Home Buying in New Jersey>Question Details

Newjersey, Other/Just Looking in New Jersey

Can someone explain in depth the concept of a dual agent?

Asked by Newjersey, New Jersey Tue Jan 8, 2008

In NJ, can one agent represent the buyer AND seller? I looked at a house in NJ without a buyers' agent and wondered if I needed to get an agent to represent me for the offering. Can I use the same agent that is representing the buyer or would I need to AT A MINIMUM find an agent who worked for the same realty?
What are the pros and cons of using a dual agent in this marketplace?

Help the community by answering this question:


JR: " agree, however a dual agent does not act in either parties' best interest, a dual agent acts as a mediator between two parties. So a dual agent does not pretend to be loyal to two masters. "

No but a dual agent can become subservient to the biggest single master, the deal. Why should any buyer sign on for that?
Web Reference: http://www.marcpaolella.com
1 vote Thank Flag Link Thu Jan 10, 2008
Hi "Just Looking in New Jersey"

Well, it seems as though this question has sparked many answers.

Firstly, I believe that Dual Agency began in the mid-1990's in New Jersey. It started because in the old days of real estate, there were hardly ever any "Buyers Agents". Just about EVERYONE claimed to work for the Seller. The listing company was the "Agent" for the Seller and the party that brought the Buyer was the "Sub-Agent" for the Seller. All parties claimed to be working to get the highest and best offer for the Seller. Buyers, understandably, felt it was not fair to not have any representation. Hence, Buyer Agency and Dual Agency were created and Sub-Agency is essentially never heard of anymore.

Deborah is correct in telling you that representation is at the agency level, not at the agent level. Any agent from the same company, according to the law, will represent you in the same fashion during the transaction whether it's the listing agent or someone else in his/her company.

The problem arises when you are interested in making an offer on a property that is listed by the same company that your agent works for. In this case, there are only two choices for a company to pick from as to how they are representing the parties in the transaction. They are either transactions brokers from the start which means they NEVER claimed to represent the Buyer OR the Seller at ANY point in time or they can become disclosed dual agents who once solely represented the Seller or the Buyer and now will have to attempt to represent both parties fairly.

At the time of listing a property, if an agency claims to represent the Seller and does not disclose that they are a transaction broker from the very beginning, then the only option is to become a Dual Agent when that same agency brings the prospective Buyer. An agency cannot claim to represent the Seller when taking the listing, gather all their personal and confidental information, and then claim to not represent either party later in the transaction. It's too late at that point because the seller has already confided in them.

The first thing an agent is supposed to disclose to you is how they represent you. In New Jersey we are required to present you with a Consumer Information Statement that explains all of the different types of representation. For instance, when I work with a Buyer, I inform them that I will be working with them as a "Buyers' agent (if I sell them a house listed with another company) or a Disclosed Dual Agent if the opportunity arises (if I sell them a house listed by my company)". We also should have the prospective Buyer sign a form called an "Informed Consent to Dual Agency" that explains, in detail, what a Dual Agent can and cannot do in a transaction.

The only way to truly avoid the possibility of a "Dual Agency" situation is to work with an agency that does not take listings at all or claims to be a transaction broker at the time of listing a home.

There are also different viewpoints on whether it's advantageous for an agent to have both sides of a transaction. Of course, at the onset, it would seem that it would be beneficial monetarily because the agent is receiving both sides of the transaction. However, there are often times that an agent will contribute some commission to bridge gaps in the deal BECAUSE they have both sides. Sometimes an agent will make LESS because they represented both parties rather than having two separate transactions. Also, there is a lot of pressure and suspicion an agent has to deal with when acting as a Dual Agent. Both parties know that they confided certain things to this individual and it is human nature to wonder if that person will keep that information confidential, especially when they stand to gain financially from the transaction coming to fruition. The agent has to constantly work hard to make the parties feel secure that their "secrets" remain safe. What people should keep in mind is that an ethical and professional agent will not risk losing their real estate license, which is their livelihood, for the sake of any one transaction.

I feel that if Dual Agency is handled properly, it can work out just fine. An agent is still bound by the Code of Ethics to disclose any problematic issues regarding the home itself . They are also still able to provide BOTH the Seller and the Buyer with pertinent market data to assist them in coming to an agreement of a fair market price.

