Dual Agency Offers No Benefits to Buyers and Sellers
For those of you reading who are not real estate agents, dual agency is when one real estate agent represents both the buyer and the seller in the sale of a property.
In some states, dual agency can be the two agents from the same company each representing the buyer and seller. I will get that situation in a minute.
Frankly, dual agency is the dumbest thing that was ever invented for the real estate industry. Why might you be asking yourself? Simple - neither the buyer or the seller has proper representation. Both buyers and sellers often ask what is dual agency and how does it work.
When a real estate agent becomes a dual agent, they technically represent both parties in the transaction. To give you an idea of how stupid that is think about an attorney trying to represent the plaintiff and defendant at the same time in a lawsuit.
If that sounds moronic to you, it's because that situation it is just like dual agency.
When a consumer hires a real estate agent, they expect that person to be in their corner. They are hiring a professional they can count on to give them sound advice. They may be even looking for their agent to guide them through the process if they are a first-time home buyer.
The advice an agent normally gives can start before, during or even after a sale has taken place. With dual agency, a real estate agent is not able to give proper guidance to either a buyer or a seller.
For example, if a buyer finds a home they would like to purchase and asks the agent what they should offer the agent is not allowed to give them advice.
On the other side of the coin, if the sellers asks what they should counter offer at, the agent is not allowed to help them either. It is one big cluster $#&*!
Both the buyer and the seller are in an awful position because neither of them has any true representation!
So who benefits from dual agency? There is only one party that benefits from dual agency and that is the real estate agent. With dual agency, an agent has the opportunity to what's known as "double side" the deal or make double the commission.
There are lots of real estate agents that will tell you that dual agency can be done. No problem they will insist. Of course, they will tell you that because they want the opportunity to make more money.
Human nature often gets in the way of ethics, and that's exactly what happens with this arrangement.
Is there any wonder dual agency is still around? In this ethical agents opinion, dual agency should be banned in every state. In many states, it already has been!
Dual Agency is Different in Some States
One thing that should be made abundantly clear is that the term "dual agency" means different things depending on the state you are located in. So when someone asks how dual agency works in real estate, you need to know where the parties are located and the associated laws for that state.
For example, as mentioned above, in some places dual agency is defined as when two agents from the same company each represent a buyer and a seller in the transaction. Frankly, I have no problem with this arrangement as each party has representation.
This is completely different than one agent trying to be masters to two different parties. They are not even remotely similar situations.
In Massachusetts, where I am located this is referred to as "designated agency".
There are a lot of real estate agents who will take offense at me writing an article like this. Do I care? No! Doing what's right for a client has always been more paramount to me than making more money.
I like seeing consumer laws change for the better. Banning single agent dual agency would do just that!
Do yourself a favor and take a look at the two references above on dual agency. You will find the first article on dual agency is one of the most detailed posts every written on the subject.
If you are planning on buying or selling a home shortly, it is vital to know how agency law works in your state.
Not understanding the law can put you in a terrible position.
If you find the article helpful, I will encourage you to share it with your social networks.
You will be helping a lot of people that have no idea what dual agency is and how it works! There are lots of real estate agents who love to sugarcoat dual agency into something acceptable. Don't believe it.