If you decide to sell your home, you’ll work with a listing agent. If you’re on the hunt for a home, you need to find a selling agent. What you may not plan to encounter is a dual agent.
What is dual agency in real estate? This isn’t a common arrangement, so you may need insight into what dual agency entails.
You may find that your agent also represents the seller of your dream home, which can make dual agency tempting. For some major insight into how the process works, what the pros and cons are, and if it’s even legal where you live, read on.
While a dual agent sounds like a job title straight out of a James Bond movie, the title represents something a bit less exciting.
A dual agent is simply a real estate agent who represents both the home buyer and the seller in a real estate transaction. It’s much more common to have separate real estate agents represent the buyer and seller, as different representation helps avoid a conflict of interest (we’ll elaborate more on this issue in a bit).
It’s most common to come across dual agency when a buyer’s real estate agent happens to list a home for someone else that the buyer happens to falls in love with. The odds of the stars aligning here are slim, but it does occur on occasion. When the opportunity does arise, dual agency may seem like a convenient arrangement at first glance — and in some ways it can be — but dual agency also comes with some major ethical concerns.
If you’ve already started to pick up on the fact that the concept of dual agents can be perceived as unethical, you’re not wrong.
When a real estate agent sells a home, they split the commission paid by the seller with the buyer’s real estate agent. Dual agents receive double the commission they normally would in a real estate transaction where they represent both the buyer or seller. That means they have double the incentive to close the sale, and may not disclose important information to either the buyer or seller that could jeopardize the sale and their hefty commission.
They may also struggle with the fact that they need to help two clients negotiate against each other. This is especially a concern if the real estate agent is closer with one client than the other. Even if they don’t intend to, the dual agent may subconsciously provide better representation to one party.
When a listing agent and selling agent work together to close a real estate transaction, two things happen. To start, they each have their client’s best interests in mind and can champion them. Secondly, they keep each other in check. What do we mean by that? The average consumer naturally isn’t up to snuff on real estate best practices and laws. So, it’s best to have another agent watch out for any fishy behavior by their counterpart. Each agent should ideally make sure everything is above board and that they protect their client throughout the process.
While dual agency can be ethical when the dual agent manages the process correctly, the more important question is, is it legal? The answer to that question depends on where you live. Dual agency is illegal in some states. Even if both the buyer and seller want to work with a dual agent, they can’t do so legally in these states:
Chances are, your real estate agent won’t propose dual agency if it’s not legal in your state. If they do, that’s a big red flag and you should reconsider your relationship with them. Even if the state you live in allows dual agency, there are typically restrictions on the process. Both the buyer and seller will have to give written permission to the real estate agent to move forward in the event that the opportunity for dual agency arrives. Without permission from both parties, there’s no way for dual agency to occur.
Like most things in life, there are both advantages and disadvantages associated with the dual agency process. Let’s take a closer look at both sides of this coin so you know what you’re up against.
If dual agency is legal in your state and you find a real estate agent you trust to manage to process correctly and fairly, then you may find that a dual agency arrangement is the right fit for you. That being said, you get a better quality of service, more support, and a lot more impartiality when you work with an independent agent. Whenever possible, it’s best to skip a dual agency arrangement.
If you find your dream home and it’s listed by your real estate agent, you may be tempted to move ahead with dual agency. Make sure you weigh both the pros and cons before you decide to work with a dual agent — and trust your gut here before you make any written agreements.
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