DUAL AGENCY: A SWORD THAT CUTS BOTH WAYS

This has and probaly always will be a "highly debated" topic.

In GA; Dual Agency is allowed; however my Broker is STRONGLY AGAINST it.

I had a situation last year where I ended up working with "walk-in" Buyer. The price range was around $250k. During the consultation; I went over the various types of Agencies, and working relationships that are available.

She insisted that she didn't want representation; and just wanted to "look at some houses". Sensing her hesitation to sign the dotted line; I gave her a copies of the various forms regarding "Agency" and how it all works; for her to take home and read.

The following day; I called to see if she had any questions so we could get started. She had a pre-approval letter with her the day before so we were good in that aspect. Long story short; she didn't want an Agent because in her mind she will not be able to negotiate a lower price from the Seller since he or she was responsible for paying my commission.

It was like "pulling teeth;" but we got through it once she realized that having an Agent represent you exclusively in a transaction is totally better than going it alone. Not only can Real Estate Agents negotiate on your behalf and know the contracts; they have local knowledge & info about the neighborhood you're interested in moving into.

As well as have accurate fair market value price for homes you're interested in purchasing. Real info on the health of a neighborhood and area foreclosures can also be obtained from your Agent. There's a wealth of information (such as upcoming building or projects) that can and will impact your home purchase, and local Realtors have access to all of that.

By the way; I think Dual Agency should be determined on a "case-by-case" basis....personally it just depends on the transaction, and what the parties involved (Buyer & Seller) expect from me.

Even though dual agency is permitted by Georgia Law and by my company, I do not engage in the practice.  As you mention, I don't believe I'm offering my client the best representation if I'm splittling my represntation between two parties.  I have "worked both side of a transaction" where I represented the seller and a buyer wanted to make an offer.  I facilitated the offer preparation and delivery with the full disclosure that my duty to the buyer was limited since I represented the seller.  

Randy, you posted a link to the Florida Bar Journal and asked that it be read before commenting.   That's an excellent idea for an excellent article. 

Brian

The best thing Florida did was make dual agency illegal. We can work as a single agent, no rep or transaction broker.

And with all of the above I can get paid on both sides of the transaction.

It's my opinion that dual ageny is really just our profession coming up with a way to make buyers and sellers think we can be an agent to two masters in the same transaction.  I've worked this way and did not like it at all.

Now having said that I have zero issue working for both parties to the transaction. I simply let them know my job is to be honest with both and let them make the decsions. I will answer any questions they have as long as it is not divulging confidential info. 

To me this seems a truer picture of what we do when working for both parties. It's not an agency relationship.

I just read the other comments. I want to point out that language is very important when talking about agency. For one, you CAN represent someone without it being an agency relationship.

Dual agency is not about representing 2 parties to the same transaction. It's about representing 2 parties in an agency (fiduciary) capacity. There's a difference.

For example: In Florida we are by default transaction brokers. BUT we do not represent the transaction as the name implies. We represent buyers, sellers or both just not as a fiduciary.

OK that's my 2 cents worth :)

I believe that to be comfortable with dual agency, you have to understand that buyers & sellers are not really competing parties and that you cannot compare this situation with a defense and prosecuting attorneys.

Both buyer and seller want the property to transfer.  One wantss the most they can get and one want to pay as little as they can, but they both want the same thing.  If you treat both parties fair and disclose what you must and not disclose what you can't, the parties will negotiate and either reach an agreement or not.  You have to "forget" what ypu know about the party you are not currently with.  In other words, if I know the seller will take X for the home, I cannot use that when the buyer wants to offer Y. If I was just the buyers agent, I would not know what X is so even if I do, I have to "forget". If Y is more than X, the buyer got what they want and the seller got more.  It it is less, the seller can decide to counter or accept.  It's up to them.

No everyone can do that, but many can. I feel I can and have had many successful transactions where all parties were pleased.

If you are uncomfortable with it, you should probably not represent both parties.  If you can do it, why not.

p.s. I also feel other agents are not my competitors, they are my co-workers.  They supply buyers for my listings and listings for my buyers. I do the same for them.  I would not like to make a living in this business by just selling my own listings.

I hate the idea of dual agency.  I was a lawyer before I went into real estate- so I understand about fiduciary duty.  I will not represent both sides.  

