I have often wondered if there is a legitimate case where the buying and selling parties of a real estate transaction are best served by the same person.
To be honest, I'm not sure I can think of one.
But in a numbers game, the payout can be extremely lucrative for a licensee.
With the help of a whiteboard and marker, I recently explained to a co-worker exactly how the real estate "commission pie" gets split.
I drew a box, and then a line down the middle, representing the buying and selling sides of the transaction.
"This box represents 6% of the purchase price", I said. "Both the buying side and the selling side each get half, usually. So 3 percent."
Instantly he was doing the math.
"So $3,000 on a $100,000 home?"
"Good try, but no" I said, as I drew another line that cut the first two boxes in half again.
"The buying and selling agents each split the pie with their brokerage"
His face fell, as he realized what we all eventually do--the real estate pie gets split a lot.
But for real estate agents that can manage to represent both sides of the equation, the pie gets split 1 less time, giving both the agent and the broker a full 3%.
That's a double commssion.
But there's a catch.... you have to get the permission of both the buyer and the seller. This means that they have to knowingly agree to let you help out the other side.
So I'm back to wondering about what kind of clients would realistically do this. The one area that I could see double agency MAYBE being a good thing for both parties, is in really small and specialized niches of real estate--cabins or raw land sales for instance.
If you are an agent that specializes in agricultural land, and has a unique knowledge of food production, growing conditions, and the requirements, it seems like you might be among a minority, and therefore qualified to represent both sides of the transaction.
Can you think of any other examples?
Have you ever represented both sides of the transaction? If so, what was the experience like?
Subscribe to CommentsComment