I hope this information was helpful. If you still have concerns, I suggest that you openly communicate with your agent about it. I know this topic can be confusing. It is to some of us in the business and we deal with it every day! Good luck to you! :-) Feel free to e-mail me directly with questions.

Janet Levy-Minetti
Broker-Salesperson/Office Manager
Crossroads Realty/Lacey Office
0 votes Thank Flag Link Wed Jan 30, 2008
You can use the same agent to represent you in the transaction. It is A DUAL AGENCY for which both buyer and seller need to be informed and consent to the agency relationship.

Now the one thing you will lose is LOYALTY. It is impossible to be LOYAL to two different parties. In most real estate textbooks loyalty refers to working solely in the interests of one client. That means giving the client our allegiance. It means giving whatever professional advice we can give to advance their interests, and no one else’s. It means advocating for the client’s goals and interests. In dual agency, however, where two parties’ interests are in direct conflict, the real estate agent cannot advise, advocate, or give allegiance to either party if such counsel gives one party an advantage over the other.

As for confidentiality and disclosure, in single agency we would disclose anything we learned about the other party that would give our client an advantage. In a dual agency transaction we are not permitted to disclose any confidential information about one party to the other.
Web Reference: http://www.agentjustin.com
0 votes Thank Flag Link Thu Jan 10, 2008
It is not a good idea to use the same agent. It is not a good idea to practice dual agency. Almost always this is a losing proposition for everyone involved.

I have defaulted to transaction broker (not representing either party) when both parties agree in writing. I would not consider this unless both parties are experienced in real estate transactions and know excatly how they want to negotiate. Most often when I've done this I offer to reduce the commission saving each party money. If you decide to use the same agent (I wouldn't if I were you) but if you do I'd ask your Realtor to reduce the commssion and reduce the price you pay accordingly.

If my brokerage represents both parties an agent is designated for each party. In my opinion this works out just fine.
0 votes Thank Flag Link Thu Jan 10, 2008
Thanks for your answer Elv!s. We used to do sub agency till recently, now we do broker's agency, but we are still working for the seller. We offer buyer's agency, but we don't get a lot of takers (yet).
0 votes Thank Flag Link Thu Jan 10, 2008
I work with both buyers and sellers (about 60% sellers and 40% buyers), but it varies year to year. Most agents I know work with both.

Yes, when I'm working with a buyer, I represent the buyer as a buyer's agent, and there is no requirement to sign an exclusive buyer's agreement.

Illinois is not a sub-agency state, where even when working with the buyer, you truly represent the seller.
0 votes Thank Flag Link Thu Jan 10, 2008
Alan May, Real Estate Pro in Evanston, IL
I know there are exclusive buyers agents who don't list...what I was wondering was, when a buyer comes to you, do you usually represent them or the seller? And do agents work with buyers are buyers agents? (Not exclusive of listing).
0 votes Thank Flag Link Thu Jan 10, 2008
jr, if you're asking, do buyers commonly work with "exclusive buyer's agents"... agents who don't list also... the answer is not... that's not common...
0 votes Thank Flag Link Thu Jan 10, 2008
Alan May, Real Estate Pro in Evanston, IL
Elv!s, a question: is it customary for buyers only to work with buyer agents in IL? I would love it if it become SOP here, but like I said, buyers don't want it.
0 votes Thank Flag Link Thu Jan 10, 2008
oh, i agree, j.r.

that WAS the question, and you described dual agency well... I just believe that if the public understood what it truly meant, they wouldn't allow us to do it.

