What’s behind the mask? If you’re buying real estate, is your real estate agent representing the seller, too, and acting in the capacity of a dual agent?
Dual agency is legal in every state, provided there is full disclosure to both parties, and provided the dual agent does not compromise the special duties he or she owes exclusively to the seller and to the buyer.
Here’s the challenge. A dual agent owes his client a duty of loyalty, obedience, disclosure, confidentiality, financial responsibility, and reasonable care and diligence. It’s easy to understand how all these duties would apply to an agent’s seller, or to an agent’s buyer, but to both at the same time?
Imagine you are a buyer, and your agent is a dual agent, meaning he or she is also the listing agent for the seller who owns the home you want to buy. Because the agent owes special duties to the seller, there are things your agent cannot share with you. In order for your agent to work in your financial best interest and beat up the seller on either price or terms, your agent would have to work against the seller’s interest. That would violate the law of dual agency, and subject the agent to legal liabilities.
In one case, the buyer closed on a unit in a co-op only to find out later that he could have purchased a unit in the same complex for 40% less, but his agent also represented the seller. Was the buyer upset? You bet, but it was too late, since he had already closed on the transaction. There are many other issues besides price that could be negotiated in favor of the seller to the detriment of the buyer if your agent is a dual agent.
This is why a buyer’s interest are clearly best promoted when a buyer retains a real estate agent to act as their exclusive buyer’s agent. In this case, there are no divided loyalties, and you have an agent who has one client, you. You can be confident your agent is promoting your interests, and your interests only. This gives your agent freedom to withhold nothing from you, to help you negotiate the best price and the best terms, so you come out the winner.
You wouldn’t go watch an NBA game if there was one coach for both teams? Can you imagine the coach running back and forth to coach the players on each team during time outs? What would he tell the players? How would he promote their best interests? Likewise, why would you hire an agent who represents the seller when you want to buy?