Home Buying in 22101>Question Details

Marc M., Home Buyer in 22101

What are the Risks with Dual Representation?

Asked by Marc M., 22101 Tue Sep 30, 2008

We met friends of friends who are selling a house in McLean. After several meetings and inspections, we verbally agreed on a price range but did not submit any offer yet. For several reasons our price is below the list price. The buyer agreed at the condition that we use their agent.

As we agreed on the price, what are the risks for us, buyers to use the seller's agent to represent both seller and buyer?

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11
Great question Marc M. It is my practice to avoid dual agency. I agree with the previous answers wherein they stated it IS "legal" in Virginia. However, it is my feeling it should become illegal. The reason I feel it should be "illegal" is I don't think anyone gets true representation when they sit in the middle and become a facilitator as a dual agent, not the negotiator you hired. The whole theory of having a Real Estate Agent "help" you is so they can give advice and guide you through the transaction.

If the listing agent has performed an accurate CMA (comprehensive market analysis) on the subject property and got the listing, they signed an exclusive agency agreement with the seller. When a buyer comes along, the first question out of the buyers mouth is normally "well, how much do you think I should offer for this property?" How can that listing agent tell the buyer anything other than the current listing price (if they did their homework properly to begin with).

Another real problem I have found is during the home inspection process. A home inspection almost always comes up with something that needs to be taken care of. It's very difficult to tell a buyer they are being unreasonable with their request(s) if you are the listing agent. If you are strictly a buyer's agent you'll ask for anything and everything they want and not think twice. If you were the dual agent and took a long list of repairs to the seller, the first thing the seller is going to ask is "well, what do you think we should do?"

You simply cannot give advice when you are a dual agent. People want and need advice and guidance. They're paying a good price for this help, and deserve nothing short of a professional on their side.

Another problem you might run into (especially in today's market of tough lendor guidelines) is having a problem with credit issues at the last minute. If the dual agent has knowledge of this issue, it becomes an ethical question of what shall I share with the Sellers? If the Sellers know of any problems about you personally along the way, they might be less likely to accomodate a last minute request on your behalf. As a buyer's agent everything is kept confidential about you between you and your agent. Only things that you want to be disclosed to the other party should ever be disclosed. You MUST give permission to your agent to disclose anything personal.

I have always equated dual agency to this: If you are married and decide to get a divorce, will you and your spouse use the same attorney? ABSOLUTELY NOT! You want someone to be strictly on your side to fight for your rights. The same goes for real estate, in my mind.
Web Reference: http://www.jennymcguire.net
2 votes Thank Flag Link Wed Oct 1, 2008
Dual agency, while legal in VA, is a slippery slope. Many agents say they can do it. I have no doubt that an agent can be fair, honest and provide each party with accurate information to make a decision., but what a client loses in dual agency, is the benefit of the agents advice. Out of conscience, I won't do it.

I rather work this way:
As a Buyers agent, I try to find out as much as I possibly can from the listing agent about the house and the seller: what is their motivation, their personal situation, finnacial situation, etc. I then use that info along with my knowledge of human behavior and my negotiating skills to advise my buyer client. The result is a great deal for my buyer AND a happy seller. If I represent both parties, the best I can give the buyer is a current CMA and say, "what would you like to do?" I become a "transaction coordinator" and neither party really gets what they pay for in terms of my full services.

Jim is right about the procurring cause issue. Most list agents, however, are just eager to get the home sold and know that a buyer is entitled to full representation. It is best to talk to them about allowing you to hire a buyer representative that will be paid a commission from the listing agency. In the meantime, try to keep quiet: "everything you say can be used against you."
1 vote Thank Flag Link Wed Oct 1, 2008
There is a very real reason why "dual representation" is not allowed in some states......simply stated, the potential for a conflict of interest are just too great!
0 votes Thank Flag Link Fri Apr 18, 2014
My office does not permit dual agency. The listing agent for the property you are interested in represents the best interests of the seller only. Just as lawyers cannot represent both sides in litigation, nor should realtors.

In fact, it is not in the best interest of the seller to request that their agent represent you as it dilutes the listing realtor's attention to their best interests as well.

I have read several agent responses and they are all correct and it was wise of you to put your question out there.

I recommend that you contact a broker and ask to talk with one of the best buyer representatives in their group.

Do not fall into this trap,
Patricia Queen
BRIGHTSTAR at Keller Williams Realty Atlanta Midtown
404-388-0400
http://www.queensellsatlanta.com
0 votes Thank Flag Link Fri Apr 18, 2014
Dual Representation = NO representation. How can one "represent" a client when one must keep confidential everything known about the other client? It is imposssible to serve each party responsibly. It should be illegal.

Sounds like a great deal for one party and their agent! The other party will NOT have sufficient representation. Run as fast as you can to enlist the services of a good agent who is equipped with great negotiation skills. There's no charge for you but will save you LOTS of heartache, headache and $$$ after settlement. And of course, it will cost the seller the commission fee.
0 votes Thank Flag Link Wed May 2, 2012
Regardless if you are the buyer or seller, you should always have someone looking out for your interest.

The risks are that you don't get the proper advice on price strategy or home inspection issues. The savings to the seller could cost you thousands.
0 votes Thank Flag Link Thu Aug 12, 2010
One of the risks is confusing Dual Representation with Dual Agency, which isn't quite what people think of when they think, "representation."
0 votes Thank Flag Link Thu Mar 11, 2010
Marc, the sellers agent represents them first and foremost. Did you ever buy the house? Almost 2 years later I hope things worked out.
0 votes Thank Flag Link Thu Mar 11, 2010
Wow, lots of risk. You need buyers representation. a good source for information is http://www.buyersedge.com. Do to the site for information then give me a call for representation :) I live in McLEan and have been a buyers agent in McLean for 7 Years.
Web Reference: http://www.buyersedge.com
0 votes Thank Flag Link Thu Mar 11, 2010
Marc - are you the buyer or seller? Regardless, I have to say that the vast majority of agents don't really know the answer to this, I have discussions with seasoned agents all the time that don't understand what constitutes dual agency. If there is only 1 agent in the deal, it may or may not be dual agency. I often sell my own listings or otherwise am the only agent in the transaction. Without representation, you give up certain benefits which are unique to each transaction and each situation. When all goes well, it's a non-issue. It is only when things fall apart that it becomes a problem.

Good luck.
0 votes Thank Flag Link Thu Oct 2, 2008
While that agent must deal with you honestly and fairly - they are not representing your best interests. You may very well be over-paying for the home; may not have the best options as far as home inspection items, etc.
Often - this type of transaction will be easy - UNLESS a problem arises. ANYTHING can happen in a Real Estate transaction.

The other problem is called procuring cause. Even if you get your own agent - the listing agent now has procuring cause. Even if you get your own agent - they will most likely not be eligible to receive a commission.

I would demand representation and demand the listing agent agrees to pay your agents commission.
0 votes Thank Flag Link Tue Sep 30, 2008
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