Today a new client asked me if there would be any issue in working with me since another REALTOR® had previous shown her some homes. She sent me a copy of a Designated Agency Disclosure which the other agent had her sign. It mostly said that the real estate agent was the designated agent for the real estate broker. However, one paragraph had the buyer agree that the designated agent with written consent could represent both the buyer and a seller in a sale as a disclosed dual agent.
Dual agency is popular with real estate agents since the agent gets both sides of the commission. Many real estate agents even offer discounted commissions to sellers, if the agent provides the buyer.
I recommend that my buyers and sellers decline dual agency for two reasons.
First, I can’t provide my clients full service, if I am engaged in dual agency. I can’t advise the buyer on what to offer or counteroffer since I know confidential information the seller has shared with me. Likewise, I can’t advise the seller since I know confidential information the buyer has shared with me.
Second, with dual agency a conflict of interest can arise. Let’s say that a REALTOR® has found a buyer for one of his listings. Both buyer and seller have agreed to dual agency. The buyer and seller are negotiating. The REALTOR® gets a call from another agent saying she has a buyer who wants to make an offer on the listing. Normally, listing agents like multiple offers since the buyers can bid up the price. The higher the price, the higher the commission. But wait, if the other REALTOR’s® client’s offer is accepted, the listing agent won’t get both sides of the commission! The listing agent will get a much lower commission!
Are you sure you want to accept dual agency?
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