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Dual Agency: What Is It And Are Dual Agents Bad?

Sa El5-Minute Read
February 18, 2020

Trying to figure out the various ways buyers and sellers can be represented by real estate agents can be confusing, especially when you hear about the infamous dual agents.

But hear me out:

If you want to make sure you find the best home or that you can get the highest price for a home you are selling, you must understand the role of each agent.

In this post today, I will go over what a dual agency is, how they work, their pros and cons and help you determine if dual agents are bad.

What Is A Dual Agency?

To understand a dual agency, it’s essential to know how the home buying and selling process usually works. Mostly, if you are looking to buy a home, you will have a buyer’s agent represent you. If you are looking to sell your home, you will have a seller’s agent (also known as a listing agent) represent you. When a single real estate agent works with both the buyer and the seller of a home, it is considered to be a situation of having a dual agent or dual agency.

Dual agency real estate can also be caused by the buyer and seller having different agents that work for the same real estate brokerage.

How Does Dual Agency Work?

In all honesty, ending up with a dual agent is rare, but if you live in a smaller market, then you might run into it. Dual agents essentially combine both the roles of the buyer’s agent and seller’s agent into one; however, they must obtain the consent of both parties before a dual agency can be reached. A dual agent also has to be neutral concerning any conflicting interest of the seller and the buyer. Being neutral means that if you have a dual agent, they can’t satisfy the duties of full disclosure or loyalty to their fullest extent. If you are the buyer, they can’t get you the lowest price, and if you are the seller, they can’t get you the highest price.

It would help if you also considered the commission because a dual agent will get a total of 6% commission. They receive 3% for helping the buyer find the home, and 3% for helping the seller sell the home. It probably makes sense to try to get them to lower their commission since it’s going to be higher than their usual 3%.

Are Dual Agents Bad?

Whether or not dual agents are bad is going to depend on what you expect to get out of the transaction. If you want a more streamlined home buying process or want to attempt a lower commission as a seller, then maybe a dual agent is what you need. If you would prefer to have your own personal agent that will give you all of their time and work to get you the best deal on your home, then you don’t need a dual agent. You are also going to deal with a ton of conflicts of interest and conflicts of loyalty if you go with a dual agent. 

Remember, the commission that pays out to the agent is based on the final sales price of the home.

If you are the buyer, you might be on the losing end of a transaction when it comes to being part of a dual agency. Overall, it isn’t that dual agents are “bad,” it’s just that it’s less beneficial to use one.

Is Dual Agency Illegal In Some States?

Yes, dual agency is illegal in some states, eight states to be exact, which are Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas and Vermont. 

While other states have not made it illegal to have dual agency, they have created a ton of limitations on the power a dual agent has. The main reason so many legal issues surround dual agency is because your real estate agent is supposed to look out for your best interest. A dual agent can’t do that because they represent both the buyer and seller of the same home.

Imagine if you had to go to court and your lawyer was also the lawyer of the offending party. Wouldn’t you be anxious about who was going to get the best deal? Or if your attorney would prefer you over the other client?

While other states have restrictions, there are still ways a real estate agent could end up being a dual agent for your home, so it is essential to choose your agent wisely.

Alternatives To Dual Agents

As we discussed earlier, there are other options for real estate agents available to you outside of a dual agent. You want to make sure you hire the agent that best fits your current situation when buying or selling a home.

Exclusive Buyer’s Agents

A buyer’s agent is a real estate agent that focuses on assisting their clients through the process of buying a home. Not only will they help you find a home, but this agent also owes the buyer reasonable care, undivided loyalty, obedience to lawful instruction, disclosure, confidentiality and accountability. A buyer’s agent must negotiate terms acceptable to a buyer and must always put the buyer’s interest first.

You should be able to expect your buyer’s agent to do things like:

  • Help you find your home
  • Attend your home inspection
  • Get you preapproved for a loan
  • Negotiate an offer on your behalf
  • Assist you with picking a home inspector
  • Communicate with the seller’s agent throughout the sale
  • Speak with the buyer’s attorney throughout the sale
  • Keep an eye on your credit and loan situation
  • Negotiate home inspection repair requests
  • Helping you through the closing process

Unlike a dual agent, the buyer’s agent is only going to be responsible for the person buying a home. There will be no split agendas and they will only get a 3% commission to do their job.

Exclusive Seller’s Agents

A seller’s agent is a real estate agent that focuses on assisting their clients through the process of selling a home. If you are selling your home, this agent owes the seller reasonable care, undivided loyalty, obedience to lawful instruction, disclosure, confidentiality and accountability. A seller’s agent must also negotiate terms acceptable to a buyer and must always put the buyer’s interest first.

You should be able to expect your seller’s agent to do things like:

  • Extensive marketing of your property
  • Price your home correctly
  • Make sure the buyer is qualified
  • Communicate with buyer’s agent throughout the process
  • Negotiate the best term
  • Negotiate home inspection repair requests for the seller
  • Attend the home appraisal
  • Finalize loose ends for closing
  • Attend the home inspection to represent the seller

Unlike a dual agent, the seller’s agent is only going to be responsible for the person selling a home. Again, they will only get a 3% commission to do their job.

Taking Action

Dealing with a dual agent has its strong points, but overall it can become shrouded with conflicts of interest. And we can’t forget that a dual agent is going to get a huge commission check, which could also make this process very one-sided to the favor of the seller.

When it’s time to choose a real estate agent, you need to be very cautious and make sure you select an agent that’s going to be a strong fit. You want to make sure the agent will have your best interests in mind and that you choose the agent that best fits your home buying or selling situation.

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    Sa El

    Sa El is the Co-Founder of Simply Insurance & Credit Knocks. Along with being a licensed real estate agent, he is also a licensed Insurance Agent with over 11 years of experience in the industry. He is an entrepreneur, insurance educator, and freelance writer.