What Are Dual Agents in Real Estate? (And Why to Avoid Them)

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Clever Real Estate

Updated 

June 18th, 2019

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Dual agents in real estate are sometimes a necessity or a condition of the market. In other cases, they’re rigged to privilege one party over the other. Here’s what you need to know and why an experienced local agent is the best way to end up with the most lucrative deal.

Between the 1.3 million licensed real estate agents scattered throughout the country, there are many agents that work as both buyers and sellers. In some markets where there are few agents working, agents work as “dual agents” for certain properties. In other cases, a dual agent situation refers to the fact that the buyer’s and the seller’s agent are both licensed under the same broker.

Whether you’re selling or buying a home, finding an experienced local agent is key to ensuring that you get the most bang for your buck. Working with a dual agent can lead to a conflict of interest, which is why some people steer clear. Here is everything you need to know about dual agents in real estate and why to avoid them.

Is Dual Agency Legal?

Dual agents can lead to a conflict of interest for buyers because they could have a relationship with sellers who do business with them regularly. Sellers using a dual agent might be motivated to push prices down to get faster commissions. Any time they might privilege one party over the other, someone walks away from the deal feeling ripped off.

That’s why dual agency is illegal in Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, and Vermont. In most of the other 42 states, it’s controlled by disclosures that both the buyer and seller need to sign. If they refuse to give consent to this agreement, the transaction is halted.

After the agreement is executed, a single agent in these cases becomes a disclosed dual agent.

What Are the Limits to Dual Agency?

While the National Association or Realtors requires all of its licensed agents to act with fairness and honesty, dual agents are required to walk something resembling a tightrope. Not all agents can pull off working as a dual agent, no matter how professional they are or how tightly they control how they speak.

The agent is required to provide full disclosure to both parties at all times. Agents can tell buyers about known issues but must protect confidential information about the seller. Dual agents can’t advise the buyer on how much to offer or advise the seller to accept or reject an offer.

Most times, this is some of the most important advice an agent can offer to their clients.

What’s the Impact for Buyers?

In most real estate transactions, the buyer communicates with their agent who then reaches out to the seller’s agent. This is one less step when working with a dual agent, but it also provides the potential for slips of the tongue and offering conflicting advice. The chain of communication might add time but it also protects both parties.

The average buyer can’t find out whether the agent has a previous relationship with the seller. While this might not be important to all buyers, it can influence how the dual agent handles the transaction. It’s unlikely that a buyer will work with the agent again soon, but a seller with multiple properties is likely to work with the same agent or brokerage over and over.

Commission is important to an agent and is calculated as a percentage of the final sale price. A buyer’s agent will fight for a lower price on behalf of their client but one who represents the seller will want a higher price because it pleases the seller. As a buyer in the dual agent process, it’s usually a bad deal unless it’s your only option.

What’s the Impact for Sellers?

As a seller, you’re usually responsible for paying for the entire commission cost of both the buyer’s agent and your own. That total commission is ~6% off the top of the total sale price of a home.

When you work with a single agent, you can often get the agent to lower their commission, but don’t assume that they will automatically. It depends on the state and health of the current market. Sometimes, it can save you tens of thousands of dollars while in others it can mean paying what you would pay to have your own agent while getting less engaged service for your dollar.

As a seller, the worst thing that can happen is that your agent communicates about confidential information with your buyer. It can ruin the deal or offer leverage they otherwise wouldn’t have. It’s hard for a single agent to have undivided loyalty, no matter how professional or ethical they are.

Working With a Clever Partner Agent is a Better Option

If you’re a seller looking to work with a top-rated agent and to save money on commission costs, working with a Clever Partner Agent can save you money. Our top-rated Partner Agents work for a flat fee of $3,000 or just 1% of any sale over $350,000, all while providing the highest-quality services possible.

For buyers, working with a Clever Partner Agent gives you access to top quality agents from every major brokerage. Rather than having to hire a dual agent who might have interests with the seller, you can get your own agent to work on your behalf.

Contact us today to connect with a Partner Agent from right in your backyard who knows the market better than anyone else.

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