Are there reasons to worry when buyers and sellers as well are represented by the same agent at one deal?
The main point of the agent’s involvement in the deal is to act on behalf of his client without matter is it a buyer and seller. So, if you request the services, which might be provided by the agent, he should protect your interests. The dual agency appears when the same agent is represented by the buyer and the seller at one deal. Such a situation requires a careful attitude to stay independent and protect both sides’ interests at an equal rate, which is actually impossible because in most situations the conflict of interests appears. As a result, acting as a dual agent (being a so-called transaction broker) is forbidden by law around all the USA.
How to Detect the Dual Agency Appear?
For cases when the same person acts at the same time in the listing agent’s and buyers agent’s roles the dual agency situation appears. The same situation comes when there’re two different agents, but they work for one firm, which benefits from both the seller’s and buyer’s sides. In a short word dual agency is determined by the type of relations between broker, seller, and buyer.
Illustrating this situation the following example can be given. Mr. Smith lists the deal at the Main Street 1 working for A-Agency. Mrs. Brown represents the buyer of the house at Main Street 1 and works for A-Agency as well. A-agency will receive benefits from both sides of the deal buyer’s and seller’s, thus the dual agency appears.
The previous situation is simplified, although some cases can be more complicated. For example, in case Mr. Smith is acting as a listing agent finding a buyer, but then makes the offer of listing to this buyer and sings the respective agreement. In such a case the conflict of interests appears because actually, Mr. Smith is acting neither for seller’s no for buyer’s behalf, acting in personal interests to complete the deal successfully and benefit from it.
What Do Fiduciary Responsibilities Mean?
All real estate agents are under fiduciary responsibilities with their clients, which means to keep full and total loyalty to clients. The listing agent must protect and act on behalf seller’s interests, as well as buyers agent must totally protect the buyer and his interests too. The dual agency makes it impossible for the condition to be totally loyal to the only one of the sides.
The fiduciary responsibility is a mandatory condition for any agent enshrined in state law, licensing, contract, tort. As a result, the agent is obligated to disclose any dual agency relationships in full, provide respective information to all participants of the transaction, and everybody should acknowledge the conditions of it. From the side of consumers, consent to such deals means a kind of refusing the right for undivided loyalty, which normally exists when there’re no dual agency relationships.
Only in this way the deal can be considered compliant to the legislation.
Dual Agency Tricky Sides
Confirming dual agency regarding some deal means that the rule of fiduciary duty is no longer applicable to your agent. Although according to the contract’s term agent still obligated to protect the client’s confidential information you should consider that any information received from you can influence the deal not on your behalf, even if it legally prohibited from being transferred to another side of the deal. Usual advice from attorney comes down to carefully filter what you’re telling to the agent in such a case.
Note: you should carefully read any agreement proposed by an agent because sometimes dual agency can be included as a standard clause in it. Your right is to refuse dual agency condition in case you feel inconvenient with it and to select another broker for your deal.
Can Dual Agency be Beneficial?
In the real world, they’re no such things, which are totally good or totally bad. Besides the abovementioned concerns, which may happen in the case of dual agency appears, some beneficial things can also happen.
For example, the time for processing some requests can be shortened, because there is no long chain between your request-your agent-third-party agent- third party. Actually, sending a standard non-confidential request you may receive the response faster because there’s no need to process it with many people and your agent being an agent or the third party can already give you feedback.
The same is applicable speaking about planning some activities or during the final stage of the transaction. Because during such planning you shouldn’t consider a big number of participants and amend schedule based on their preferences.
It’s possible to save some money, especially being the seller, who usually pays a standard fee to the agent, which usually is split between two agents participating in the deal. As there’s only one agent, so no split required and respectively the amount of commission can be reduced.
What’re Other Disadvantages of the Dual Agency
Complications, which may occur in a dual agency deal are relevant to all participants. Speaking about the disadvantages related to the dual agent, sometimes it becomes impossible to get the optimal offer with a good price for the seller and the buyer at the same time even applying strong negotiating skills. Moreover, its rather probable that the agent can ask for a higher price, so the commission for the deal will become also higher. Actually, the last point explains why the dual agency is restricted by law in the USA.
Another thing is four-eye-controls, which is very useful in order to prevent some mistakes and omissions. For dual agency cases, double-check is impossible, because there is no side, which could do that. Having a listing agent and a buyer’s agent at the same time in one deal means that one of them can notice the wrong steps of the other and correct the issue. The single agent has a stronger motivation, because of the fiduciary responsibility and his motivation to have a clear deal higher.
All in all, when the transaction is represented by 2 agents it is much more probable the deal will be more clear and the conditions will be fairer for both sides.
When it comes to choice, whether to enter in a dual agency deal everybody should clearly decide what is more important to have a transparent and clear deal with somebody loyal only to the one side or to save some time and money on commission, but have doubts whether all the interests were considered during it.