Dual-agency--pros vs. cons? red flags? Effective/honest buyer's agent in San Ramon/Danville area?

Asked by Home Buyer, San Ramon, CA Fri Dec 24, 2010

Hi, my wife and I saw a house in San Ramon a couple weeks ago and while we were talking with the listing agent, he strongly suggested we work with his wife as our buyer agent. He said if we go with them we could potentially save some money on the purchase price. I do not like this idea at all because dual agency poses all kinds of conflict of interest. But my wife suggested we might not be so close-minded. She pointed out having a husband and wife team might get the deal through and save us some money (they are proposing a 1% credit on purchase price). She also pointed out even the wife representing us should uphold herself to the same professional standard of having her buyer's interest first (in other words, another buyer agent would not be better). Is that correct--that having an exclusive buyer agent is no more advantageous than dual-agents? What are some of the red flags we should be looking for, in the rare case we work with this husband-wife team? Thanks, David

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17
Tim Moore, Agent, Kitty Hawk, NC
Fri Dec 24, 2010
Dual agency occurs not just when the same agent represents the buyer and seller but when anyone in the office does. In other words if Bill Jones, who works for ABC Realty is the listing agent and Patty Smith, who also works for ABC Realty, is the buyers agent this is also Dual Agency. It is not the agent but the company that is in a dual position and it has to be noted as being so. There is a thing in real estate called designated agency and that is where Bill is designated as the sellers agent and Patty is designated as the buyers agent and there are some rules about that, but I won't bore you with them. Designated dual agency is what your agents are suggesting to you. While it sounds like you are protected and being looked out for, it seems pretty obvious that the agents are in it to win it and to get the commission by luring you in to work with them by offering the 1% discount.

As others have said, and I like the way Dan said it best, get your own agent from a different company if you are uncomfortable with dual agency.
2 votes
John Juarez, Agent, Fremont, CA
Fri Dec 24, 2010
Let me state my opinion in a different manner.

The listing agent team is willing to pay you 1% of the transaction amount to enable them to make more money on this transaction. Oh yeah, and to represent you, too.

Is the seller on board with this arrangement? Is the seller getting a discount if the team does both sides? If not, won't the seller expect a higher price?

I have done dual agency but I have never told a buyer they would get part of my commission if they worked with me. There was always the understanding that I would become more of a messenger for the parties than an advocate.
1 vote
Terri Vellios, Agent, Campbell, CA
Fri Dec 24, 2010
All good answers. Many of the questions we professionals answer are "after the fact" from Buyers who are under contract in a dual agency. A problem has come up during the transaction and they feel something is not right, so they end up here on Trulia looking for a solution.

I have been a dual agent and it is not easy. First the seller has to understand and accept the dual representation and the buyer as well. Negotiating on price for the buyer by the listing agent doesn't really exist because the Listing Contract is for the benefit of the Seller and the Listing Broker has a duty to the Seller. The agents have to seriously have their own client's best interest (not their commission) first and foremost. Negotiating goes beyond just the contract price, it is the terms, repairs, any bumps during the contract. If the transaction has problems how will the broker handle it? Are the agents independent Brokers with their own Errors and Omission Insurance, or are they with a large company who has attorneys to protect the Brokers interest? These are the red flags.

The positive is you have two agents who know each other well. They know the seller and they know the buyer. As in other representation they have the same goal in mind, to close the transaction. They have commission flexibility since it goes to the same pocket. With dual agency you have eliminated the other agent so you go straight to the Listing Agent, however you have also eliminated the agent who is there to be your adviser and to represent your best interest.

The seller has agreed to pay an agreed to commission, why would the seller agree to allow you the buyer to gain any % instead of the seller. .. and have less representation at the same time? Unless this has not been explained to them.

Depending on the price of the home, you may be able to have your own representation and get more than a 1% savings off the final purchase price.

Simply having another buyer's agent may not be better. You would simply need to get a better Buyer Agent. And if they are good at negotiating why would they be willing to give up 1%?

If you do decide to proceed, get references, talk with their Broker if possible, look up their license on the Department of Real Estate website, understand the agency disclosure, and make sure everything is in writing.
Web Reference:  http://terrivellios.com
1 vote
Mack McCoy, Agent, Seattle, WA
Fri Dec 24, 2010
The red flag, home buyer, is that you think that having your own representation is worth less than 1%.

