Dual agency is a term used when one agent is representing both parties involved in a real estate transaction. That is, the agent represents the seller and the buyer at the same time.
By default, every real state transaction has a seller’s agent and a buyer’s agent. The buyer’s agent represents the buyer and works in the best interests of the buyer. On the other hand, the seller’s agent represents the seller and works in the best interest of the seller.
Causes of dual agency
The dual agency could happen if you decide to buy a property that is listed by your agent. This means that he will represent you and the seller. This scenario usually happens in small towns without a lot of inventory.
In addition, you could have your agent and the seller’s agents being under the same brokerage firm. This scenario happens in bigger firms. Even if there are two agents involved in the transactions, the brokerage firm will be the same. In this case, a dual agency condition can be used to describe this situation.
Is dual agency legal?
Dual agency is illegal in the following 8 states:
- Alaska
- Florida
- Vermont
- Maryland
- Texas
- Kansas
- Oklahoma
- Colorado
Pros
When two agents are working together on a real estate deal, they split the commission. In the case of the dual agency, the commission will go to one agent. This could be an advantage to the seller and the agent.
- The agent could give you a discount on the commission
- Some agents choose a flat value as a commission to help sellers especially when they know each other.
- You will save time in communication and therefore, buy or sell a house faster
- The agent could make more money on a single deal since the commission is not split with another person
Cons
- The agent might close the deal without concerns of who wins or loses because they want that big commission
- The agent may favor the seller to sell the property at a higher price. Remember, the higher the sale price the bigger the commission
- You could lose legal options
- You may not get the best property
Final Words
It is important to avoid dual agency whenever possible because of conflicts of interest