I don't practice dual agency either, even though Illinois allows it. Why would I be a dual agent, when a thoroughly acceptable option exists in "designated agency". I merely turn the buyers over to a designated agent in my office, who they throws me a referral fee, and now the buyer is fully represented, and both sides are separate and clean. And yes, I make more than I would have if I only had the seller, but less than I would have representing (or MISrepresenting both sides).
0 votes Thank Flag Link Thu Jan 10, 2008
Alan May, Real Estate Pro in Evanston, IL
but the consumer (let's say the seller in this instance), when they hired us, they interviewed 3 agents, and one of the reasons they chose us is because of our experience and success as a skilled negotiator. Now, as a dual agent, that skill as a negotiator has to be ignored, since I cannot advise them one way or the other... I have to be a neutral mediator.
... That is not what the seller signed on for, nor what they hired me for..
I agree with you Elv!s, and that is why I don't work as a dual agent. That was the question, though, to explain the concept of the dual agent and that is what I did. For my own....if I have a customer for one of my listings, I fully explain agency and who I am working for, and tell them what NOT to tell me if they don't want that disclosed to the seller. I also tell them that we can have another agent appointed to handle their "side" of the transaction, if it makes them more comfortable. So far, I have not had any problem selling my own listings as the seller's agent and the buyer being my customer. I have never acted as a dual agent because the seller hired ME to work in their best interest, not to act as an uninterested 3rd party. And, on the other hand, that's pretty much how I explain it to my customers when they are listed in other seller's properties also. One thing the agents from the rest of the country have to understand here is that we only JUST GOT buyer agency here on Long Island, and believe me the buyers are going kicking and screaming towards accepting the concept of signing up with an agent, even if it means we are not looking out for their best interests.
0 votes Thank Flag Link Thu Jan 10, 2008
[ I agree, however a dual agent does not act in either parties' best interest, a dual agent acts as a mediator between two parties. So a dual agent does not pretend to be loyal to two masters. ]

The problem I have with this philosophy is that it sounds so innocuous that many people will be sucked in.... but the consumer (let's say the seller in this instance), when they hired us, they interviewed 3 agents, and one of the reasons they chose us is because of our experience and success as a skilled negotiator. Now, as a dual agent, that skill as a negotiator has to be ignored, since I cannot advise them one way or the other... I have to be a neutral mediator.
... That is not what the seller signed on for, nor what they hired me for... the only person being well served by my acting as a dual-agent... is ME, the dual-agent. I'm getting paid twice. If consumers really understood what we were asking them to do, they would not allow us to do it.
... Dual agency is still legal in many states, (including Illinois) but in my opinion it is a law-suit waiting to happen.
0 votes Thank Flag Link Thu Jan 10, 2008
Alan May, Real Estate Pro in Evanston, IL
Dual agency is a terrible deal for you. How can an agent be loyal to two masters? He cannot.
I agree, however a dual agent does not act in either parties' best interest, a dual agent acts as a mediator between two parties. So a dual agent does not pretend to be loyal to two masters.

Dual agency occurs when a real estate agent is representing both buyer and seller in the same transaction. Since the agent has promised a duty of confidentiality, loyalty and full disclosure to both parties simultaneously, it is necessary to limit these duties in this situation, if both parties consent.

If you find yourself involved in a dual agency relationship, make sure that you completely understand dual agency definition. Contact a Real Estate Lawyer for a complete explanation of dual agency definition.

This relationship involves the following limitations:

* The Agent will deal with the Buyer and the Seller impartially
* The Agent will have a duty of disclosure to both the Buyer and the Seller
* The Agent will not disclose that the Buyer is willing to pay a price or agree to terms other than those contained in the Offer, or that the Seller is willing to accept a price or terms other than those contained in the Listing
* The Agent will not disclose the motivation of the Buyer or the Seller to sell unless authorized by the Buyer or the Seller
* The Agent will not disclose personal information about either the Buyer or the Seller unless authorized in writing
* The Agent will disclose to the Buyer the defects about the physical condition of the Property known to the Agent
0 votes Thank Flag Link Thu Jan 10, 2008
Hi Newjersey,

Yes. You NEED to get your own agent for the offering. Dual agency is a terrible deal for you. How can an agent be loyal to two masters? He cannot. It does not happen in any other profession, and it should NOT be legal in New Jersey, but it is.

Dual agency is never good for you, so I would avoid it completely. Furthermore, you have to give written permission for dual agency at the time you make an offer. It cannot just happen. Your consent is required, and it is a consent that you should not give. Buying a house is implicitly adversarial. It doesn't have to get ugly, but it's still adversarial. The only beneficiary of dual agency is the agency, because they get to keep the whole commission. This can be big money, and the agent can be tempted to dedicate their loyalty to the DEAL at all costs, and not to you. Yes I know, the ethics rules are supposed to prevent it, but why ask for trouble?

It costs you nothing to get your own representation. So my recommendation to you is to get your own agent to represent you, protect your interests, and be loyal to you. And from a completely different company then the one listing the house.

Good luck with the purchase and remember: You MUST give your written permission to fall into a dual agency. Don't consent!

