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.

Virginia Hall
ABR®, CRS®, e-Pro, GRI®, SFR
Coldwell Banker Residential Brokerage
VirginiaHall.com
Direct (619)258-8585
DRE#01409760

Buyer's Representation is Free, Free, Free!

I recently had a friend call me after he had entered into a contract on a home, only he used the listing agent to represent him,as the buyer. He thought that by using the listing agent with a cash offer, that he was more likely to get his offer accepted. Which may be true, since the agent will be double ending it--walking away with the full commission rather than just half. Can't blame the agent. Dual agency is legal in California. In most cases, an agent can represent both parties fairly...or so it seems.

Regarding commissions, the standard of practice in Southern California is the seller pays the full commission to their listing agent who splits it with the buyer's agent. Therefore the buyer who believes he is saving money and still getting the best representation, may be sorely mistaken.

Ironically my friend called me, someone he trusts, to ask if I knew of someone that could look over his paperwork. He hadn't used agent in his last real estate transaction and didn't understand all the paperwork. I had to explain to him that I could not, nor would any ethical realtor, review the paperwork after hiring the listing agent to represent him. This would be interferring with their agency and could land myself or the other realtor in hot water. So I had to refer him to a real estate lawyer. And they aren't cheap.

I explained that the next time, he would be better off hiring a separate agent to represent him and then he would feel like someone is really looking out for his best interest. Often the listing agent has established a relationship with the sellers, making it difficult to be impartial; as well as it is often difficult to keep certain confidential information from slipping out.

While I have done dual agency in the past, and believe that in certain circumstances it may be a good way to sell a more challenging home. However, I firmly believe the best way to buy a home is with your own FREE representation.

--Virginia Hall
ABR, CRS, e-Pro, GRI, SFR
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760