neutral party.

When an offer comes in, you will undoubtedly want to know if any terms don't look so good. When the home inspection happens, you'll want someone who has your back. With dual agency, none of these things can happen. Remember, the agent has to stay completely neutral. They CAN NOT fight for your best interests.

Dual Agency is Illegal in Some States

Some areas of the country have wised up to the fact that dual agency doesn't benefit consumers. In the following states, dual agency is illegal:

  • Alaska
  • Colorado
  • Florida
  • Kansas
  • Maryland
  • Texas
  • Vermont

In these states, you cannot be a dual agent. A buyer and seller will have their own representative.

Dual Agency Brings Lawsuits Against Real Estate Agents

Unsurprisingly, real estate agents are often sued in dual agency arrangements. What usually leads to the lawsuit is one of the parties feeling they were unfairly treated. A buyer could feel the agent was favoring the seller or vice versa.

Frankly, I love it when I hear about agents being sued because of dual agency. Greed has no place in the real estate industry. Dual agency provides the fuel for agents to be working for their own best interests and not for their client's needs.

Does Dual Agency Have a Future in Real Estate

Hopefully, as time goes by, other states will conclude that single-agent dual agency doesn't benefit the best interests of consumers. Consumers have often not been explained the downsides of dual agency. A real estate agent will put the dual agency disclosure form in front of them to sign and call it a day.

Do you see why dual agency is bad? If you have any questions on how it works, feel free to reach out for clarification.

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Bill Gassett is an avid writer for numerous real estate topics including finance, mortgages, moving, home improvement, and general real estate. His work has been featured on numerous prestigious real estate publications.

Massachusetts State
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