Single-Agent Dual Agency Doesn’t Benefit Consumers.
Did you know that dual agency is illegal in some states? There is one perfect reason why dual agency has been made illegal in some places – it sucks for consumers!
Dual agency is bad for buyers and sellers. Let’s be clear from the onset. When I say dual agency, I refer to one agent representing both the buyer and the seller in a transaction.
In some states, dual agency can mean two agents working for the same company, each representing a buyer and seller. Often referred to as designated agency.
Designated agency and dual agency are two very different things despite what some pundits will argue.
With designated agency, both the buyer and seller each have their OWN representative. The agent truly “represents” the respective buyer or seller. In dual agency, that is not the case!
The topic of dual agency stirs many opinions among the real estate community. Some real estate agents are dead set against it. Others say there is absolutely no problem with it.
Having been a Realtor for almost thirty-five years, I can unequivocally say that lots of real estate agents and consumers have no idea how dual agency truly works.
Keep reading, and you will find out which states have made dual agency illegal and why you never should accept having a dual agent.
Following Dual Agency Law Properly
Most real estate agents understand the basics of agency law. If you are a seller’s agent, you present the seller. If you are a buyer’s agent, you represent a buyer. Simple enough.
When dual agency comes up, many real estate agents either ignore the state’s laws or don’t know what they actually mean.
Those who say there is no problem with dual agency obviously have no idea what the meaning of “represent” means or ignore its enormous significance.
Let me explain – When you are a seller’s agent, you become a fiduciary of the seller. You’re their trusted advisor. Everything you do should be in their best interests, even when it conflicts with your own. The same can be said for a buyer’s agent.
For real estate agents, this means counseling on price, negotiating in their best interests, advising on decisions such as home inspections, and a whole myriad of other things that come up in a sale. These are the regular duties of a top-shelf real estate agent.
You are their confidant and someone they rely on for sound advice. When selling a home, there should be many reasons beyond procuring a buyer why someone would hire a real estate agent. Your wisdom and expertise should be a guiding force in any hiring decisions.
There isn’t a consumer in the world who goes into a relationship thinking the person they hired will not represent them.
Nobody Would Accept Having a Dual Agent if Explained Accurately
This concept either escapes many real estate agents who practice dual agency, or they don’t care. Most clients would NEVER accept dual agency if it were correctly explained. The problem is a significant percentage of real estate agents put the form in front of a buyer or seller and ask them to sign it.
There is no explanation of the ramifications of dual agency. It’s called winging it. There is no other way to describe this besides unprofessional behavior. It happens every day of the week.
Then some will explain it. But guess what – do you think the agent comes out and says I won’t be able to offer you any professional assistance like I would if I remained a seller’s agent. I think you can guess the answer.
Dual agency is the departure from a real estate agent’s normal duties because you no longer have the capacity to do what you would as a respective buyer’s or seller’s agent. For consumers, it is essential to know who represents whom in a real estate transaction.
There are excellent reasons why dual agency is illegal in some states. If you want to learn all of the downsides of dual agency, make sure you read this resource!Be a smart buyer or seller - educate yourself on the downsides of dual agency.Click To Tweet
What Kind of Real Estate Agent Are You?
Single-agent dual agency is a choice. As a real estate agent, you should precisely explain how dual agency works when you sit down with a buyer or seller. In every state across America, these discussions take place, as they are a legal requirement.
Here is the problem – the agent explaining dual agency has a vested interest in the client accepting it. What do you think happens when the agent and seller sit across from one another, and the dual agency discussion occurs?
If the word SUGARCOAT comes to mind, you would be one hundred percent right. Real Estate agents who practice dual agency don’t explain the downsides. Why would they? Heck, what salesman who wants dual agency would tell their client it sucks?
What agent is going to say, “Mr & Mrs seller, I want you to know that when the buyer makes an offer on your home, I can offer you ZERO help? I also want you to know that when the buyer presents a laundry list of home inspection items, don’t ask me for guidance.”
I am laughing right now. Folks, this is exactly why dual agency is so bad. Consumers are being fooled daily.
Putting an agency disclosure form from the local board and asking the client to sign it is not living up to your duties.
Unfortunately, in the vast majority of sales, this is precisely what happens. The Consumer Federation of America recently did a survey showing consumers are clueless about dual agency.
There is a reason why consumers don’t have a clue about dual agency. The person explaining it often is not up to speed on what they can and can’t do either, or frankly, they are unethical.
This article at Active Rain is more evidence of a lack of understanding about dual agency from so many real estate agents. Disclosure without explanation is unacceptable.
The best real estate agents never make money the basis of their decisions. They always put their client’s best interests first. Practicing dual agency is a function of greed — the everlasting desire to make money the basis of sensible decision-making.
Dual agency is one of the ways real estate agents fool their clients. Don’t be one of them.
Dual Agency Almost Always Starts With The Seller
There will always be that real estate agent who tries to defend dual agency by saying, “what if I already have a buyer I’m working with, and I list a house that matches what they want?”
On that rare occasion when this scenario pops up, there is nothing wrong with referring the buyer to another agent. You will get a referral fee if the sale takes place. No, it won’t be two sides of the transaction. You won’t make the same double commission, BUT that is one of the points here.
