Dual Agency Broker - good or bad?

Question

Does anyone have experience working with a broker who represented you as the buyer (or seller) who also represented the other party on a purchase?  Wondering the pros and cons of using this setup!

Marcus Auerbach · Answer

It can go okay if the deal is smooth, but generally a bad idea with no upside. If the deal goes bad (over inspection), EM disputes, maybe ends up in litigation... no, thank you!

A common misconception is that the deal does not include the cost of a buyer agency, but buyer co-broke is paid for by the listing agent, so you save the listing agent that expense, not the seller. So as a buyer, you get no representation and the seller is still paying for it.

On top of the legal issues, I have an ethical problem and feel I can represent opposing parties. So if someone calls me on one of my listings unrepresented, I refer them to another agent - did so last night.

Jules Aton · Answer

I am actually in favor of it as a buyer although as @Seth McGathey noted you need to know what you are doing with regard to the offer. It seems to reason that an agent essentially double dipping has more impetus to get my deal through all things being fairly equal. It is easier for them to control the moving parts and I suspect more likely to close. In most cases unless a  blatantly bad deal I suspect most Realtors want to close the deal regardless of who they are representing but also will be relatively ethical about it. No problems with it so far.

Seth McGathey · Answer

@Jules Aton good point. I actually almost added that arguably one positive to the clients is smoother and quicker communication. Because normally you tell me, I tell their agent, their agent tells the other side. Then the response reverses. So maybe you trust your agent to properly communicate your information but who knows what the other agent is doing. With one agent, that fear mostly goes away.

Elealeh Fulmaran · Answer

Dual agency can speed communication and cut drama, but it blunts advocacy. Pro: one point of contact, faster info flow, potential leverage with a motivated listing agent. Cons: conflicts of interest, limited ability to push price/repairs, and risk of things getting lost in translation on commissions and terms. If you do it, require written disclosed dual agency, define exactly what the agent can and cannot advise on, and add protections: independent inspection, your own appraisal/comps, and an attorney or transaction coordinator on your side. When in doubt, ask the broker to assign a separate agent in‑house.

Kevin Farmar · Answer

Dual Agency is such a slippery slope. I've been the dual agent in smooth transactions and those that became complicated. There's bumps in the road 95% of the time during the contract to close period in any real estate transaction. For that, I no longer practice dual agency as I never want a client to say or think "who is this guy really working for?". I'd make the argument that the agent is loyal to the person that hired them first -  especially if it's the seller, as they are usually the one paying commission.

There's listings that close everyday with dual agency and that's fine too. If you have a qualified (and ideally experienced) buyer who has a set budget, is motivated and makes a fair market offer to the seller - I see no issue with that. Buyer should understand the risks, but that will not faze some as long as they end up with the keys to the property. It sounds great in concept, but applying it is a totally different beast.

Always interesting to hear others perspective on this topic. I can appreciate the opinion either way.

Marc Winter · Answer

Up until a year or two ago, when NAR had this issue litigated, listing agents represented the seller, and if they brought a buyer, were obligated by Realtor regulations to deal honestly and ethically with a buyer they brought to the table.

Of course, Realtors are humans and subject to the foibles of our species; some are open and honest, while others were not so much.

To me, it depends on the agent you are working with, irrespective of if they are representing the seller or the buyer.

Steve K. · Answer

Dual agency is forbidden in my state and a few others. We can only represent one side here or we can be a “transaction broker” representing neither side, like a referee. Whether or not it’s advisable in places where it is allowed depends on the situation IMO.

If you’re talking about simply needing someone to write a contract or manage the paperwork for a transaction that is super easy, then it might make sense to keep it simple with one agent.

However if you’re talking about using the listing agent to represent both you and the seller as the buyer, I think that’s a terrible idea unless you have done dozens of transactions and know the contract and the whole process on an expert level. If you’ve only done a few deals or less, then you’re still an amateur and the listing agent (who obviously has an existing relationship and fiduciary duty to the seller) may be an expert. How do amateurs usually fare when competing against experts? It’s like using your ex’s attorney in a divorce in my opinion, or like asking the other teams coach for advice in the Super Bowl, just a terrible idea.

I’ve heard people bragging about going straight to the listing agent to submit an offer in order to save the buy-side commission before and found out that they overpaid by the property by $500k in order to save a $30k commission. Another example is a friend I was helping out who cut me out and went straight to the listing agent then tried to sue her for problems with the property as if it was her fault that they didn’t find those problems out during their due diligence. Too late, now they own those problems because they messed up.

It can work if you’re an expert at all things real estate, equal to a seasoned agent who has done hundreds of deals, or it can backfire badly if you’re an amateur at real estate like most people are.

Dual Agency Broker - good or bad?

Most Popular Reply