Real Estate Dual Agent Pros And Cons – Few topics spark more heated debate among real estate agents than dual agency real estate. Some are in favor of this practice, some are strongly against it. Several states have banned or strongly regulated dual agency, and several others are currently considering similar legislation. Since the decision to enter into a dual agency situation is strictly made by both buyers and sellers, let’s take a few minutes to define dual agency and look at some of the advantages and disadvantages. I’m writing this column in California, so I’ll refer to commonly used terms and examples here. If you’re in another state where the terminology is slightly different, pay attention to how agency relationships work, regardless of titles and labels.
Dual agency is a situation where both the buyer and the seller in a transaction are represented by the same real estate broker. Have you ever gone to an open house and met with the listing agent (the agent representing the seller)? If you express interest in the home, the listing agent will usually ask if you currently work with an agent. Alternatively, they can submit an offer to the seller on your behalf. If you agree, you will be entering a dual agency situation.
Real Estate Dual Agent Pros And Cons
Agent Arnold listed a tiny home in Silicon Valley for sale at $4,100,000. The selling agent confidently told Arnold that he would accept $3,900,000. The buyer agreed to meet with Bob Arnold at an open house. Arnold submits an offer to him in a dual agency situation. Bob wants to give away $4,000,000 and up
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Agent Arnold for advice on how much to bid. Can you advise agent Arnold Babb how to get the best deal—his duty of good faith—without using or disclosing confidential information to the seller? Note: Bob needs a number, he does not consider “make your best offer” an acceptable suggestion.
There are actually two types of dual agency, so let’s expand the simple definition presented above to refer to the role of brokers in real estate deals. In most states, real estate agents must work
. The broker owns the office or manages the sales staff employed by the agents. Here in California, real estate contracts like listing agreements and buyer representation agreements
(Unless the agent is a working broker). Simply put, when you hire an agent to list your home for sale, you are essentially hiring a broker. You may never meet the broker, but every document you sign with the broker will have his or her name or office name on it. How does this involve dual agency? Let’s look at another example.
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Seller Ann signs a listing agreement to sell her home with agent Sally, an agent at Happy Valley Realty. Within days, an offer was received from a buyer represented by agent Doris of Happy Valley Realty.
If the seller accepts Ann’s offer, is the sale a dual agency situation? Yes, the listing agreement is between the seller and the same broker/office that employs both agents. In some states, this form is called dual agency
Is dual agency dangerous for the buyer or the seller? Buyers and sellers must weigh the pros and cons of dual agency situations based on the convenience of their particular transaction and process. Some sellers won’t accept offers that create dual agency situations, and some buyers won’t work with agents employed by the same broker who listed the home they want to buy. Some brokerage firms have developed innovative and ethical solutions to reduce the risks inherent in dual and multi-agency transactions, while others prevent their agents from entering into dual-agency situations. Consumers concerned about the risks involved in any real estate deal should consult with an attorney in the state where their property is located.
Have questions about dual real estate agency or other aspects of buying and selling real estate? Drop me a line! When you’re looking for the right home to buy, an important thing to consider is whether you can get a dual agency for the home you want. Dual agency occurs when the real estate agent who represents you also represents you. The home seller you want. This situation can occur when two real estate agents from the same brokerage represent the seller and the buyer. Remember that these agents
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Each party can benefit to some degree from a dual agency situation. The seller can save a small amount by paying commission to an agent. The entire transaction can be streamlined, meaning that buying a home can be completed in a shorter time frame. The main advantage for the agent involved in the transaction is that they receive the full commission, which is usually six percent of the total sale price.
Although dual agency is legal in almost every state, it is important to understand that the practice is highly regulated to ensure that both sellers and buyers are protected from predatory practices. In a state like Alabama, both the seller and the buyer must agree to be represented by the same company or agent before the transaction can proceed. The same is true in California. Before an offer is made on the home you want, you will be given a form entitled “Real Estate Agency Relationship Disclosure”. The form identifies all agents and intermediaries directly involved in the transaction.
Every California real estate agent has a fiduciary responsibility to act in the best interest of the clients they serve. If an agent represents a buyer, they must act in their best interest regarding a home or during the negotiation process. Therefore, it is almost impossible to properly manage both parties when the transaction closes. The fiduciary duties that a real estate agent has are written into the licensing laws. Due to this obligation, you must log out before proceeding with the transaction.
This article takes a detailed look at some of the advantages and disadvantages of dual agency.
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Although dual agency is risky, there are numerous advantages for buyers if they decide to pursue this option.
The main benefit of sharing your real estate agent with the seller is that the transaction can be streamlined. In most situations, an agent representing both the seller and the buyer will be able to more efficiently prepare and sign the documents. When offers are made by the buyer or counteroffers are made by the seller, communication between the two parties may occur at a faster pace than usual.
In a standard real estate transaction with two separate agents, an offer is made with the help of your agent. Your agent will send the necessary documents to the seller’s agent, after which the seller can make a counteroffer or accept the original offer. By eliminating one party, the entire process becomes more efficient and effective.
There is also the possibility that the dual agent will accept a slightly lower commission than usual. In a standard real estate transaction with two agents, each agent receives three percent of the total home price, which equates to six percent overall. When an agent represents both parties, they may be willing to earn a commission of 5.0-5.5 percent. When you use a dual agent, you also have some bargaining power as a buyer. If multiple offers are made to the seller, your agent can help you create the offer that is most attractive to the seller.
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There are times when dual agents have more information compared to agents working only for the buyer or seller. For example, a double agent may obtain information from the seller that he would otherwise be unaware of. If the seller agrees, the agent can provide this information to the buyer, leading to a smoother transaction. Without a dual agent, any questions you have about the condition of the property should be directed by your agent to the seller’s agent, which will only serve to prolong the transaction. With these benefits in mind, having a dual agent may be the right choice for you when buying a home.
While dual agency can be very beneficial to a buyer, there are some legitimate concerns you should be aware of before making your decision. of
Although a dual agent can tell you about the condition of a property or other information you require from a seller, the seller is legally prohibited from giving you confidential information that you do not want to know. For example, a dual agent cannot tell you if a seller will accept an offer lower than the listed price. If you were
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