Realistically, I think you should proceed; there are conflicts of interest, but you're really past the point of no return, and I'll tell you why.

When you start looking at houses with your own agent, that agent becomes comfortable with the idea that if you don't buy this house, you'll probably buy another house. (There are also other valuable benefits to seeing houses with an experienced guide, but that's beyond the scope of this answer). The "hired gun" has no such comfort; they have no relationship and no investment in you and your goals - their job may be to negotiate on your behalf, but their only chance at compensation is if they put this deal together.

My wife and I work together, and we would never split sides on a transaction.

I think that if you want this house, don't pretend that the wife is your agent working against her husband. Accept the dual agency, hope for the best. If you don't want this house, start interviewing buyer agents that can provide real value to you.

All the best,
1 vote
Bill Eckler, Agent, Venice, FL
Fri Dec 24, 2010
David,

Go with your feeling of not feeling comfortable with this. We always recommend to buyers that they seek their own personal representation. Even with the husband and wife representing different transaction elements, there is too great a chance for a "conflict of interest."

Why take the chance?

Good luck with your decision.

Bill
1 vote
Bob Georgiou, Agent, Danville, CA
Wed Dec 29, 2010
Home Buyer,

Not a fan of dual agency though I'd be lying to you if I said I hadn't done them recently. In this market with commissions being squeezed and transactions are challenging in every way there is a HUGE temptation to sell dual agency. The language I use in these situations is "I become a facilitator of the transaction and am not able to represent one party. Representation means being a advocate for one party which is impossible to do in dual agency situations." Then there is the additional risk of agent "mischief" at the expense of one part or the other or worse the agent represents himself in your transaction...

If you REALLY trust these two married agents to represent you. Choose the wife... :-)
Web Reference:  http://bob2sell.com
0 votes
Donna DeSino, Agent, Walnut Creek, CA
Mon Dec 27, 2010
Hello Home Buyer-

Dual Agency is legal in California- not recommended, due to the fact that you need your own representation- a buyers Agent looking out for your best interests and goals. The husband and wife are a team.

good luck!
0 votes
The Hagley G…, Agent, Pleasanton, CA
Sat Dec 25, 2010
I agree with John Juarez. It seems there is a potential immediate conflict since the husband and wife team are willing to give you a discount to help them make more money. If you were the seller, and you were not getting the discount, how would you feel? Of course, this could all be legitimate and the seller could very well be aware. Ask you agent if the seller is aware and OK with this arangement.

I have personally never been comfortable representing both sides in a transaction. Good luck! San Ramon is a great place to live!
Web Reference:  http://www.cindihagley.com
0 votes
Scott Godzyk, Agent, Manchester, NH
Fri Dec 24, 2010
Unless you are comfortable handling all aspects of buying a home, You should have an agent working for your best interests. How can an agent get the highest price and terms for the seller and get you the lowest price and best terms for you as the buyer?
0 votes
CJ Brasiel, Agent, San Jose, CA
Fri Dec 24, 2010
HB
I agree strongly with answers below from Mack and Bill.

With your own representation and the lack of risk from "pillow talk" about the deal, you may very well come out ahead of any 1% rebate.

Dual agency can work, but the reality is it comes with risk. On a dual agency deal, the clients tend to be watching at every point in concern of being taken advantage of and this many times creates more problems than would normally exist.

So, the seller is going to pay full commission to two agents that will rebate to the buyer. If I were the seller, I would feel like I am losing the 1%. Simply doesn't set up for a good deal. Or maybe you are paying 1% more in offer price and all breaks even. Or...

Make the offer you want with 1% back from the seller utilizing your own agent. Now that is negotiating.

