How Does Dual Agency Work in Real Estate

Written by Posted On Wednesday, 12 April 2017 08:35

What is Dual Agency?

Let me be very clear right out of the gate. I am not a fan of dual agency. For those who have heard the term and are wondering what it is, dual agency is when a real estate agent represents both the buyer and the seller in a single real estate transaction.

In my thirty years in the business, doing what's right has always been my top priorty. Money is secondary. Your income is what you make from doing your job. It is not, however, something that should influence your ethics in anyway.

Frankly, this is what happens when real estate agents practice dual agency. They try to serve two masters in the same deal which is impossible. Agents do this because they don't want to give up the opportunity to make double the commission.

Let me explain what I mean. When a buyer contracts with a real estate agent to represent them it's not because the agent drives a nice car and thinks getting chauferred around in it to look at homes would be nice. NO - a buyer hires an agent to be able to guide them throughout the process of buying a home.

One of the major aspects of buying a home, of course, is to make sure you are paying the right price. A major function of a buyer's agent is to advise their buyer client on the fair market value of a home. The agent is in the buyers corner making sure they are making smart decisions. They are advising them of things in the area that could impact market value.

When the home inspection happens and their are issues that turn up, the real estate agent becomes an advisor again. What should the buyer ask the seller to repair? Should there be a credit given for a specific issue?

Dual agency precludes any of these things happening. You cannot advise a buyer client on price when you become a dual agent. The real estate agent becomes a neutral party. The buyer is giving up their right to having a buyer's agent in their corner. Sounds great doesn't it?

Now let's review dual agency from the sellers perspective. When a seller contracts with an agent they also want someone who can advise them properly throughout the process. Again, using the pricing example, let's say a home is listed for $500,000.

An offer is brought in on the property from an outside real estate company for $475,000. When this happens the sellers agent can advise the seller what to do. How much should the counter offer be? Are there other terms in the offer that don't make sense?

The agent is there to make sure the seller gets the best terms possible. They have an advisory role that protects their client.

In dual agency the sellers agent cannot give the seller any kind of pricing advice. They cannot tell them what they should counter at. They cannot tell the seller what they should accept. The seller loses their "sellers agent". They don't have anyone "exclusively" in their corner anymore.

Are you beginning to get the picture that dual agency does not serve buyers and sellers?

Unfortunately, there are numerous real estate agents who will tell you otherwise. You see money gets in the way of doing what's right. Real estate agents love to "double side" a deal. Who wouldn't want to make more money? Human nature has a way of people making poor decisions. Dual agency is one of them.

Dual Agency and It's Meaning in Different States

One thing that can be confusing for both real estate agents and consumers alike, is the fact that dual agency has different meanings in different states.

For example, in Massachusetts dual agency occurs when one agent works with both the buyer and seller. In other states dual agency is when two real estate agents from the same firm represent the buyer and seller. In Massachusetts this is called "designated agency".

I am perfectly fine with this arrangement as both the buyer and the seller have someone in their corner representing them. The buyer has an agent and so does the seller. Each is protecting their clients interests.

Dual agency with one agent trying to present both the buyer and seller is a far cry from that. Can you imagine a lawyer trying to represent a plaintiff and a defendant in a lawsuit? Me either. Sounds pretty stupid doesn't it? That's because it is!

Real Estate agents are required to explain agency law to buyers and sellers. If you are going to be buying or selling a home do yourself a favor and reject dual agency!

Get yourself a real estate agent who is fully committed to doing what is best for YOU and not their wallet or pocketbook!


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Bill Gassett

One of the top RE/MAX agents in New England over the last decade plus. Providing exceptional real estate services to buyers and sellers in the Metrowest Massachusetts area including the following communities: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.

See my real estate website at Maximum Real Estate Exposure - one of the most visited real estate sites in Massachusetts.

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