During a real estate transaction, buyers and sellers are typically represented by their individual real estate brokers. However, in some instances, the buyer and seller are represented by the same agent. This type of scenario is called dual agency. While every situation is unique, dual agency has pros and cons. If you are presented with a possible dual agency scenario, read on to learn more about dual agency.
What is dual agency?
Dual agency is when the real estate professional represents the buyer and seller in a single transaction. While individual representation is more common, some situations can warrant dual agency. One of the most common scenarios for dual agency is if an agent lists a home that one of their buyers wants to purchase. However, with dual agency, the agent must negotiate for both sides, which means the agent can’t advocate for one party or the other. Additionally, in some states, dual agency is illegal. Checking with the particular state association can provide insight into each state’s requirements.
Dual Agency Pros:
Timely and streamlined communication
Since the same agent represents both the buyer and seller, you don’t have to deal with communication issues between parties. It also cuts down on communication wait time, as the agents don’t need to hear from each other. This can help avoid missed deadlines, scheduling difficulties and paperwork oversights.
Completing the deal quickly
If you’re a buyer or seller looking to complete a deal as quickly as possible, you may be open to dual agency. Since there is less room for negotiation and less time between communication, the process may move quickly. This type of scenario works best if it’s a straightforward transaction that doesn’t require much negotiation.
Dual Agency Cons:
Less guidance
As a rule, buyers want to negotiate a home sale down. Alternatively, a seller wants to earn as much as possible for their property. Since dual agency is a conflict of interest, an agent representing both parties must remain neutral and advocate for one client over the other. An agent representing both partners can’t disclose confidential information to either side.
More room for error
Since only one agent is involved, there is a higher likelihood of oversight and less checks and balances. If you pursue a dual agency situation, it’s wise to rely on a trusted attorney to help with the transaction. Since there is a heavier workload on the agent, this also means that the agent’s availability may be limited.
Less financial gains
Since a dual agent can’t advocate for one party over the other, both parties may not reach their financial goals. As a result, buyers may end up overpaying, while sellers may not receive their full asking price. Therefore, dual agency may not be for you if the financial aspect is your primary concern. However, if a quick, streamlined sale is your priority, you may consider dual agency.
