It is not the first time that I have thought about this. I am not in the practice of performing dual agency, even though it is allowed in Iowa. In fact, I have sold over 200 homes in the last 15 years and I have only acted as a dual agent less than ten times!
Since I rarely host open houses on my own listings, I have been able to avoid putting myself in a dual agent position. For those of you that might not understand what a dual agent is and how it works.....here is your crash course!
A dual agent is where the agent represents both the listing side (seller) and the buying side (buyer) at the same time. It is required that this type of agency be disclosed and accepted in writing by both parties. In some cases, the agent may have known the buyer for longer than the seller. In other cases, the listing preceded meeting the buyer such as an internet lead from Zillow or someone that visited an open house. In my case, I rarely host an open house on my own listings to avoid putting myself in that position. I represent the seller first!
But in a few occurences, I have found that because I know more about the house and the neighborhood due to my pre-listing research, I AM the best agent to show the house. But as a dual agent, my role is limited on both sides. I cannot provide advice for either side at the detriment of the other. Because as an agent, my seller is owed reasonable confidentiality. But the buyer is also due full disclosure. As a dual agent, my role is limited to material facts and information that guides both sides to an agreement. So when it goes well, it is great. But if there is an issue with an inspection, the questions from both sides becomes "Who do you really represent? Whose side are you really on?" And the answer is that I am Switzerland, ie I am neutral. I want what is best and fair to both sides. Which can be perceived as choosing sides in the end.
Most buyers and sellers that have been in a dual agency situation in the past will swear to not make that "mistake" again. Perhaps, they felt unrepresented or not treated fairly. Or they did not like that their agent could not give them their opinion regarding pricing or offers or inspection negotiations.
But there are many buyers that call the listing agent for the property that they want to see, not realizing that the listing agent may not be the best one for the buyers to enlist for their search. I met a new buyer client today after they contacted me from Zillow about my listing. There have been many showings on my listing, but no offers or real interest. I needed to be able to provide a better insight into what buyers were thinking about the house. I found out a lot today. And in the process of explaining agency and dual agency, I also gained a buyer that trusts me and asked me to show them other homes. For now, my listing is still in the running, but the buyer understands that should they decide to offer on my listing, I will refer them to another agent in my office to ensure that they receive the representation that they deserve. But that is just the way that I have done business in the last 14+ years. I would rather pay another agent to represent the buyer than to feel anxious the entire transaction.
Not all agents feel that way...in fact, many agents prefer dual agency. They like the control over the entire transaction and like being able to know everything about both sides. And the fact that the compensation doubles probably doesn't hurt. The risk of something going wrong is outweighed by all of the positives for these agents.
Please contact me if you have any questions regarding your representation. I believe that sole representation is the best situation for both buyers and sellers when at all possible.