Lessons from the Pros

Real Estate

Dual Agency – Good Thing or Bad Thing?

I’m currently in the middle of a transaction where the question of representation and good representation has been an issue.  It got me to thinking about the assumptions many people make when using a real estate agent/broker.  It is often funny to me that so many people want to deal with the “listing agent” in a “dual agency” situation, I feel most of the time this is not ideal, let me explain.

First, let me define what “dual agency” is: Agency refers to the relationship between a buyer/seller and the real estate agent/broker.  Dual agencies can occur with two agents or a single agent. The first kind of dual agency occurs when the buyer and seller are using agents licensed under the same broker.  With this kind of dual agency the buyer and seller are both represented, however legally they are represented by the same “Broker.” This must be disclosed by law.  I found myself in this situation on a piece of commercial property and felt unrepresented. The agents were more concerned about getting the deal done than both mine and the seller’s interest. In meetings, it was often hard to tell which agent was representing me.

The second kind of “dual agency” is more common for a retail buyer.  This is when there is one agent that represents both the seller and buyer.  This can happen naturally, like when an agent is holding their own listing open and an unrepresented buyer walks in and falls in love with the property or when an agent gets a listing that is perfect for one of their clients.  It can also happen where the buyer seeks out the listing agent (this one I truly don’t understand) thinking they will get a better deal by using the listing agent. In the bible it says “a man can’t serve two masters.”  Now a real estate transaction doesn’t have to be a “win” or “lose” negotiation, however it is the listing agent’s responsibility to get “the best and highest offer.” The buying agent’s responsibility is to “represent their client in whatever is their desired outcome” i.e.; lowest price, acquire the property at any cost….

States handle dual agency differently, but I’ve found most do require there be full disclosure.  In most states, the agent is also limited to the amount of information that can be shared with the seller and buyer – for example, in New Jersey, the agent cannot advise the buyer on how much to offer nor can the agent advise the seller to accept or reject an offer.  In California, the law specifically prohibits someone acting as a dual agent from telling the buyer how low the seller will go, or from telling the seller how high the buyer will go.  I appreciate the way the Dept. of Real Estate in New York advises consumers “…when a person enters into a dual agency relationship, they are forfeiting their right to that agent’s loyalty.  The agent then cannot advance the interest of either party.”

All situations are different, but I would say that I feel it is healthier as a practice to have your own representation.  I’ve even known some agents that have found themselves in a natural position of dual agency to bring an agent in for the buyer so that both parties have their own advocate.  My advice to you is that you should always feel that whoever is representing you is moving your agenda forward with their guidance.

Great Fortune,

Diana Hill


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