Web Reference: http://www.marcpaolella.com
0 votes Thank Flag Link Wed Jan 9, 2008
With the consent of both the buyer and seller, in NY, the agent would act as a mediator, and not look out for either's best interest. If you find an agent from the same realty they would still be a dual agent.
0 votes Thank Flag Link Wed Jan 9, 2008
Dual agency is not a problem...

... until it is.

If you're working with a dual agent, they cannot advise you on so many things (price, inspection issues, negotiation...), and if no problems arise, then a dual agent could be okay. But when a problem arises, you'll suddenly find that you're represented by someone who cannot adequately advise you. The only person who's truly represented well by dual-agency, is the agent himself, who now receives both sides of the commission.

In the other scenario that Deborah mentions, where you're dual-agency, simply because both agents work in the same office... as long as your agent doesn't have any "inside information" about the seller, s/he should be able to advise you fairly well. I have less of a problem with that situation.
0 votes Thank Flag Link Wed Jan 9, 2008
Alan May, Real Estate Pro in Evanston, IL
I'm an agent who just recently moved from Florida to Georgia. In Florida, we have single agents and transaction brokers. Dual agents are not allowed under the Florida Real Estate Commission. Most brokerages represent clients as transaction brokers - even if at the time they are only representing one side. Single agents are only allowed to represent one side (seller or buyer) and must either transition to transaction broker with both parties, or have "no representation" of the 2nd party. As a transaction broker, we are able to advise and assit both sides of the party without being soley responsible for their actions, nor are they responsible for our actiions.

I find it is easier to be the only real estate agent involved in most deals, because as the previous poster said, communication can be dramatically easier. And, as I explain to my clients, I am representing the "transaction" and will do everything I can to help see that we reach closing in an agreeable fashion to all parties involved.

Now, here in Georgia, it is similar to New Jersey in that we have single angents and dual agents. At first, I was a little freaked out to be a dual agent (being that it is not allowed in Florida!) But, I came to realize I treat all tranactions with the utmost care and respect as I'm sure most agents there in New Jersey. The bottom line, you want to "know, like, and trust" the agent you are working with. Then I'm sure you will have a successful transation!

Hope this helps,
Web Reference: http://www.helpinghomes.net
0 votes Thank Flag Link Wed Jan 9, 2008
I am a real estate broker in NJ. Dual agency applies at the brokerage (company) level. Even when buyer and seller each have individual agents, but both work at the same company, it is still dual agency. That is legal representation for you is by the broker (company) and the agent is the representative. But, in reality, yes, there can be a difference when you have two differenct agents when they work for the same company.

I am not a fan of dual agency, but is allowed in NJ, and yes, I have been in several dual agent situations. There are instances when having the same agent can be beneficial. It can speed up converations and simplify appointments, and simple negotiations.

The biggest challenge exists when negotiations do not remain simple. If buyer and seller are looking at the same set of information through very different eyes, and each party wants their agent to advocate for the view they hold. An agency relationship establishes a duty of loyalty. And, how does one person serve two masters?

Dual agency can be easier when no challenges arise, and both parties continaully see things the same way.

If you have two different agents form the same company, each person will work on behalf of their personal client. But, neither agent, if they learn confidential info about the other party, may share it, since the agency relationship is at the broker level. By confidential info, I am referring to personal info, not material facts about the property. In all instances, all material facts about a property are to be fully disclosed.

All in all, I am not a fan of dual agency, and recommend that buyers have their own agent. I have in the past, functioned as a dual agent, and expect that I will in the future. If I ever think that it would be beneficial to bring in another agent to help, I will do so. I have done this on several instances.

Did the listing agent show you the property? And, did that listing agent do so as a sellers agent? Or did that agent do so as a dual agent and explain agency to you? Since agents work on commission, the agent who showed you might have some claim to the commisison for his/her role in the transaction.

Without knowing the details, I don't want to speculate further. If you determine that you want to hire your own buyers agent, do explain to them all of the circumstances thus far. The buyer agent will be then be able to call the agent who showed you the property and work out the details for compensation. A common resolution when more than one agent is involved is that the 2nd agent pay the 1st agent a referral fee. Again, without knowing all the details, I am not suggesting that would be the best in your situaion. Such may or may not be acceptable to the parites in your situation. Or, the agent who shoed you the property may assert that he/she did so as a sellers agent and has not claim to the buyers agent side of the commission. You wouldn't want to hire a buyer agent and have the buyer agent have their fee be challenged by the fact another was the procuring cause of the sale. You needn't dwellon this, but simply be candid with the buyer agent you choose, so he/she can handle it.

