Dual agency is not preferable for most buyers and sellers, but those who must go with a dual agent can protect themselves by staying informed
In the business of buying and selling a home, real estate agents have an attorney-like role, protecting, advocating and representing the rights and interests of their clients.
Considering that these clients must place a lot of trust in an agent, it’s no wonder that the term “dual agent” can have an ominous ring to it.
So, what exactly is a dual agent? There are two main types, one that is of more concern than the other.
With Two Agents
A licensed real estate broker (either an individual or company) often employs several salespeople, commonly known as agents, who work directly with clients.
“If a broker has two agents, one who is listing a property and another who represents a buyer who wants to purchase the same property, that is considered dual agency, because they are both under the same broker,” says Clare Ellingwood Mullen, an agent with Prudential Reddington Realtors in Glenside, Pa. Mullen says her company often represents clients on both sides of a transaction.
In this form of dual agency, there’s less of a chance for a conflict of interest. It’s helpful if the broker does not get involved “in any negotiations or other transaction details unless there is a major issue,” such as a death on the premises during transaction or breach of contract, as is the case with Mullen’s broker.
“[Real estate] offices and brokers are area-specific, so this is common and sometimes unavoidable,” Mullen says of this situation.
With One Agent
The other form of dual agency is when an agent lists a property for sale and represents the buyer for the same transaction. As can be expected, this causes a conflict of interest.
“In states where there is agency law, agents have the highest fiduciary responsibility under law to the person you are representing,” says Sheldon Detrick, CEO of Prudential Detrick/Prudential Alliance real estate companies covering the Oklahoma City and Tulsa, Okla., markets. “Fiduciary” means making decisions that are in the client’s best financial interest.
Each client should have an agent who works for his or her interests exclusively, so the client can get the best deal. But, it’s impossible to advocate for the best price for the seller and the lowest price for the buyer at the same time.
Dual agents get to know all the secrets of both the buyer and the seller. Just like someone wouldn’t want to share the same divorce attorney with an estranged partner, it’s a bad idea to share an agent with a buyer or a seller.
Agents and companies who practice dual agency often have to walk a very cautious path.
“Under the law of agency… you have to keep both the buyers’ and sellers’ information private and you need to do what is in the best interest of both parties to positively affect the deal,” Detrick says.
Mullen says agents have different ways of dealing with such situations.
“Some agents have created techniques that they believe overcomes the grey area of [dual agency],” she says. For instance, they might keep all offers sealed until presenting them to the seller.
She continues, “I personally do not feel comfortable with this type of dual agency. How can you truly represent a party when you have equal ties to both sides?”
Despite the apprehension, there could be situations where a buyer or a seller has no option but to go with a shared or dual agent. In that case, tread carefully and ask lots of questions, Mullen advises.
“Discuss the process for presenting offers and dealing with inspection and appraisal issues,” she says. “Do research as to market values in specific neighborhoods to be sure you are not over-paying or accepting a lower offer that benefits an agent more than you.”
Every state has its set of disclosure laws. Visit the Real Estate Commission’s website for your state or connect to its hotline. You can also inquire about the laws with a licensed real estate professional, Mullen says.
© CTW Features