Dual Agency Should Be Banned in All States

By
Real Estate Agent with RE/MAX Executive Realty 91362

 

Dual Agency Offers No Benefits to Buyers and Sellers

How Does Dual Agency Work

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.

 

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comments (191)

Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Rick Fifer the word represent in the context I used it in is a rather simple one. You are an advocate for that person or in their corner. This does not exist with dual agency. Sorry but this is a really simple concept.

It is real estate agents who don't want to see it go away that make it seem difficult.

When it is explained in plain english to a buyer or seller they never want it and rightfully so.

I will again go back to Alan's comment that sums it up so well:

"The only one who wins in dual agency is the agent.  If consumers truly understood the dynamics behind dual agency, they would never agree to allow it.  Unfortunately, they don't understand and the one who's explaining it to them is the agent who will benefit from them saying yes to it."

Apr 23, 2017 02:32 PM
Rick Fifer
Vintage Homes Realty - Tampa, FL
Broker/Owner, Vintage Homes Realty

no point arguing it. I have literally explained that I can't give them advice on offers or counters. That I can't tell the seller that a buyer can pay more than offered or that a seller will accept less than listed. I tell each this means we go back and forth a few more times. And yes some do accept that; and my percentage is very high by industry norms but it isn't because I have thrown anyone under the bus.  I also tell both that offers and counter offers are not always just about the money but also about other terms and to think outside that box.  As I said in my first comment, some aren't comfortable and bring in another agent: in a few cases I've given them a name or two to reach out to. But I have seen listing agents throw their sellers under the bus to get a co-broke by saying to other agents the seller will take less! Is that representation?  like I said, no perfect mousetrap.

Apr 23, 2017 02:55 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Rick Fifer at least you explain it. Clearly, many agents don't or explain it in a way that buyers and sellers don't see a problem with it.

Apr 23, 2017 03:00 PM
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

Ihave represented both seller and buyer in the same deal a few times.  I remind them of our INTERMEDIARY clause in our INFORMATION ABOUT BROKERAGE SERVICES. A REALTOR will do best to think about who they represent and not the paycheck like so many. I don't advise anyone, I show them the numbers and the seller knows his bottom number and the buyer knows his highest and best. I don't find it difficult and as long as one is an ethical and totally honest and fair you don't have to divulge confidential information.

Apr 23, 2017 03:31 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

That's the one of the problems Theresa Akin. You can't advise anyone - one of the major reasons a consumer hires an agent - their expertise.

Apr 23, 2017 03:36 PM
Bill Gassett

Theresa Akin fairness is only a small part of the equation. People hire real estate agents for their expertise. What does not being an attorney have to do with anything?


Do you not give advice when you represent a buyer or seller? Are you just a paper pusher?


 

Apr 24, 2017 03:55 AM
Theresa Akin

First off let me point out, I am not an attorney and therefore can not and do not "advise/ give advice" to anyone. i show both sides the numbers and they make their decisions in accordance with what they see. Seems possibly that some are not able to do that. There are many in the industry who do very well representing the seller and the buyer, honestly, fairly and ethically because they hire a realtor not just an "agent". Evidently you feel you would not be able to be fair to both sides. I know I can and was fair to both sides and will continue to be. 

Apr 23, 2017 04:43 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Bill Gassett - with so many comments favoring your thought, I dare to say anything here.

Though I'd say,  there is something known as 'balancing act' which helps an agent to 'master' the dual agency.

Yes, I agree, the agent wins (double) in this case, at the same time, you can make a total win-win for all parties - and yes, it can happen.

Apr 23, 2017 10:25 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Praful Thakkar when dual agency is practiced correctly a consumer is not a winner that is the whole point.

There is no such thing as a balancing act Praful. You can't favor one side one day and the other the next.

You must remain completely neutral, give no advice, offer no counseling, ect. The very reason why a buyer or seller would hire you.

When an agent understands the law it is hard to fathom your viewpoint.

Unless of course your clients just consider you a mindless paper pusher.

 

Apr 24, 2017 03:51 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Obviously you've touched on a topic with lots of opinions and feedback!  I wasn't going to comment but figured I read your entire post so why not?!  I've never been a fan of dual agency either and have never fully represented both sides. Only once has a buyer knowingly bought a listing where I put it in writing I did not represent him, but represented the seller.  I asked if he wanted to hire an agent or if I could refer one to him and he declined, in writing.  The only glitch was when he forgot to turn on the utilities on the day of closing!  Other than that I fairly told him all of his options, even when the home did not appraise for full price.  He still opted to pay full price, in writing.  Full disclosure was key, but I am not a fan of this type of arrangement.  It's too risky for a buyer not to be represented.

Apr 25, 2017 10:00 AM
Alan May

What you've described, Jan Green , isn't a case of dual-agency... you gave the buyer a notice of "no-agency"... telling him that you represent the seller and you do not represent him.


I have no issue with that, and do that whenever the potential of "dual" comes up.  In this situation, I am able to counsel my seller all I want.  The buyer is on his own... and oddly enough, I now get both sides of the commission.

Apr 26, 2017 08:34 AM
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Yeah, full visibility, not having to wait for calls to be returned for status updates, not having to deal with incompetent agents... dual agency is horrible!  It takes an ability to compartmentalize to properly represent each party individually and fully in a dual agency transaction.  I've done a few of them and they have been some of my smoothest escrows.  Buyers were thrilled, sellers were thrilled.  Neither party EVER thought I didn't have their best interests at heart.

