In a real estate transaction, two main parties are involved: the buyer and the seller. Each party typically has a real estate agent to assist them with the process. These agents represent their client’s interests during negotiations and help them get the best deal possible. However, in some cases, homebuyers want to buy a property their real estate agent listed.
As a real estate agent, you must understand how this arrangement works and what benefits and pitfalls might arise with dual agency.
Learn More: Listing Agent vs. Selling Agent: What’s the Difference?
What Is a Dual Agent? What Is Dual Agency in Real Estate?
In a dual agency arrangement, the buyer and seller are represented by the same agent. This type of agency can occur when the buyer and seller both consent to the arrangement after being fully informed of the potential conflicts of interest that may arise. After all, these two opposing parties will naturally have competing interests.
The laws governing how dual agencies work can vary from state to state, but most states require that agents in this capacity disclose their arrangement to all the parties involved.
How Does Dual Agency Work?
In a dual-agency scenario, the same real estate agent represents both the buyer and the seller in a transaction. This agent essentially wears two hats, navigating the interests of both parties simultaneously. Throughout the process, the dual agent must maintain neutrality and transparency. The goal is to ensure fairness and clarity for all involved.
In this scenario, the agent will mediate discussions, facilitate negotiations, and manage expectations from both sides. While this arrangement can streamline the process and foster smoother communication, it also requires exceptional skill in balancing conflicting interests and fostering trust amongst all parties. Excellent communication skills are non-negotiable as a dual agent.
The Pros and Cons of Dual Agency in Real Estate
Those interested in working with a dual agent or working in this capacity as an agent should understand the benefits and drawbacks that might impact clients.
The benefits of dual agency
● Since a single agent works on both sides of the case, negotiations generally go smoother and faster because information and paperwork do not need to get passed back and forth, limiting potential delays.
● The dual agent could provide the buyer additional information about the property since it’s their listing, which can help buyers make better decisions.
● Sometimes, dual agents may agree to a lower commission. This is not a guarantee since working as a dual agent requires the agent to complete the tasks of both the buying and selling agent, but some will offer a discount, which can save money for the clients.
The drawbacks of dual agency
● Agents may have a conflict of interest because buyers and sellers have competing interests.
● Agents may also have trouble adequately representing both sides in negotiations.
● Agents may not give full attention to any side of the arrangement. By trying to manage both, they may focus less on the particular real estate transaction overall.
Working as a Dual Agent in the U.S.
Real estate agents must learn the laws regarding dual agencies in their state. Some states have outlawed the practice. Therefore, you want to ensure that you legally can work as a dual agent based on your location and understand how the state expects you to protect your clients on both sides of the sale.
Also, stay up-to-date with the latest in the industry and learn as much as possible about your local market to best serve your clients on both sides of the negotiation.
Colibri Real Estate can help take your career to the next level. Our real estate classes cover dual agency laws in your state, so you understand expectations if one of your clients wants to purchase a home you listed. Are you looking for helpful continuing education courses covering topics important to you? Colibri Real Estate will help you grow your business and maintain your license. Check out our continuing education course packages in your state.