Good luck!
CJ
Web Reference:  http://www.TalkToCJ.com
0 votes
Julia Murtagh, Agent, Pleasanton, CA
Fri Dec 24, 2010
Hi David,
I would agree with many of these agents, whom say get your own representation. But, I will point out that Dual Agency can work, for all parties, if, and this is the big IF, you are working with Honest, and Trustworthy Real Estate Professionals! If you are entertaining this idea, start looking at this team's past performance. Ask for referrences, so you can gauge what their past clients say. If they have mentioned they have been in Dual agency before, get the names of the Buyer's and Seller's and talk to them. If the team, is not willing to provide you with these references, there is your answer.
I have been invloved in 2 Dual Agency deals in the last year, These deals were the smoothest transactions, I have had. One was a regular sale and one was a Short Sale. Good Luck.
Sincerely
Julia Murtagh
"Bringing Integrity to Your Front Door"
Alain Pinel Realtors~Pleasanton
925-997-2411
Web Reference:  http://www.JuliaMurtagh.com
0 votes
Alan May, Agent, Evanston, IL
Fri Dec 24, 2010
While dual agency is legal in many states in the U.S., I've never run across a situation where it's been "advantageous" to anyone other than the agent involved.

Yes, s/he can treat you fairly and honestly, but that's not usually what you hire an agent for.

The buyer hires an agent to represent their interests, and help them obtain the lowest price and the best terms possible. You've hired them to advise you regarding any issues that arise during inspection, and help you determine any credits and/or repairs that might be needed. And to help guide the process to it's eventual close.

The seller hires an agent to represent THEIR interest, and help them get the HIGHEST price and the best terms possible. They also want you to help negotiate the inspection, and guild the transaction to close.

These two jobs are not mutually compatible. In order to be a dual agent (or transactional agent, or whatever your state calls it), you have to be completely neutral and cannot advise either side to an "advantage".

Somehow that doesn't sound as though it's in "Home Buyer's" best interests. Yes, the agent might have said you can save 1% off her commission... but it's possible that your own buyer's agent could save you more off the purchase price, and perhaps save you some huge headaches down the line in the inspection or other pre-closing issues.
0 votes
Bernard Gibb…, Agent, Danville, CA
Fri Dec 24, 2010
While dual agency is perfectly legal in California, I am not a believer in it. If a buyer wants ts me to represent them in the purchase of one of my listings, I will refer them to another, ethical agent.

Dual agency has a great potential for conflict of interest. Get your own buyer representation. There is no shortage of good agents.

Bernard Gibbons

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Bernard Gibbons, J. Rockcliff Realtors
DRE License # 01331583
Phone (925) 997-1585 - bernard@bernardgibbons.com
0 votes
John Souerbry, Agent, Fairfield, CA
Fri Dec 24, 2010
Brokers should be fighting (with all professional respect and courtesy) to get the best price and terms they can for their client. On your checklist of criteria for picking a broker, negotiating skills should be near the top of the list. It makes no sense to spend money cleaning, upgrading your home and staging your home only to have your broker go wishy washy when it comes down to the price on the contract. Some agents say they can serve buyer and seller in dual agency by getting a fair price, which I say is a load of cow dung. I'm not interested in getting a fair price for my client, I want the best price.
I believe that a husband/wife team could do many of the functions of an agent very well, up until time to negotiate price. Are they willing to go nose-to-nose with each other to negotiate the best price for you? Do they know each other's top secret negotiating tactics, thus making them ineffective?
0 votes
Phil Rotondo, Agent, Melbourne, FL
Fri Dec 24, 2010
I think you know that it's an issue just by asking the question. Hire someone working for you.
Web Reference:  http://www.321property.com
0 votes
Dan Tabit, Agent, Issaquah, WA
Fri Dec 24, 2010
Home Buyer,
My wife and I work as a team and we have and always will assist anyone who wants to buy one of our listings, but we do not practice dual agency. I make it very clear that I represent the Seller and can assist you and offer the highest level of professionalism, but my contractual obligation exists with my seller.
Dual agency, in my opinion is impossible in most cases. The only exception I have considered would be on a short sale listing where the seller’s primary goal is to get the house sold.
As a buyer you want to spend the least amount possible. The seller is hoping for the most possible, how can this be fairly mediated? The offer to refund part of the commission, or obtain a 1% discount may be reasonable, but how can you know without objective independent research?
Bottom line, if you want your own representation you should have your own agent and preferably one who doesn't share a bed with the listing agent. Pillow talk could cost you thousands.
0 votes
Vijar, Home Buyer, San Ramon, CA
Fri Dec 24, 2010
As long as everything is in writing and you have not waived anything, you should be fine. If anything goes wrong, you will have something to challenge with...

Good luck and happy holidays...
0 votes
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