Monday, May 16, 2011
The Slippery Slope of Dual Agency
Many buyers deliberate seek out the agent selling the home to represent them. They believe they have a better chance of getting their offer accepted at a better price and terms. Some first time home buyers don't understand that they don't pay for their representation, the seller normally pays the commission. But is it a wise decision? While many agents can do dual agency fairly, it is often like being the divorce lawyer for both parties.
Representing both sides is legal in California, and the California Association of Realtors tries to educate buyer and sellers with the Agency Disclosure that defines the agencies. However, Dual Agency can be a slippery slope and not always in the best interest of both parties. In comparison to separate representation, dual agency involves a higher number of law suits.
Conflict of Interest. While it is legal, the Agent's interest may be the priority. Normally the listing agent splits the commission with the buyer's agent. In the case of dual agency, all of the commission goes to the listing agent. Some sellers will try to negate this by negotiating a lower commission for a dual agency situation, but it is worth the risk of stepping over the regulated agency boundaries.
In most cases, the transaction is also easier for the agent. They spend less time calling and emailing, communicating and negotiating with another agent, who is busy and can never be reached. Also, the agent spends less time faxing or scanning forms to be signed by the other party.
Confidentiality. Since the agent is representing both sides and knows everything about both parties, confidentiality can be hard to maintain. For example, I had buyers once who found out they were expecting and reconsidering their decision to buy a two bedroom, when their adolescent would have to sharing a room with the baby. At the same time, the excited sellers were prematurely heading to another state to search for a new home.
Less Satisfied. Often both parties feel like the other party got a better deal. Even though the agent strives to please both parties, some little nagging devil sits on their shoulder whispering that the agent favored the other party and "they got a better deal."
So having your agent represent both sides, may not always be in your best interest.
ABR®, CRS®, e-Pro, GRI®, SFR
Coldwell Banker Residential Brokerage