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.

Dual Agency is a Bad Idea:

red-light.jpgThe 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?

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 We Handle Dual Agency?

We don’t do dual agency except in rare situations.

We think it is a bad idea and not in our clients best interests.

If we have a listing and show the property to buyers without their own agent, we explain that we represent the seller. We let them know that they have 3 choices if they like the property and want to make an offer:

  • We 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. We 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.
  • We 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 will represent you and not try to sell you on dual agency. Rather than calling the agent working for the seller, contact me and I can arrange a private showing for properties anywhere in St. Louis, St. Charles or Jefferson County.