What is Dual Agency in Real Estate, and Should I Use a Dual Agent?

Nov 21

Sometimes, you come up on terms in real estate that you just aren’t completely sure what they mean (understandably so), and you need to Google them. Dual agency in real estate may be one of those terms, and hopefully, if you Googled it, you found and clicked on the link to this blog!

So, let’s get right to it and answer your questions.

What is Dual Agency in Real Estate?

Dual agency refers to when one agent or broker represents both parties – the buyer and the seller – in a real estate transaction.

Dual agency in real estate is often met with mixed reactions and opinions. On one hand, having the same agent represent both the buyer and the seller can streamline the process, cut down on communication delays, and be pretty convenient. On the other hand, it can create situations that test the loyalty, focus, and ethics of even the most skilled agents.

I’ve been in the real estate industry for over thirteen years, and in my experience, it’s crucial to approach dual agency cautiously.

A Real-Life Example: The Importance of Due Diligence

Let's start with a story. I was representing a buyer, while another agent was representing the seller. During the inspection, some issues came up with the heating system. I insisted that my client consult a heating specialist for a more detailed evaluation, contrary to the dismissive attitude of the seller's agent, who kept insisting it was "no big deal."

Long story short, the HVAC specialist identified a potentially life-threatening issue: leaking carbon monoxide and a gas leak.

This issue was severe enough to warrant an immediate shutdown of the system. Thankfully, this was caught, and the seller agreed to replace the faulty system, ensuring a safe environment for the buyer.

Now, imagine a scenario where the buyer and the seller were represented by the same agent. The hard truth is there's a good chance the agent wouldn't have insisted on that crucial heating system check. It's a tough but good example to share that highlights how the dual responsibility to advocate for both parties can pose a conflict of interest.

Should I Use a Dual Agent?

I’m not going to give you a straight answer “yes” or “no” on this because there are too many factors at play, but I will share some helpful information to know and consider when it comes to your decision of using a dual agent or not.

Dual Agency: In Theory vs. In Practice

By law, agents operating in a dual capacity have a fiduciary duty to protect the interests of both the buyer and the seller. However, real estate transactions are inherently adversarial. Both parties have opposite objectives. The seller wants the highest price with the least amount of concessions, and the buyer wants the most value and as many concessions as possible.

The question is – how can one agent effectively serve two masters?

While it's not impossible, it's a difficult balancing act that requires an incredible amount of skill, experience, and integrity.

Guidelines for Navigating Dual Agency in Real Estate

Here are some pointers if you find yourself considering a dual agency situation:

Be Experienced: If you've been through multiple transactions, you're more likely to understand the nuances and potential pitfalls.
Know the Agent's Competence: Ensure the agent has a proven track record of managing dual agency responsibly.
Trust but Verify: Trust is crucial, but you should also independently verify information rather than accepting it at face value.

To Summarize…

While dual agency in real estate can work in some cases, it's essential to know what you're getting into. Make sure you understand the transaction documents and that your agent is capable of fairly representing both parties without conflict. If done right, dual agency can offer advantages. However, if not handled with the utmost care and ethical consideration, it can lead to a less-than-optimal outcome for both parties involved.

So next time you find yourself with an opportunity to use a dual agency, tread carefully and weigh all the pros and cons. Your financial and emotional well-being could very well depend on it.

Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.