Friday, September 5, 2014


Would you hire the same Divorce Attorney that is representing your ex partner?
Why would anyone think they are getting a better deal when their Agent also represents the seller?
Back in the Day…
Back in the day, when interest rates were 18%, and the MLS consisted of a huge 3-ring binder, agents and brokers mostly represented sellers, but the public didn’t exactly understand this. They would call up an office, or a listing agent to see a home, write an offer, and assume that whoever wrote that offer, was representing them. They had no clue that the listing company and agent were actually representing the seller!
Over the years, and many lawsuits later, the evolution of agency has emerged. And to be honest, the public still doesn’t get it, and neither do many agents.  The National Association of Realtors has released their Bi-Annual Legal Scan, and while agency in and of itself isn’t the leading cause of disputes, dual agency came out as a high ranking issue.

What is Dual Agency?
Dual agency occurs when one agent represents both the seller and buyer in the same real estate transaction.
When a potential buyer sees the advertising for a home for sale and calls the listing agent, the listing agent has a choice to show the buyer the home but only represent the seller or to convince both parties to agree to dual agency.


For example, a buyer wants representation by a REALTOR® while purchasing a FSBO. This can be confused with dual agency, and often is, but as both  parties are not represented (the seller is representing them self), there is no dual agency.
Some people may  not need to have representation. If we think of the experienced  investor, the lawyer selling a FSBO that only needs their house in the  MLS but is fine to handle negotiating, the contracts, and closing, or  possibly the buyer who has purchased before, and feels comfortable  enough to buy without the use of a buyer’s agent, but wishes that the agent  coordinates the closing details.

What are the Agents Responsibilities in a Dual Agency Situation?
If they are a REALTOR®, ethics says confidentiality for both parties   should be the norm. So even though the agent is working now for both   buyer and seller they have to provide fair business dealing to both.
However, the practice of representing both parties in a transaction  is  SLIPPERY.  One basic rule of agency requires maintaining   confidentiality.  When an agent represents both parties, the rules of   confidentiality essentially make the agent a document preparer at best.    They can’t share information about either party with the other.
For   instance, an agent representing both cannot tell a seller what the   buyer is willing to spend.  Conversely, the agent cannot tell the buyer   what the seller is willing to take.  Within the rules of agency   representation, it’s required that when an agent knows a material fact,   they must share that fact with their client.
The most important point for you to know about dual agency is that if   your agent is also representing the other side, your agent cannot advocate for you in negotiations or give you advice on pricing. This means that when you hit a stumbling block in the negotiations, your agent can’t fight for your needs.
Let’s say that a buyer and seller are negotiating and they are $5,000 apart on purchase price. When we represent the buyer, our job is to convince the seller that our buyer will not pay more and that they should take our offer because it is the best they will do. As a seller’s agent, our job is to convince the buyer that the house is worth more than they are offering, and the seller won’t reduce the price any more.
Dual agents can’t take either of these positions.
All a dual agent can do is present to each client what the other side has responded, and ask if the offer on the table is acceptable or if they want to make a counteroffer.

Who Benefits from Dual Agency?
With real estate agents coining terms like Double Bubble, Double Dip, Me-Me it’s no wonder there is a perception that Buyers and Sellers don’t benefit from dual agency. 
The only person who benefits from dual agency is the agent.
Many agents are eager to act as dual agents because they get to keep the entire commission. When an agent is hired to sell a home, a portion of the commission paid to the listing agent is given to the buyer’s broker. If the agent represents both sides, then they get to keep the entire commission.
How do I handle Dual Agency Situations?

I don’t do dual agency except in rare situations.
I think it is a bad idea and not in my clients best interests.
If I have a listing and show the property to buyers without their own agent, I explain that I am represent the seller. I let them know that they have 3 choices if they like the property and want to make an offer:
  • I can assist with the paperwork  and the contract details just like a store salesperson can assist  the people that are purchasing products from the store. I represent  the seller and will encourage the buyer to accept the terms that the  seller wants. By the way, this is exactly what new construction  salespeople are doing when a buyer purchases a new home without a  buyer’s agent.  But this would be illegal when the Realtor/Broker is part owner of the construction company. This information must be disclosed to all buyers and when this information is not disclosed this would be considered a violation of license law. In this scenario you will end up losing more and paying more for your new home.
  • I can refer them to another agent  that can act as their buyer’s agent…an agent that can represent  just their interests.
  • They can find a buyer’s agent on their own, and have that  agent submit an offer on the house.
The next time you are in a market to buy, make sure you have your own agent.
If you discover a home through an ad or a yard sign, call an agent that you can trust and that will represent you– not try to sell you on dual agency. Rather than calling the agent working for the seller, and I can arrange a private showing for properties anywhere in Bloomington, Indiana.