Home Buying in Sacramento>Question Details

Chris Johnson, Home Buyer in Sacramento, CA

What exactly is dual agency? Who does it benefit?

Asked by Chris Johnson, Sacramento, CA Wed Dec 31, 2008

My agent doesn't pressure us too much, but when we see homes that are listed by her company she seems to bring up the nice features a little bit more. I have read a couple brief blog articles on dual agency and only understand it somewhat. It seems like my agent would benefit by selling me one of her own company's listings. My husband and I get along well with our agent, but we're not sure she is always looking out for our best interests.

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That's an interesting question you ask, Chris. Whom does dual agency benefit? It can benefit the selling agent if she is also the listing agent because she'll earn both the listing and selling commission, but typically neither the agents nor the buyers nor the sellers benefit from dual agency. The entity that benefits is the broker because the broker keeps the transaction in-house, earning the commission and sales volume on both ends.

Dual agency can happen if your agent sells you one of her own company's listings, even if it's listed by another agent in the company because all agents work for a broker, and the broker owns the listing, not the agent. It is unlikely that your agent receives any incentive for selling one of her own company's listings.

The underlying tone of your question sounds as though you are uncomfortable with your agent, that you have doubts about her. The best thing to do is to talk with your agent about these concerns. A good agent will know how to assure you that she is working in your best interests and put to rest those fears. A not-so-good agent will become defensive, and if that's the case, you may want to look for an agent with whom you'll feel more comfortable and trust.

Also, bear in mind that you do not have to agree to dual agency. If you sign a purchase contract where the broker represents both the seller and the buyer, however, you have agreed to it. So, if you do not want dual agency representation, tell your agent that you want single agency and get a different agent from another company to represent you on that transaction. Personally, I have no problems with two agents at the same brokerage representing the buyer and the seller. The agents may not even know each other. But they are, nonetheless, operating under those circumstances in dual agency.
1 vote Thank Flag Link Fri Jan 2, 2009
She might be talking up the features of her colleagues homes because she is more familiar with those homes.
Her colleagues have probably pitched these houses in office meetings that she attended and she may have gone on an office "caravan" touring her colleagues listings.

She may not even be aware that she is cheerleading for her co-workers listings. The better a sales person knows the available inventory, the better she is able to present the product.

No agent is perfect, but it sounds like yours is trying to do a good job.
1 vote Thank Flag Link Wed Dec 31, 2008
Everyone is answering your questions correctly but I want to point out something more specific to help you understand better, (hopefully).

Dual agency is regarding the BROKER, in that a buyer is buying a home where the BROKER also represents the seller. Dual representation is where the individual agent, who works for the broker is representing both the buyer and the seller. There is a document that you sign with any offer you present that is called the Disclosure regarding Agency relationship. The second page is the actual civil code that describes the responsibilities of the agent.

Personally, I will not represent both a buyer and a seller on the same transaction, but it can be done. I have no qualms repesenting a client in one of my broker's listings by another agent. Not that I get any financial gain, but I normally know the property better, know how to negotiate better for my client with that agent and generally can make the transaction go smoother when it's an agent I know, and they know me.

So it might be in your best interest that the agent is able to describe the property better, but if you have a question on their motivation, ask your agent!

And best of luck in finding your new home!
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Thu Jan 1, 2009
Dual Agency is when your agent represents BOTH you and the seller. Showing you listings by other agents in the office does not put your agent in dual agency since another agent represents the seller although the broker would be considered a dual agent since both agents fall under the broker's umbrella.

True Dual Agency occurs when your agent attempts to sell you one of her listings. In Pennsylvania, if this were to occur then the buyer and the seller would have to sign an addendum acknowledging that the agent is representing both the buyer and the seller.

The problem with Dual Agency is that since the agent is representing both the buyer and the seller the agent must ensure that they don't disclose any confidential information to the other party. For instance, if the agent knows the buyer will pay more for the house they can't tell the seller. As a result, the agent must be careful to ensure that neither party feels this has happened. In some cases, they have to remain so neutral that they can't offer the best advice to the buyer or the seller.

Companies like to list and sell the house so that they receive both sides of the commission. As a result, these listings are promoted in sales meetings. Also, your agent is probably friends with the other agents so she would like to help sell their listings.

As another agent recommended, I would probably mention it to her so that it is clear what you expect from her services.
0 votes Thank Flag Link Wed Dec 31, 2008
Dual agency benefits the broker. With this agency, the real estate salespeople involved are forced into a position of neutrality (as opposed to advocating for one side or the other). The brokerage company receives the full commission offered by the seller, but in the process, switch gears from "representing" the seller to more of a facilitator capacity- you become the second party facilitated, but not offered fiduciary.
If you get your own outside representation on a listing within your agents company, you'll have the benefit (if you choose buyer agency) of someone offering the true value/most aggressive offer on a property, as opposed to a neutral position in which they can't advocate for either side.
Get your own representation when dealing with in house listings whenever possible- your gut feeling is correct. She CAN'T look out for your best interest when in a dual agency situation.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Wed Dec 31, 2008
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

Keep in mind if she sales you one of her listings her benefit is financial she would earn approx. 6% closing vs. 3% approx. for showing another listing agent home for you to purchase.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Wed Dec 31, 2008
Dual agency with your agent showing you homes listed by other agents in her company will not give her any additional commission or unusual incentive, like a bonus if in escrow by a particular date, that is not also offered to a non-dual agent. In other words, she doesn't profit monetarily unless she herself has a listing she sells to you. In that case, she will earn "both sides" of the commission, a commission for being the Buyer's agent and one for being the Seller's agent.. In what ways do you think she is not looking out for your interests?
0 votes Thank Flag Link Wed Dec 31, 2008
Hi Chris;
I think you should talk to your agent about your feelings. It could just be a big misunderstanding. I know that if I sell a house to my buyers that is being represented by my broker, but I am not the listing agent, I do not get any extra cash or benefits from the transaction. Of course my broker is happy, because they make money from both ends of the deal, but I do not get any thing extra out of it.
I have heard of some offices where the agent will get a bonus for selling a home that is represented by their own office, but this should be disclosed to the client to avoid any misgivings as you are feeling, and also for the purposes of full disclosure.
0 votes Thank Flag Link Wed Dec 31, 2008
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