Picture this: You’re a boxer. (Bear with us.) You’re getting ready to head into the ring to face your opponent. You turn to your coach for a last second pep talk, and he says: “By the way, I’m his coach, too.”
Furthermore, your coach goes on to tell you that throughout the match, he won’t be able to help or advise you since it would be a conflict of interest. “Is that cool?” he asks. “I mean, I won’t be able to help the other guy either, so it’s not that big of a deal.”
In real estate, when an agent represents both the buyer and the seller, it’s called dual agency.
It’s important to note that it’s also considered dual agency when the buyer and seller are represented by two different agents who are employed by the same broker, a common occurrence in these times when huge brokerage firms oversee a heavy number of transactions.
If you live in one of the states where it’s legal, (Yep, it’s illegal in some states. That alone should give us all pause.) the agent is obligated to disclose that he represents both parties and to get everyone’s ok in writing.
That said, while a listing agent might entice you with the idea of lower fees or blow off dual agency as “not that big of a deal,” we believe you should know a few things before you’re asked to approve it.
Dual agency is tricky.
Agents cannot advise on price or terms or negotiate on anyone’s behalf. They must disclose everything they know about a property without revealing confidential information that might aid either party in the transaction.
There’s a reason it’s illegal in some states, and a reason, too, why it is often the subject of lawsuits; It can create a huge conflict of interest.
In one recent lawsuit, an agent and her brokerage firm were found liable for withholding information about a property’s foundation defects from the buyer. In another, an agent was sued for advising the buyer to ask the seller for new carpet.
To be fair, dual agency does have the potential to move the buying/selling process along because the agent can match up a buyer with a seller from her own list. It can also be advantageous because she knows the property well. If she’s ethical, she’ll disclose everything the buyer needs to know to make an informed decision. And yes, an agent may be willing to negotiate a lower fee for herself (because she’ll be taking what typically gets split between the buyer’s agent and the seller’s agent).
At its best, dual agency relies on agents and brokerage firms with ethics so impeccable that they’d choose integrity over profit. And while we love the thought of the ideal world in which those kind of ethics are the norm, we also love the idea of agent as guide, advocate, teacher, friend, and (yes, sometimes, we admit) therapist.
Listen, if you decide to go the route of dual agency, we’re all for it – as long as you go in fully aware.
But if you do get the heebie jeebies once you’re in the ring (to go back to the boxer analogy), you can call a time out and inform the listing agent that you’d like to find an exclusive buyer’s agent to represent you. We can’t guarantee she’ll be happy about it, but we’re pretty sure she wants to see the house sold almost as much as you want to buy it.