Whether you're selling or buying a house, you've decided to hire a real estate agent to help with the transaction. They can help you get the best price for your home, or negotiate a good deal on a purchase. But what type of agent should you hire?
When looking for an agent you could stumble across the term “dual agent” and wonder what it means. Are they the right real estate agent to list your home, or should you keep looking? Find out what you need to know before signing a contract to work with an agent.
What is a Dual Agent in Real Estate?
A dual agent represents both parties in a real estate transaction. They help the seller with staging, marketing, and more to sell their house. When a buyer is found, or the agent brings them to the seller, they also represent them.
Because they represent both sides of the transaction, it's called dual agency.
Is Dual Agency Allowed?
Yes, dual agency is allowed by most brokerages. But many real estate professionals, including many in the Hampton Roads area, consider it to be unethical. This is because buyers and sellers often have competing interests.
The seller wants to get top dollar for their house, whereas the buyer wants to get a good deal. Given the amount of negotiation involved in a home purchase, a dual agent might not advocate fully for either party. Since an agent's commission is based upon the home's final selling price, an unethical agent could push the price higher rather than negotiate effectively on the buyer's behalf.
If an agent or brokerage is a dual agent, it's illegal for them to not disclose this
Is Dual Agency Legal?
Dual agency isn't legal in all 50 states. It's banned in Alaska, Colorado, Maryland, Texas, Florida, Kansas, and Oklahoma. Legislators in those states believe that potential conflicts of interest in dual agencies outweigh any of their benefits. Dual agency is legal in the Hampton Roads area, although many brokerage companies discourage it due to the potential for ethical issues.
Dual agency is sometimes confused with a designated real estate agency, which some of these states allow. Designated Agency is one that represents both buyers' and sellers' interests. One agent, working for the broker or agency, represents the seller and another stands in for the buyer. It's a requirement that certain procedures are put in place to ensure that client information is kept separate.
Should you use a Dual Agent?
There are times where using a dual agent could work out. If you need a fast close, a dual agent can streamline the process. Instead of your agent calling the seller's agent with a question, and then waiting for their call back, you have one source of information. However, if you want an agent that is going to put your best interests first, then I would strongly caution against entering into contract with a dual agent.
Real estate agents who work as dual agents cannot disclose confidential information to either party in the transaction. In my opinion the mere fact that an agent has confidential knowledge pertaining to both parties automatically puts the both the buyer and seller at a disadvantage.