This week we wanted to talk about dual agency. What is Dual Agency you ask? Dual agency is where an agent represents both the buyer and the seller in a real estate transaction. Some examples of how this may happen is if buyers are shopping around at open houses and find one that they love they may choose to hire the agent at the open house, which is commonly the listing agent. Dual Agency can also mean than a buyer and seller have separate agents that work for the same brokerage. Dual Agency is legal is California but it must be disclosed to all parties. As with anything, there are some advantages and disadvantages to Dual Agency.
Dual Agency can make a transaction quick and painless! Think about it… If one agent is handling both sides, they’re not waiting on anyone else to pass along information. They’re simply the middle man between the buyer and the seller. Another advantage may include a savings for both the buyer and seller. The seller pays an agent for their hard work (generally 6% of the sales price) which is then split with the agent representing the buyer for all their hard work. Now, if the listing agent is representing both the buyer and seller, they keep the full commission. As a result, a lot of times when an agent is representing both sides of a transaction, they may be likely to drop their commission so the buyer can get a lower sales price, and the seller can still net the same amount of money. This way its a win-win for everyone.
A dual agent is supposed to stay neutral, meaning they do not favor the buyer or the seller and must represent both sides equally. A dual agent must tread carefully to not betray the trust and confidence of either party, which can be a bit tricky! If both parties had their own agents they may learn more juicy information that could potentially be used to negotiate on their behalf.
For example, a listing agent may know their clients are divorcing and looking to sell ASAP. If a buyers agent found that out, they would know they have a bit of the upper hand in negotiating power because the sellers just want to sell. Now, if the agent is representing both sides, they may not relay the information of the divorce and will only tell the buyer specifics about the property and keep quiet about the personal matters.
In short, there are some advantages but also some risks with dual agency. Whether its a dual agency situation, or you find your own representation The most important part of any real estate transaction is being able to TRUST your real estate agent. Please feel free to send us a message if you have any questions! Thanks for tuning into this weeks Tip Tuesday!