We often get asked “What is dual agency in real estate?” by both buyers and sellers and, as you’ll see, we have strong feelings on the subject.
By definition, dual agency means that the real estate agent is representing both parties in a transaction. For example, we are representing the sellers of 123 Main Street. We advised them on how they should price the home to be competitive in the market, but still meet their financial goals. We’ve also advised them on how to stage the home so it will sell fast, done all of the marketing for the home, put it in MLS, conducted Broker Open Houses, met their kids, snuck treats to their dogs, etc.
Totally unrelated, we meet you. You ask us to help you find the perfect home for you. We tour tons of properties together, go through your finances with your mortgage lender to determine what you can comfortable afford, meet your parents, cousins, kids, fish, etc. One of the properties we see is 123 Main Street, which you decide is the home for you. It’s perfect, it has rainbows over the house, unicorns flying off the roof and little leprechauns with pots of gold in the yard. You want this house.
The problem is that we now know confidential financial information about both you, the buyer, as well as the sellers. In IL, as long as you and the seller sign off saying you want us to represent you both in the transaction, it’s legal. We act as an intermediary and help you both come to an agreement on the sales price of the home and the terms. However, we are NOT allowed to advise you in any way or make suggestions about what you should offer the seller, etc. Well then, what did you hire us for? If we’re representing the seller, it’s our job to get the highest price and best terms for the seller that we can. And if we’re representing the buyer our job is to get the lowest price and best terms for the buyer that we can. After all, that’s why you picked us over Joe Schmo. We are master negotiators.
So how can we represent both the buyer and seller fairly? In our humble opinion, we can’t. No Realtor can. It’s a conflict of interest. We would never work as a dual agent and would rather refer our buyer to a different agent who can handle the negotiation on their behalf, even though that means losing part of our commission. It’s the right thing to do.
What should you say if your agent wants you to agree to dual agency? We would say no. In virtually all states it is unethical and illegal for a broker to represent buyer and seller in a real estate transaction without written consent of both. So you have a choice. You do not have to provide your written consent. We would say no then ask the brokerage to provide us with a new agent who will represent OUR best interests.
But that’s just me.
Click here to read a great article from the Wall Street Journal about dual agency in real estate
