Dual Agency: Why I Don’t Do It

Before I launch into my rant about Dual Agency, I need to do a brief vocabulary lesson:

Listing Agent: The Realtor(R) hired by the SELLER to represent them in a real estate transaction
Buyer’s Agent/Selling Agent: The Realtor(R) hired by the BUYER to represent them in a real estate transaction
Commission: Paid by the SELLER and built into the listing agreement when the seller decides on a list price.

Now, in a regular transaction there are usually 4 parties to a contract: The Seller, The Buyer, The Seller’s Agent (Listing Agent) and the Buyer’s Agent:

  • It’s a balanced seesaw. Everyone has fair and equal representation. Everyone’s interests and concerns are heard by their OWN agent.
  • Now, take out the buyer’s agent:
    • Suddenly the balance has shifted. When the Seller hired the Realtor(R) they signed an agreement that the listing agent WORKS FOR the SELLER. They represent their interests…not yours.

You should know EVERY agent has their own opinion on this subject and can choose to do it, if they wish. It’s completely legal and often very common. I choose not do it for several reasons:

1. Frankly, in a world where someone can sue a company for burns after ordering Hot Coffee and spilling it on herself – I do it as protection, just in case.
2.  I think at some point, someone will be unhappy. If your attention is split between parties, especially during negotiations, someone will not be heard. I’ve had a lot of happy customers over the past few years and i’m not sure if I could say that had I been representing both sides.
3.  You don’t necessarily get a “better deal” by using the listing agent. When pricing a home, you get an estimate of what it costs to sell your home and part of that is the total commission nugget. More often than not, if an agent is doing both sides they cut their commission for the SELLER – not you as the buyer.

On one of my first dates with my boyfriend, he told me he thought Real Estate Agents were criminals; I don’t blame him as our industry usually has a bad rap. Turns out he had a bad experience with a dual agency situation years back. That explains it.

6 thoughts on “Dual Agency: Why I Don’t Do It

  1. I could not agree with you more, Laura. My state allows dual agency as well and I try to stay away from it. You nailed it dead on when you stated that buyers think they are getting a deal by using the listing agent as their Realtor. I think most people who have the situation fully explained to them would understand and opt for their own representation. They need to really understand the cost and impact that this scenario has on their bottom line – and it is not money in their pocket!

  2. Having been involved in defending cases against real estate agents, and also a lot of construction and real estate cases in general, you are definitely on the right track.

    The lure of earning both ends of the commission I am sure is tempting. For the parties, the chance to reduce the total commission for sale by joint negotiation is probably attractive. The problem is serving two masters and satisfying none.

    Also, by acting as dual agent, you eliminate the protections of the economic loss rule … stated simply, you need a contract to sue for contract damages. Generally, most suits will flow from buyers upset over getting into a deal they perceive as bad after the fact. If you are a dual agent, you can likely be sued for negligence or breach of contract as opposed to just fraud.

    Note – this comment is very Virginia specific, the law is a lot different in other jurisdictions …

  3. You are right about this being one of the reasons why many people are suspicious of realtors and they don’t trust them. One bad experience is mostly enough. As for dual agency itself, it is allowed where I come from, but I also don’t prefer this kind of agency relationship, as I think it represents a potential conflict of interests. One of the most important points of real estate agency is to take many worries off client’s mind, not to add more.

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