A dual agent is someone who works with both the buyer and seller in a single real estate transaction. Understanding dual agency can be very confusing for people who don’t know what they’re getting into, especially when you’re purchasing a home for the first time.
In real estate, the term “agency” describes the type of relationship you have with your agent. There are some states—like Florida—that do not allow dual agency. In the state of California, however, dual agency is permitted. The primary reason why it is not permitted in some states is because by nature, dual agency represents a conflict of interest.
However, dual agents are required to inform both the buyer and seller of the arrangement. In California, buyers and sellers must provide written consent to prove they are aware of dual agency, what it represents, and understand associated restrictions. The real estate transaction cannot move forward without these completed consent forms.
Dual agency can occur in a variety of ways. One way is when a single agent works with both the buyer and the seller. Dual agency can also occur with two different agents who are licensed under the same brokerage. Regardless of how it’s set up, the same set of rules apply. For those that may be considering working with a dual agent, here’s what you need to know:
The Traditional Real Estate Agent
Most people understand the benefits of working with an agent. An agent is there to help you understand the market, navigate the complex buying and selling process, and seek offers in your best interest. They are there to make your experience much more seamless and streamlined, giving you confidence every step of the way.
On the seller’s side, your agent will market your property to appease target buyers, price your property favorably and fairly, and work hard to get you the most money for your home. On the buyer’s side, they’ll negotiate in your favor, help you find listings that align with your needs and wants, and walk you through tricky paperwork processes.
Fiduciary Responsibilities
In normal circumstances, real estate agents are bound by fiduciary responsibilities to be loyal to you. This means that the agent is required to act in the best interest of their client. Standard fiduciary duties include honesty, undivided loyalty, and reasonable care. With dual agency, those responsibilities are compromised. The agent cannot advance the interest of either the buyer or seller, so some level of loyalty is forfeited in this type of relationship.
Understanding the Pros
The drawbacks of dual agency are fairly clear. When you work with a dual agent, you forfeit some of the benefits of the standard agent-buyer or agent-seller relationship. However, there are some cases where you’ll find yourself in a position working with a dual agent. If you’re confident in the agent, you may benefit from some pros.
For example, with a dual agent, communication is much more streamlined because you don’t have to wait around for multiple parties to interact with one another. A dual agent spearheads all paperwork independently and is responsible for scheduling. This may result in a more smooth transaction overall. In some cases, you may even be able to save money; the brokerage may lower the commission fee if the agent is representing both ends of the deal.
Restrictions of Dual Agency
Working with a dual agent does come with its restrictions. In order to offer a fair deal for both parties, the agent cannot advise the buyer on what type of offer to make, and cannot advise the seller on whether to accept the offer. For buyers and sellers who need guidance on making these important decisions, this may not be ideal. But for those who are confident in their pricing strategies and trust their real estate agent, it could work just fine. A great duel real estate agent will walk a narrow line to maintain honesty and integrity across each relationship and will maneuver any restrictions as best as they can.
The majority of resources you’ll find online will likely advise you not to work with dual agents. However, these arrangements can work if you exercise caution and educate yourself on the pros and cons. A reputable agent will be happy to explain in layman’s terms and instill confidence in your decision.
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