When
an agent represents both the buyer and the seller in a real estate transaction,
it is referred to as dual agency. Dual
agency also exists when the brokerage represents both the buyer and the seller
through two different agents. It is
legal in California; it’s not an uncommon practice and it can be done very
well. Over the years, I’ve run across
many buyers who it’s their strategy to try and win the offer process by seeking
out the help of the listing agent on each property they are interested in thinking
that is how they are going to have success in a competitive seller’s
market.But is that the best
strategy?Here are a few things to
ponder and some of the “rules” we as agents are to go by, if you are thinking
that is the route you want to take in trying to get an offer accepted.
Disclosure of
Agency Relationships - Agency relationships are
to be disclosed to both parties at offer presentation. In a dual agent situation, both parties must
consent that they are ok with a dual agency.
If the listing agent has made an agreement with the seller that if they
represent the buyer as well, they will reduce their commission, that must be
disclosed to other agents in the MLS.
Fiduciary
Responsibility - The
listing agent has a fiduciary responsibility to the seller already. That means the listing agent must guide the
seller in a way that will benefit them financially. In a dual agency situation,
the listing agent has the obligation to get the seller the most money possible
and as a buyer’s agent, has a duty to the buyer now to help them get the
property for the best price possible.
This can be a tricky predicament to be in as an agent but can be
done. As an agent in a dual agency
situation, the agent has an obligation to NOT disclose proprietary information
of either party to the other party, without the permission of said parties. For
example, a dual agent in representing the seller should not tell the buyer the
lowest amount the seller is willing to take and in turn, when representing the
buyer, should not tell the highest amount the buyer is willing to pay.
The Benefit of
Having Buyer’s Agent that is not also a Dual Agent - There are multiple benefits that come with
working with one agent throughout the course of your buying process. First, they get to know you well and what you
are looking for. Second, because you’ve built a relationship over the course of
the home search process, they can help you keep your emotions in check if the
negotiations get dicey. Thirdly, when you have an agent that represents your
interests solely, you are less likely to wonder if your agent is in your corner
even when they may be diligently working for both parties.
Usually
when the buyer’s strategy is to seek out representation from the listing agent,
it’s been my experience that they do so with the idea that they will have an
advantage with the seller.It is
important to keep these things in mind when deciding if that strategy is right
for you. As always, consulting with your realtor®and
asking them these questions can be a great place to start.