Your concern, as a buyer, is to choose the agent that you believe will best service your needs.

Deborah Madey - Broker
Peninsula Realty Group
New Jersey
0 votes Thank Flag Link Wed Jan 9, 2008
Deborah Madey, Real Estate Pro in ,
I am a sales associate for Keller Williams Realty in Princeton,N.J. you can use the same agent. A Dual agent can represent you as a buyer and the seller. You can expect them to fairly represent you and there should be no pro or con. If you have any doubts about your agent ability to do this, you might want to look for another agent. Most good expierenced agents with busy brokers will many listings. If they represent you in buying any of the listings they are in effect acting as a dual agent. A dual agent can't divulge any information about the property that they have gained as result of having the listing. Example, the fact that the seller has said they would take $450,000 for a property that is listed for $500,000 or that they are selling because the have to move due to a job relocation. They are required to diclose anything material about the house that they are aware of. In fact between the Seller Disclosure and the Inspection service you will know all you need to know about he property. I would look for a good buyers agent if you need help in navigate the finding the right property process and negotiating the deal. However, I never have a problem with dual agency. In property I have bought, sold or otherwise. If you have a good agent you have a good agent. Hope that helps
0 votes Thank Flag Link Tue Jan 8, 2008
I don't know about NJ but in NV and most places it is allowed with consent from both parties.
Personally, I will not do a dual agency. I just don't believe in it. When a seller signs with a listing agent, that agent takes on information about the seller such as motivation , reason for selling, necessity for selling, plus finacial imformation of the seller, etc. He has a fiduciary responsibility to sell that property for the highest possible price. If he is acting as a dual agent, ethically and legally, he can not give a buyer any information that would assist the buyer in obtaing a lower price. He would then have breached his contract. The buyer is left to try and find it out on his own (or not).
Now if the buyer has his own buyers agent, that agent can help determin if the asking price is at market value, assist in finding out possible motivations or reason for selling. Anything that would help present an offer that would be acceptable but much lower than the asking price. In a nut shell, he is working for YOU and your best interest.
Whenever I find myself in a "dual agency" position, I refer one side (usually buyer) to another agent in our office or if they wish, I have refered them to another office. The analogy I use is " If you were in court as a defendant, would you want your lawyer to be the plaintifs lawyer also? " Obviously one side is not going to be represented fairly if they are both using the same lawyer. I beleive the same holds true with a Realtor who acts a a dual agent. One or niether side of the deal will be represented fully.
Just my opinion! Good Luck!
0 votes Thank Flag Link Tue Jan 8, 2008
Hi Newjersey, I can't answer about New Jersey specifically, but I think I can help you with the concept overall.

When I represent only a Seller as a listing agent, that is where my loyalties lie. I can not divulge confidential information, tell lies, mess up the money... do anything that would hurt my seller - I must act in their best interests at all times. This of course includes negotiating the very best contract for them - highest possible price, great earnest money deposit, manageable deadlines, not giving away any appliances, etc.

When I work as a Buyers Agent - I am on the opposite side of that fence - I am fighting for the lowest price, lowest deposit, every appliance, the kitchen throw rug and the living room curtains - maybe even throw in the play set and the fireplace tools. I also have to be honest, keep my buyers info confidential, be careful with where I put that escrow check - etc.

As a dual agent, my hands are tied in negotiating. I must remain mute if asked for any guidance or advise during negotiations - and remember -- this means not just the initial offer, and contract, but also, any post inspection requests, if any issues come up in the closing. I still have to be honest and provide due diligence, but because I am helping both sides, I am not allowed to advise either side.

This arrangement is not usually in the best interests of either party, but there can be exceptions to that, which is why it is allowed. In both MA and CT where I practice, to be in this situation, I have to tell both parties in writing we are in this position, and then they have to agree in writing that they accept this position. The real advantage in this to the parties - especially if they are both experienced and don't need as much guidance in the negotiating phase - is that I can transfer communication very quickly - as opposed to the chain of communication which happens with agents on both sides.

In your specific situation, it sounds like you are new to this process and would benefit greatly from an agent on your side guiding you. It is fine - in my opinion, to use another agent at the same firm - but yes, I would encourage you to obtain your own agent. Hope that is helpful, Stacey
0 votes Thank Flag Link Tue Jan 8, 2008
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