Whether you're selling or buying a house, you've decided to hire a real estate agent to help with the transaction. They can help you get the best price for your home, or negotiate a good deal on a purchase. But what type of agent should you hire?
When looking for an agent you could stumble across the term “dual agent” and wonder what it means. Are they the right real estate agent to list your home, or should you keep looking? Find out what you need to know before signing a contract to work with an agent.
What is a Dual Agent in Real Estate?
A dual agent represents both parties in a real estate transaction. They help the seller with staging, marketing, and more to sell their house. When a buyer is found, or the agent brings them to the seller, they also represent them.
Because they represent both sides of the transaction, it's called dual agency.
Is Dual Agency Allowed?
Yes, dual agency is allowed by most brokerages. But many real estate professionals, including Clever Partner Agents, consider it to be unethical. This is because buyers and sellers often have competing interests.
The seller wants to get top dollar for their house, whereas the buyer wants to get a good deal. Given the amount of negotiation involved in a home purchase, a dual agent might not advocate fully for either party. Since an agent's commission is based upon the home's final selling price, an unethical agent could push the price higher rather than negotiate effectively on the buyer's behalf.
If an agent or brokerage is a dual agent, it's illegal for them to not disclose this.
Is Dual Agency Legal?
Dual agency isn't legal in all 50 states. It's banned in Alaska, Colorado, Maryland, Texas, Florida, Kansas, and Oklahoma. Legislators in those states believe that potential conflicts of interest in dual agencies outweigh any of their benefits.
Dual agency is sometimes confused with a designated real estate agency, which some of these states allow; go here to find out the differences.
Should you use a Dual Agent?
There are times, however, where using a dual agent can work out well. If you need a fast close, a dual agent can streamline the process. Instead of your agent calling the seller's agent with a question, and then waiting for their call back, you have one source of information.
Real estate agents who work as dual agents cannot disclose confidential information to either party in the transaction.
Can a Dual Agent Save a Seller Money?
Working with a dual agent can save you money, but it's not a guarantee. The typical real estate commission is 6% which is split between the buyer's agent and the seller's agent. If your agent represents both parties, they would receive the whole commission.
This is great for home sellers, who might be able to negotiate with their realtor to accept a 4-5% commission. They might agree to this because they're still making more than they would in a one-sided transaction. Or, you could choose a low commission real estate agent from the beginning and know you'll save money.
What to Ask a Dual Agent you Want to Hire?
You may have met your perfect agent, but they typically work as a dual agent. Ask if they'd be willing to sign a contract to solely represent you as a buyer's agent. If that's not an option but you still want to work with them, ask a few more questions.
Ask the agent to explain how they'll best advocate on your behalf if they represent both sides in the home sale and purchase. You can also ask them to tell you of an example when working as a dual agent helped both the buyer and the seller. Finally, find out how they'd handle any conflicts that might arise between the two parties, particularly after the home inspection.
Which Type of Agent Should I Pick?
The answer depends upon you and your needs. By handling all the paperwork for both buyer and seller and simplifying communication dual agent can shorten the typical closing timeline. But if you'd always wonder if you got the best deal you might want to stick with an agent who's dedicated to your interests.
Clever Partner Agents can help buyers and sellers understand the concept of dual agency and other real estate lingo. They provide full service but offer homebuyer's rebates to buyers and sellers a discount on their commission. If you're ready to list your house to sell or to shop for your new home, reach out to connect with an agent today.