We often get asked “What is dual agency in real estate?” by both buyers and sellers and, as you’ll see, we have strong feelings on the subject.
By definition, dual agency means that the real estate agent is representing both parties in a transaction. For example, we are representing the sellers of 123 Main Street. We advised them on how they should price the home to be competitive in the market, but still meet their financial goals. We’ve also advised them on how to stage the home so it will sell fast, done all of the marketing for the home, put it in MLS, conducted Broker Open Houses, met their kids, snuck treats to their dogs, etc.
Totally unrelated, we meet you. You ask us to help you find the perfect home for you. We tour tons of properties together, go through your finances with your mortgage lender to determine what you can comfortable afford, meet your parents, cousins, kids, fish, etc. One of the properties we see is 123 Main Street, which you decide is the home for you. It’s perfect, it has rainbows over the house, unicorns flying off the roof and little leprechauns with pots of gold in the yard. You want this house.
The problem is that I now know confidential financial information about both you, the buyer, as well as the sellers. In PA, as long as you and the seller sign off saying you want us to represent you both in the transaction, it’s legal. I act as an intermediary and help you both come to an agreement on the sales price of the home and the terms. However, we are NOT allowed to advise you in any way or make suggestions about what you should offer the seller, etc. Well then, what did you hire me for? If I am representing the seller, it’s my job to get the highest price and best terms for the seller that I can. And if I;m representing the buyer my job is to get the lowest price and best terms for the buyer that we can. After all, that’s why you picked me over Sally Jo. I am a master negotiator.
So how can I represent both the buyer and seller fairly? In my humble opinion, I can’t. No Realtor can. It’s a conflict of interest. I would almost never work as a dual agent and would rather refer my buyer to a different agent who can handle the negotiation on their behalf, even though that means losing part of my commission. It’s the right thing to do.
What should you say if your agent wants you to agree to dual agency? I would consider asking to be referred to another agent.
However, there are instances where a potential conflict could be avoided by having the broker themselves negotiate the deal. OR having another agent on the team represent you, the buyer.