Bryant Tutas' comments, nos. 58 & 59 are excellent.   To make an informed decision on dual agency, the form of representation should be understood.  He illustrates the idea very well.

Brian

I don't understand some of the responses.   In Maryland, Dual Agency occurs when an agent is showing listings that are listed by their company.    If one works in a small area this is inevitable and most buyers want to see everything on their list.  When it becomes a contract both listing agent and selling agent become dual agents and the seller and buyer must consent to this.

Some of the responses seem to refer to when a Listing Agent shows their own listing and writes a contract for the buyer.  The Listing Agent is always working for the Seller and must advise Mr. Buyer of this prior to showing their listings.  Mr. Buyer can choose to work with the Listing Agent however he is the customer.  Mr Buyer can also choose to have another agent represent him as Buyer Agent in the sale.

In Maryland, Agency must be explained to a Buyer or Seller at the first scheduled meeting.

Dear Randy,

The way I understand dual agengy in Maryland is that only the broker can be a dual agent, with two separate agents in the company representing the sellers & buyers respectively. If you are the listing agent, you cannot represent the buyer too. You can help them do what needs to be done and have to be honest towards them, but your allegiance lies with your sellers. This would make the buyers your customers, but not your clients. To avoid the funky feeling that may arise (like being afraid, you might accidentally tell the buyers something you should not), you can offer to have your broker assign them their own agent, but you cannot represent them as well.

When I first started in real estate everyone represented the seller. Then buyer agency came along and the majority of agents wanted nothing to do with it - it carried too much liabiity. All of a sudden agents were supposed to know everything about a house or parcel of land that the seller and the listing agent knew - and disclose it to the buyer.

What happened was total confusion. People were trying to sort it out and understand who did what and why, but it was a mess.

By the time I left real estate sales, agents and consumers were starting to understand agency and disclosure forms, and a  few people were even having home inspections.

Note that our little part of Idaho is always many years behind times, so when agents across the nation were understanding and using buyer agency, we were just hearing about it.

Brian, #62, sums this post best and I agree too. Implying that an agent appears to be dishonest or without integrity because he represents both buyer and seller is defamatory. The buyer and seller determines the outcome of the transaction, don't they, since either one can say no to the transaction?

Probably about 1/3 of my sales each year is via Dual Agency (I control a lot of the inventory in my marketplace). I personally believe that if done right a real estate transaction should be a win-win scenario between the buyer & seller, not an adversarial process. Plus I often find that the transaction goes much smoother with only one Realtor's ego getting in the way. :)

Hi Randy, dual agency isn't allowed in Florida, but the "transactional" broker isn't far from it.

Dual agency, that is where both sides have a great agent, me, and a fair deal for both parties is reached. Single agency, that is where I will slice and dice the other side, especially if the other side has a average or mediocre agent and the other side takes it wounded and leaves the battlefield disgraced while my client does a victory dance. Or the other side has a agent at my level and we leave the battle field with the same outcome as me being a dual agent.

Brian in #70:  I think the way you explained how YOU do Dual Agency is just perfect.  I agree.  When I got into real estate in 1973... that is about all we did, or at least, our "version" of it.  We were the agent for the seller, we found the buyer, we put the sale together, and, being the upper-end highly-ethical and honorable agents we were... both buyer and seller were happy as clams.  And, since we didn't have to worry about another agent not knowing what they were doing... just about every sale went to a successful closing.  Way cool.

done a few of these ... quite frankly I prefer one side of the deal ... less liability and less f a chance of an attorney finding issues with a deal .... not greedy to try and catch all sides of the deal ... not thank you if I can help it

Lehel:  There is NO greedy'ness in trying to, as you say, "catch all sides of the deal." 

You have two sides... a buyer side and a seller side.  You work them on separate homes, you end up with two "half" commissions each side.  You work them on the same home... you ALSO end up with two "half" commissions on "each side"... except they are on the same home.  Two half-sides either way.

The commission totals are the same.  There is no greedy'ness in working with both the buyer and the seller on the same house.  Anyone who says different needs to simply open their eyes.

Lehel and Randy:  Here is a post I wrote a while ago that really covers the subject of working with both the buyer and the seller on the same home.  Selling Your Own listing. Double Dipping ? What A Crock !  Perhaps I need to update it and post it again.  I invite you to read it.