Can you double dip as an agent? If you can how?

Question

I just became licensed in Florida and I thought to my self if you could double dip as an agent meaning you list a property for a seller but then you wholesale the listing to get the commission from the seller and the assignment fee from the buyer if it’s possible how would you go about it?

Jeff Copeland · Answer

While you are not wrong, your answer has nothing to do with the original poster's question about wholesaling his own listing.

Sergey A. Petrov · Answer

Why worry about the client's best interests if I can put more money in my own pocket? Sarcastic, obviously....

Adam Martin · Answer

I just don't see this working out.  If you list the home I am assuming you are listing for market price.  The only way the deal would work for a wholesaler is to buy it under market price and keep the spread.  Why would your client agree to sell at a discount to a wholesaler when you have it listed and presumably other offers are coming in or they could get a better deal from someone else.  I have been pitched by wholesalers before and their big play is that they are saving you realtor fees which you are taking as well as the assignment.  If you ran this by me as my former listing agent that is what you would be.  I'm not saying you couldn't work this out with an uninformed buyer but ask yourself, should you and is it ethical?

Chris Seveney · Answer

@Marcell Kiss

What does your gut tell you? Are you not supposed to represent your client and get the highest and best price ???

Wale Lawal · Answer

@Marcell Kiss

Double-dipping is when a broker represents both the buyer and the seller in a transaction in the real estate industry. This act has been practiced for many years and has some advantages and more not-so-pleasant disadvantages.

Advantages of Double Dipping

Let’s start with the advantages of being represented by a double-dipping agent.

• Same agent represents both the buyers and the sellers, there is more potential for more efficient communication between the two parties. One of the most common complaints we hear from both agents and sellers is that the other party’s agent takes too long to reply. Sometimes it is because their client isn’t responding, but it is usually because the agent is too busy with other transactions.
• There is potential for more transparency in the negotiation process. While we will also touch on this as a negative, this can increase the closing speed and satisfaction if done ethically. When both parties can effectively convey their contingencies and various other aspects of settling on a house, an experienced agent can effectively maneuver the transaction for the benefit of both parties. The downside to less back-and-forth negotiation is less negotiation. When one agent represents both sides, there is no second agent to step in and negotiate a better deal for either side. There is no check on the sole realtor’s power.
• As a buyer in a seller’s market, it cannot be easy to win on an offer. While this can be unethical, when a buyer is working with the seller’s agent, the agent has more financial incentive to close with the buyer since they will likely be earning double the commission. Overall, the potential advantage in a transaction where the agent is both the seller and buyer agent is a faster, more efficient transaction process.

While a quick transaction may sound like a great deal, it does have many negatives, so let’s look at the other side of double-dipping. Throughout the entire real estate industry, one thing tends to stay constant. Realtors act in self-interest. When a realtor represents both the buyer and the seller, all the cards are in their hand. A fiduciary is a term used to describe someone who has an exclusive obligation to someone or something. In real estate, a fiduciary is an agent that represents only the buyer OR the seller. So, when an agent represents both parties, they are no longer fiduciary and have less time to spend with either party. Without the fiduciary responsibility, the agent will now negotiate with themselves, and the quality of service the buyer and seller would get goes down. In addition, this means the agent will do less negotiation, while the same double-dipping agent will get double the commission.

Agents make the argument that double the work deserves double the commission. However, is representing both parties double the work?

Disadvantages of Double Dipping

While double dipping agents gain advantages through this practice, its also has a fair share of disadvantage that can harm not only the transaction but the client as well. Here are disadvantages of double dipping in real estate transactions.

• The claim that representing both parties is double the work is not valid. In most cases, it is equal to representing just one party; in some cases, it is LESS work. You may be asking, “how is dealing with an extra party less work than dealing with one?” When a realtor deals with another realtor, many challenges arise. There are delays in communication, multiple counteroffers, an ever-changing timeline, to name a few. The benefit of being the sole realtor in a transaction is that you have direct contact with both parties. There are no wait times when negotiating contingencies, and all the info and various transaction processes are in your hands. So, the argument that double the work deserves double the pay is not valid, simply because the realtor doesn’t do double the work.
• Another reason double-dipping can harm clients, particularly buyers, is the conflict of interest. There is a high chance that a buyer agent is also representing a few sellers. In most cases, the buyer agents will show their listings first and encourage the buyers to submit an offer on those houses to get double the commission. This can hurt buyers who would miss out on finding a better home because the agent decided which homes they see. If a client gets caught up with an agent that steers them towards their listings, it is wise to use an app like Zillow and ask the agent to show those houses instead.
• Double-dipping may raise the price of the overall home sale for buyers. The agent has an incentive to sell the home for as much as possible to get more commission. When there is no competition among agents, they are free to manipulate both sides to have a more favorable outcome for themselves.

All the best!

Jeff Copeland · Answer

No. But you don't need to as a licensee.

First of all, this is a question to run by your broker. Remember, the brokerage represents the seller. and you are an agent of the brokerage. You don't get sued personally when things like this go South, the brokerage gets sued. So always run odd situations like this past your broker.

Secondly, as a broker in Florida, my take on it this is: There are legal and ethical ways you can make very good money in a situation like this (where you have a seller and a buyer, and you are the middle man bringing them together) - In fact, that's sort of your job as a real estate agent.

But what you are describing would likely be a violation of the code of ethics and possibly state law, which requires you to use skill care and due diligence as a fiduciary for your client (depending on the brokerage relationship). It would be hard to convince a judge this was in the best interests of the seller.

Standard 1-5 of the NAR Code of Ethics states:

REALTORS® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties.

Here's the thing: If you were doing this with full disclosure and informed consent of the seller, you could just charge them a higher commission for bringing the end buyer. You would already have a listing agreement so you would not need to "buy" the property yourself and charge to the buyer an assignment fee (so your hypothetical scenario above suggests you'd be doing it without the seller's awareness or consent, which is illegal and unethical).

In fact, you could also legally charge the buyer a commission and represent both parties as a transaction broker (as long as you had full disclosure and informed consent).

Many common practices involved in wholesaling only exist to get around the fact that the wholesaler is unlicensed and cannot legally be paid a commission. Having your license eliminates the need for all the shady practices designed to skirt state laws, but it also holds you to a higher standard when it comes to representing the best interests of your client and protecting consumers.

Note: There have been instances in the past few years where realtors got in trouble for buying their own listing at a reduced price and actually closing on it, and then reselling it later for a higher price (I wish I could find the article. If I do, I'll post a link). No matter how you spin it, there's just no way that was in the best interest of the seller.

Can you double dip as an agent? If you can how?

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