Will your real estate agent fight for you when you buy a home? Yesterday I talked with a very savvy buyer. He questioned whether a real estate agent who has a home listed for sale could also act as a buyer’s agent on that same property, in other words, a dual agent representing both the seller and the buyer. The answer in most states, including Washington, is that it is legally acceptable to be a dual agent, provided the necessary disclosures are made in writing. But . . .
This buyer was quite right in feeling that while dual agency is legally acceptable, it is not financially acceptable. His argument is one I have been making for years.
Imagine what a listing agent does for a seller. He or she has worked with a seller for six months to one year to list and market a property, with many many hours of paperwork, planning, writing ads, posting listings, meeting with the seller many times and having phone calls weekly, emailing and talking with prospective buyers, spending numerous hours behind the scenes, encouraging the seller and building an emotional bond, and who has committed his or her best efforts to get the highest possible price from any buyer who does show up.
Now imagine a buyer who drops into town and who calls that listing agent to drive around and look at homes for one afternoon. How can we honestly suggest the agent can fairly represent both the buyer and seller without bias?
The arguments are: it’s legal, all you have to do is comply with the law, there’s nothing wrong with being a dual agent, if you do the full disclosures it’s okay, an agent can be fair and honest and be a dual agent, and so on. All true, but not all buyers are buying it.
Buyers want to be absolutely certain that their agent works for them, and only for them. Buyers want to know that their agent is loyal to them without any potential conflict. Buyers want someone who will fight for them, negotiate for them, and watch out for their best interests in every detail, every contingency, and throughout the process all the way to closing.
Some buyers do not know the dangers of simply calling the listing agent and making an offer through that agent. I strongly recommend buyers retain their own exclusive buyer’s agent. Only then can a buyer be sure he is zealously represented and that someone is working to get the best price and terms possible.
For a real life example of a buyer who got hurt in this kind of scenario, see the Washington Post article, Agents Falling Short on Disclosure. “Stern believed he was induced to sign a contract on a house with an excessive price because the agent he thought represented him as a buyer’s agent was in fact functioning as an agent for the seller.”
“If the agent’s role is to negotiate for you, how can he get the best price on the home if his real duty is to get the highest price for the seller? ” See another excellent article on Joel Stern’s case, Well-kept Secret That Harms Home Buyers, in the International Real Estate Digest.
Last Updated on August 9, 2022 by Chuck Marunde
You’re right on the mark. I was victimized by a sham buyers agent in 2005 (working for the Weichert Company of Maryland).
For more information about my case, go to Google and type in my name “Joel Stern”, then “Weichert”; you’ll find lots of blogs and websites devoted to this matter. Contact me if you’d like further details.
Thank you Joel. What happened to you should never happen. I’ll go back to my original post and include a link to the Washington Post article and the International Real Estate Digest article on your case. Folks, Joel’s case is proof positive that you really do need an exclusive buyer’s agent. Wisdom strongly urges you to use a buyer’s agent and avoid dual agency. By the way, I am a Realtor, but I was very surprised to learn in the Post article that according to the National Association of Realtors (NAR), 70% of agents don’t fully disclose their dual agency representation to buyers in their first meeting. “According to new research by the National Association of Realtors, just 30 percent of all buyers in 2005 received disclosures about representation from their agents at their first meeting. Nearly half of all first-time buyers either received no disclosures during the sales transaction or were unaware of whether they did or did not.”
I feel that a Realtor can work in both the buyer and sellers best interests. But it depends on the Realtor of course. Just like any industry you have your good and you have your bad. The bad eventually get pushed out of the real estate business in many ways thankfully.
Kirsten, I appreciate your comment. I guess I would add a couple of thoughts to what you said. I would say that not ALL real estate agents can represent both buyer and seller at the same time and adequately and fairly represent the best interests of both. There are so many inherent conflicts of interest. Just one is the price. The listing agent is bound to get his agent the highest possible price while at the same time getting his other client, the buyer, the lowest possible price. If that isn’t a conflict, my name is Elmer Fudd. And there are many other duties and potential conflicts of interest. There is a situation where I could feasibly represent both sides, but it took me 20 years of law practice and another 10 years in sales and brokerage to full understand how to disclose and deal with every single conflict, and still I prefer not to go there. But more importantly with respect to your comment, I would disagree on your statement that the bad eventually get pushed out of the real estate business. I can guarantee that isn’t true. Both the legal profession and the real estate sales profession have many incompetent people, and the proof of that is seen monthly somewhere in the U.S. as those people are sued for fraud, misrepresentation, and breach of fiduciary duties. There’s probably a new lawsuit every single week somewhere in the country, and that’s a conservative estimate. Actually, I think you have at least 365 new lawsuits every year, which is one new one every day. And it may be much higher than that nationwide. Many of these dishonest or bad people have been in the business for an entire career. That’s as true as anything I’ve ever written. It really is. Too bad. The frustrating thing for those of us who have committed our entire careers to serving our clients honestly and faithfully is that those in our profession who we would all agree are “bad” if the truth were exposed, keep on getting new clients. My pet peeve is that clients don’t do their due diligence, and they just as easily hire a bad person as a good and honest person. Ultimately, the client is the one who pays the price, and that is unfortunate. No matter how much I preach that clients should seek out honest Realtors who are competent and experienced, most people simply don’t hear the message, or don’t consider it important enough to take serious . . . until they get royally ripped off. Then it’s too late. Okay. I’ve said my peace.
Remember dual agency is whenever two agents work for the same brokerage for both the buyer and seller of a particular house. We as agents must have a wide a client base to generate enough money to make ends meet at the end of year. We can develop the same bonds with our buyers (showing them 20 houses) as we do with our listing clients who we contact constantly.
My ultimate goal is to have every sale be a win-win situation whether I represent both clients or just one. I have had sales negotiations where the other Realtor has gotten in the way of the sale by due to their ego, or just lack of intelligence. Having two agents in a deal could kill a deal. One that both the seller and the buyer to learn to regret having lost.