by E.L. Miller
Consider the fact that dual agency is no longer allowed in many states. There's a good reason for that. Dual agency is the arrangement in which the same real estate brokerage (and often the same agent from that brokerage) represents both the sellers and the buyers of a property. It is not only a conflict of interest, but often impossible, for a real estate agent to fairly represent and negotiate for both sides of a real estate transaction.
The only advantage of a dual agency that comes to mind solely benefits the real estate agent. That's because the listing agency doesn't have to split commission with a buyer's agent. Aside from that, nothing good can come from such a business deal. In negotiating a fair price, how can an agent work to get the best value for the buyers while fulfilling their fiduciary duty to the sellers?
Technically, a dual agent is not allowed to disclose to the seller what the buyer is willing to pay, nor are they allowed to tell the buyer what price the seller is willing to accept. Instead, they are supposed to broker and negotiate on behalf of each client, while keeping the confidential knowledge to themselves. This is a no-win situation. Not only would this be a stressful (and risky, from a litigation viewpoint) situation for a real estate agent who is trying to keep both clients' best interests in mind, but it is an opportunity for a less honest agent to sell a home at a higher price than a buyer should pay for it, thereby receiving a higher commission.
Picture selling and buying property as if it were a legal transaction (yes, it actually is a legal conveyance, but think more of the courtroom scene to help the following example take shape). Real estate purchases are not like mediations; there is nothing binding a particular seller and buyer that requires them to reach an agreement with each other. Instead, they are like trials, with each side represented by a professional who is looking out for his or her client's best interests, and no one else's. There is no exchange of private information made that might damage one sides chances over the other. That would be grounds for malpractice.
Fortunately, in states that still allow dual agency at all, law requires the brokerage or individual agent to fully disclose, usually in a writing to be signed by both parties, that a dual agency exists, often in the sales contract or in an addendum to it. Supposedly, the parties are made aware of the dual agency before they reach the point of signing a sales contract. (At that point, most negotiating is over, and the disclosure would come too late.) This gives the purchaser the opportunity to procure their own representative - a real estate agent who represents buyers. Home purchasers do not pay a buyer's agent; the agent is paid by the split of the sales commission, so the listing agent doesn't walk away with the entire six percent of the sales price, or whatever the percentage may be. An honest real estate agent doesn't mind splitting this commission - it's good business for everyone.
Learn more about this author, E.L. Miller.
Real Estate agents in today’s market are a dying breed and the ones doing real estate full time is trying to stay above water so they do not drown and 99% of the listings they are selling is there own to maximize their commission.
