Agency is one of the moat confusing topic in real estate. There's your typical buyer agents and seller agents, which are fairly straight forward. Then there's dual agents, oh my. To make things simple, let's first exchange the word "agent" with "firm". You see, while most people think of buyer and seller agents as the person representing them, it really pertains to the real estate firm to whom the agreements are signed.
In a typical real estate transaction, there is a buyer's agent representing the sole interest of the buyer and a listing agent representing the seller. Also typical is that both parties are represented by separate firms. The way that I've always explained dual agency is it occurs when the firm has the listing that one of its buyer client's wishes to buy. The buyer and seller acknowledge and agree to dual agency so long as both parties are being treated fairly and equally.
The problem arises when a particular agent misinterprets dual agency as to mean that agent can be the dual agent. This is 1000% wrong but it happens all the time. The agent will sign an agreement with a buyer and the present an offer from that buyer on their own listing. That agent may have been safer playing with matches in a gasoline soaked room.
I know this is very common place in North and South Carolina, especially here in Charlotte. It seems that at every mandatory class, this topic of dual agency arises and there's someone who loves living dangerously in the room, attempting to prove that the state is wrong on this. He just never read the material.
I don't do personal dual agency and neither should your agent for a few reasons. Here's a few:
1. It's wrong. Not much explanation needed. The agent isn't an agent with referring to a dual agent.
2. It's Stupid like driving a car on I-95 blindfolded
3. In personal dual agency, both sides lose. I don't care how professional that agent claims to be, a side is not being represented fairly with personal dual agency. A good example is when a buyer tells their agent "offer $500,000 and if they counter at $520,000, we'll take it." If the listing agent represented the seller only, they could have taken that information back to the seller and countered appropriately since their duties are to the seller alone. However, now if they share that information, they would be violating agency.
4. It's Stupidlike piloting a submarine with a screen door.
5. Hello Lawsuit! When the market is going great, no one much cares what's happening so long as everyone's making money. If you don't believe me, look at the folks who were taken by Bernie Madoff. As an agent, if one party feels at all as if they've been wronged in a down market, prepare to spend your next six months in court.
6. It's Stupid like drinking the water in a foreign country.
Honesty is by far the best policy. Whenever I show one of my own listings, I always inform the potential buyer that I represent the seller's best interest exclusively. I also explain to them that as a customer, I cannot mislead them about the property or withhold disclosure. However, any personal information they share with me, I will share with the seller. I find it helpful to be open, up front, and honest about agency since most buyers and sellers are unaware of agency and the potential dangers that can arise. That way, no one feels on closing day as if the only one being represented fairly in the tranaction was me.
Jonathan Osman
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