Dual Agency?

6 Replies

Is Dual Agency something to be avoided?

Situation:  I went to a rental showing because I was interested in purchasing within the building at some point.  The showing agent happened to be the owner of the unit, who is also a Realtor.  I think this agent could provide me with an inside track to purchasing a unit in the building, but this would likely lead to dual agency.  Obviously this leads to a conflict of interest, and essentially a loss of someone 'on my side' through the transaction. 

What do you guys think of situations like this? 

You're right in your assumptions. You will lose the "I'm fighting for the lowest price you." But you'll gain an advantage among competition from other offers. Even if the seller wasn't the owner, selling agent's will fight harder to "represent" the offer that they are dual representing because they will get both commissions. 

I'm not here to talk the ethics of that subject, it just happens though! In this case, it's best to do your own due diligence and know what you're willing to pay up front. You have to be your own negotiator.

Hi Mitch,

Types of agency allowed vary by state. I would research the options in the states you are buying in to see what types are offered.

Dual Agency is not allowed in all states and just some. Dual agency is when the broker/agent is representing both sides in the transaction in a client capacity.

Generally in a dual agency situation it's hard to effectively negotiate for both sides. You are trying to get both to meet in the middle so both sides of the commission are made. This in my opinion puts the interests of the broker/agent ahead of the fiduciary duty to the seller and the buyer as a client.

Some states allow designated agency where it's the same brokerage but a different agent for each party to represent their interest etc. You also have transactional agency where the broker/ agent isn't representing either side but only helping facilitate the transaction with each being a customer. In this capacity the broker/agent is performing ministerial acts only filling in forms etc. but not doing other activities that would warrant a client relationship. You have to be careful as the actions of the broker/agent can create an "implied agency" relationship with either the seller or buyer which was not the intent. You also might have an option where the broker/agent says on the contract they are representing the seller in a client capacity and NOT representing the buyer and helping only in a customer capacity. In this way they still get both sides of the commission without dual agency.  

No legal advice.             

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Not really, dual agency is more to facilitating the transaction and representing the seller, theory at law is that a servant can not serve two masters and is now pretty much nationally recognized for Realtors. But not all licensees are Realtors!

You can talk up what ever, gain knowledge without acting like a buyer.

If you have little experience, get representation. Understand that what ever you say to a listing agent is like talking to the owner and what they know the owner may have said won't be mentioned to you. So, watch what you say! :) 

pros & cons

Pro-is if he sells it to you he doesn't have to pay anyone a commission.

Con-you may be a novice and open to being taken advantage of.

An experienced buyer its a no brainer buy directly from the owner. In a novice situation it becomes more tricky.

Thanks for the replies everyone. If I go this route I'm getting the idea to:

  • Know the legal options of Dual Agency in my state
  • Know my pricing
  • Negotiate a lower total commission

These seem to be the biggest caveats.  Would it be out of line to bring in a selling broker just to avoid DA?