Dual Agency – The pros and cons of a single broker representing the seller and the buyer.

Ali Alavi, Alavi & Braza, P.C.

Typically, in real estate, one broker represents the party selling the house, commonly referred to as the listing agent and another broker represents the party buying the house simply called the buyer's agent.  However, Massachusetts real estate law allows for a single broker to handle both sides of the transaction. This broker is now known as a dual agent. 

A dual agent will represent the buyer and the seller and therefore stands to be more profitable.  On the face of it, it may seem like a no-brainer for any broker, but the law must be followed quite carefully or else the broker could end up losing their license.  

To be approved as a dual agent, written consent of the seller and the buyer must be obtained prior to the execution of an offer to purchase.  During the entire process, the broker shall remain neutral and must work diligently for both parties to ensure there are no conflicts of interest. 

How to navigate the dual agent waters.  Most brokers and salesmen love dual agency for obvious reasons, however problems can arise if this is not carefully explained to the client.  For example, some brokers may include dual agency language in their contracts so that the dual agency happens automatically.  While on the face of this it is legal, however a strong argument could be made that informed consent was never received.  That is why it is always in the broker's best interest to be fully upfront with the client on every point.  

Dealing with both parties.  In most real estate transactions, the seller always feel that they should be more vigorously represented.  Typically, it is the seller who will pay the commission, so they feel they have ‘paid for' the loyalty.  Having said this, the buyer may feel that they are not being as strongly supported as the seller.  Obviously, in a dual agency situation, the broker will have to strike a balance between the needs of each party and this can quickly become very complicated.  

What questions should you ask if you're a broker that wants to enter into a dual agency situation:

When a broker suggests dual agency, both parties need to fully understand what that means for each of them and should ask detailed and pointed questions.  Clients should ask how dual agency will serve them better than traditional representation.  Since they are only getting one agent instead of two, can there be savings that can be realized?  They need to make sure that they can get a competent real estate attorney who will represent a dual agency closing. 

When considering a dual agency, contacting a reputable real estate attorney will serve you greatly in helping you make your decision.