Dual Agency - Listing Agents Representing the Bride and the Mistress?

Dual Agency - Listing Agents Representing the Bride and the Mistress?

A buyer posed the question today as to what the drawbacks were when using the seller's agent to save on commission costs when buying.  The answer almost always draws opposing views.  Mostly depending on which state the representing agent is from.  

Dual agency is when a listing agent represents both the buyer and seller in the same real estate transaction.  It is legal in CA and must be agreed upon in writing by both parties.  In spite of this, it always surprises me that even the most saavy of buyers will not seek out their own buyer representation from someone who has limited to no interest in the seller's side of the transaction.  The buyers are enticed into believing they will save so much more more money if the seller will consider their offer above others due to the "lowered commission." Well let's look at this a little deeper.   

WHO BENEFITS THE MOST FROM DUAL AGENCY?  In my opinion, two parties benefit the most - the seller and the listing agent that will have double-ended the deal, getting paid an additional % than he/she would've otherwise received.  Also, a buyer needs to factor in that if the seller needs to buy another house after their sell, who are they most likely to have a continuing relationship with?  You guessed it, their agent.  Who will then get paid an additional buying side commission from that transaction as well?  It would behoove the listing agent to be as cooperative with the sellers as possible throughout the first transaction.  The buyer at that point can never be sure as to whether or not they were represented by someone who had their best interests at heart.   Not to categorically state that a listing agent can't back pedal and with all sincerity do their best to take an unbias and neutral role post-listing contract, but it can be very tricky as each party pushes the agent to make demands on their behalf.  The liability is so great, that many states have discontinued the practice of dual agency altogether.     

"Do You Listing Agent, Hereby Swear to Get The Seller As Much Money on the Asking Price of Their Home?  I DO.

WHY A BUYER NEEDS EXCLUSIVE REPRESENTATION
Buyers often do not know or fail to remember that the listing agent worked for the seller FIRST. He/she had a contracted pre-established relationship with the seller. They probably know the names and birthdays of their kids. The listing agent has already by deed and action impressed upon the seller how they will get them the most money possible for their home - as they should.

Then here comes you the home buyer.  You are now being wooed by the listing agent if you didn't somewhat initiate the "flirtation" to begin with.  In this case, the listing agent is someone that is already considered "taken." 

I liken the buyer in that particular situation to a mistress. The listing agent is already married to the seller. Someone gets the first fruits, someone gets what's left. Oh it can be very exciting at first when you appear to be getting all of the attention, but once everyone gets what they want, then what?  The doubt increases even more, if and when after the close of escrow, the listing agent then becomes the seller's buyer representation. 

“Dual agency is a totally inappropriate agency relationship for real estate brokers to create as a matter of general business practice…The disclosures and consents necessary to make a dual agency lawful are so comprehensive and specific that a typical real estate broker cannot undertake them as a matter of routine.”  Pg 10 of NAR's "Who Is My Client" A Realtor's Guide To Compliance with the Law of Agency circa 1986

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Looking for buyer side representation?  Do not hesitate to call me at 310-508-4354 or visit FirstTimeHomeBuyerRealestate.com to start your home shopping in Los Angeles, Long Beach, Downey, Carson, Lakewood and their surrounding areas. 

Bride and Groom photo courtesy of marketing Deluxe for Creative Commons and 3rd wheel photo courtesy of istock

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