Apr 26, 2017 02:32 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Ryan Huggins - Thousand Oaks, CA you are right there are a lot of incompetent agents.....especially the ones who don't know what you can and cannot do as a dual agent.

Like counsel a buyer or seller.....the very reason they hire us.

Oh wait.....many do that illegally in order to get the deal done.

Apr 26, 2017 02:47 PM
Ryan Huggins - Thousand Oaks, CA

Bill Gassett 


Please post the law that says we cannot advise the buyers in dual agency.  In another post you said you've read it.  Nothing in our state supplied forms about dual agency (or my google searching) says anything to that effect, just that we can't tell the buyer what the seller's bottom line is (and vice versa).

Apr 27, 2017 10:04 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Bill Gassett 

I have read both articles and all the comments and decided to write my own post. Thanks for the discussion.

Apr 26, 2017 09:06 PM
Nick Schlekeway
Amherst Madison Legacy - Boise, ID
I seek to Add Value to my Client's Experience.

Good post Bill. I think Realtors who seek to "Walk the Tightrope" of dual agency are typically doing the client an injustice. In my experience, it is better to keep one client a customer with full disclosure OR assist them in finding another agent to negotiate on their behalf. 

NS

Apr 29, 2017 02:49 PM
Kevin Vitali
EXIT Realty Beatrice Associates - Middleton, MA
Helping Massachusetts Home Buyers and Home Sellers

Certainly a thought provoking topic with fun had by all.    I personally hate dual angency.   I avoid it at all cost. 

I am sure there are plenty of agents that can handle it legally and ethically.  I have read all of the comments and there are many that worry me.

"I have been practicing dual agency since before it was invented"

"I have no problem with dual agency, I just keep seperate files"

Im just paraphrasing a few of my favorite comments here.  There certainly are a few that shows a lack of understanding of what an agency  relationship means.

Personally,  if agents can't understand dual agency, how can a buyer or seller understand.  And as pointed out the person explaining dual agency has a vested interest.  Not quite sure how dual agency benefits the consumer in any way.

 

May 09, 2017 03:45 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Kevin Vitali clearly one of two things are happening. Lots of agents have no idea what they can and cannot do when they become a dual agent. Even worse some agents know exactly what they can do and choose not to follow the law.

It is agent-centric thinking at its finest.

May 09, 2017 05:04 PM
John Mosier
Realty ONE Group Mountain Desert - Prescott, AZ
Prescott's Patriot Agent 928 533-8142

Bill Gassett -- I depend heavily on selling land in dual agency. I work a neighborhood near Seligman, Arizona. It is mostly recreational land in parcels of 36 acres or more. There are overlapping MLSs here because it is near Kingman, AZ, Flagstaff and in the same county (Yavapai) as Prescott, where I live. There are also Brokers who work the area. These do not belong to any MLS. I have no way to know what they have for sale. These properties are a 2-hour drive from Prescott and Agents from here will not drive that far and are not familiar with the area. Agents who belong to other MLSs cannot see my listings and I cannot see theirs.

I just ran an analysis and found that 70% of my sides were in dual agency. The last two closings were in dual agency and I netted less than $2,400. My Buyers and Sellers are OK with dual agency and have to sign our Arizona Consent to Limited Representation form. My Sellers are happy to get their property sold and my Buyers are happy that I drove a lot of dirt roads, kept them from getting lost and helped them find what they wanted.

Of course, there are not as many potential issues or conflicts with vacant land vs homes. I agree with you that dual agency does not work well with home sales.

Sep 11, 2017 11:46 AM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

John Mosier I think you are missing the point. Dual agency is about a lack of representation. The seller signed you up to represent them so why do you not remain a sellers agent when a buyer comes directly to you?

The buyer can still work with you but you would remain representing the seller.

The seller didn't sign up for you to become a neutral party representing nobody. Exactly who does this benefit other than you? The answer is nobody.

One of the many problems I have with dual agency is agents don't explain it well to their clients - CLEARLY.

John if I wanted to practice dual agency I could get any seller I wanted to agree to it as I would just explain it differently - in other words it wouldn't sound so bad.

This is what happens everyday because agents think through their wallet and not is what's best for their clients.

Sep 11, 2017 11:53 AM
John Mosier
Realty ONE Group Mountain Desert - Prescott, AZ
Prescott's Patriot Agent 928 533-8142

Bill Gassett -- I explain the issue to my Sellers at the time I take land listings and I believe I do that well. The Arizona Consent to Limited Representation form has to be signed by both Sellers and Buyers. Some of these parcels may be on the market for three to five years. The Sellers are glad to get their land sold and are not so concerned about being represented.

I have a good reputation with both my Sellers and my Buyers as well as with the neighbors.

Sep 11, 2017 12:03 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

John Mosier you didn't finish your comment so I am not sure what you were going to say but I don't see the subject of dual agency being any different for land as a home.

Why would any seller want to pay a real estate agent thousands of dollars to be representing them one day and the next they are not?

John there is a reason why dual agency has been banned in a number of states. It doesn't benefit consumers in anyway.

Sep 11, 2017 12:05 PM
Victoria Ray Henderson
The Buyer Brokerage - McLean, VA
Washington DC Real Estate

How did I miss this great blog! Thank you Bill Gassett for telling it like it is! You are right on target and I appreciate your honesty! Have a great day and happy holidays!

Dec 13, 2018 10:36 AM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Thanks Victoria Ray Henderson Marshall Henderson 

Dec 13, 2018 10:39 AM