A real estate agent should never be in the position that making a sale is the goal at all costs. That is exactly what happens in single-agent dual agency. The only fiduciary in the transaction is the real estate agent. Take a good look in the mirror because what’s at stake isn’t offering the best guidance but instead a big fat real estate commission check.
And no – discounting the commission is not enough of a benefit for a consumer to accept dual agency. For a consumer, getting a two thousand dollar discount doesn’t make up for a ten thousand dollar mistake or more that could happen without guidance.
When consumers accept dual agency, that is exactly what happens. Usually, one party comes out on the short end of the stick. So if I said you could save $2000 in commission, but you’re going to overpay by $10,000, would that sound appealing? I hope not! That, unfortunately, happens every day when dual agency is acceptable.
Listening to Agents Arguing For Dual Agency Can Be Sickening
When articles like this one are written, there will always be real estate agents who proudly proclaim there is nothing wrong with dual agency – after all, it is legal. They will then say they are “the bomb,” and nobody can do their job better than they can. Eyes are now rolling.
They will then argue how “fair” they can be to both parties — again laughing. Of course, a real estate agent can be fair. You can’t, however, get what’s best for both clients.
Real Estate agents who get this fact take fiduciary responsibility seriously. They want the absolute best deal for their clients. Not just what’s “fair.”
It’s impossible to get the best deal for both buyer and seller at the same time. You can’t serve two masters when there is a conflict in doing so!
Also, giving both clients advice is ILLEGAL. Unfortunately, with dual agency, this also happens all the time as well. Again, doing whatever it takes to make the sale happen.
There is a reason real estate agents who practice dual agency often end up in lawsuits!
But Some Consumers Want to Work Directly With The Listing Agent
In the vast majority of cases, dual agency starts with the seller. An agent will interview with a prospective seller to put their home on the market.
The agent, by law, is required to explain dual agency. At this time, the real estate agent declares their intentions on dual agency. Either the agent practices it, or they don’t.
If you are selling your home, you NEVER want your agent to be no longer able to represent you.
What about the buyer who goes directly to the listing agent because they don’t want a middle man? For whatever reason, some buyers prefer to work directly with the seller’s agent.
Well, guess what – there is nothing wrong with that. YOUR agent can work with a buyer and still be a seller’s agent ONLY BEHOLDEN TO YOU! Your real estate agent does NOT have to become a dual agent to work with the buyer.
Understanding this point is something really significant that escapes most real estate agents. Why would you ever go from representing a seller – the person who hires and is paying you to become a neutral party? The answer is there is NO REASON!
An Agent Practicing Dual Agency Should Be a Considerable Hiring Decision
When you are selling your home, do you want an agent in your corner that is only concerned about what’s best for you? I hope you are shaking your head with a YES!
When you are going through an interview process for real estate agents, whether they practice dual agency or not should be a considerable hiring decision.
Do you really want your real estate agent – you know, the one you’re paying thousands if not tens of thousands to become a neutral party? Do yourself a favor and cross that kind of agent off your list.
Working with someone who is self-centered and only cares about their paycheck can come back to haunt you in more ways than one.
Do You Put Commission Before Your Clients Interests?
Dual agency offers no benefits for consumers. So what kind of real estate agent do you want to be? You have a choice. Do the right thing and reject dual agency.
My guess is more and more states will end up banning dual agency anyways.
For an industry that talks about the vital importance of ethics, dual agency flies in the face of that.
Lots of people are getting fooled about dual agency. There needs to be better education. Without proper training, consumers suffer from it. Just because something is legal doesn’t mean it’s okay.
What States Have Made Dual Agency Illegal?
Is dual agency illegal in some states?
By now, you know that dual agency is illegal in some states. It’s true. In some places, the realization that dual agency does nothing to protect the consumer’s interests has become a reality. The following states have been intelligent enough to realize the practice of dual agency should be illegal. Here is where you cannot be a dual agent:
Frankly, dual agency should be banned everywhere in the US. Several consumer groups are pushing for dual agency to be abolished. It doesn’t take a rocket scientist to figure out why dual agency is illegal in some states.
Final Thoughts on a Dual Agent
If you are buying or selling a home, you should reject dual agency. Never work with a real estate agent who is going to put their own interests ahead of yours. Get someone who is going to work hard every day for you.
If you are a real estate agent, hopefully, this article has sparked something in your brain that says, “maybe Bill is right and dual agency isn’t really something I should be endorsing.”
Please make no mistake about it; dual agency is bad for buyers and sellers. Hopefully, you now have a better understanding of what is dual agency, how dual agency works, and why some states have been smart enough to make it illegal.
Additional Helpful Real Estate Articles Worth Reading
- Home buying mistakes that are commonly made – Avoid some of the problems buyers put themselves in because they don’t know any better.
- Making a move far more smooth – see some helpful advice on making the transition from one home to the next with these excellent tips.
- Why you should have an agent when buying a new house – learn why going directly to the builder’s rep when buying new construction is a big mistake.
- Make your house more secure when selling – learn what it will take to increase the chances of not being robbed when selling your home.
All of the above resources provide excellent guidance when buying or selling a home.
About the author: The above Real Estate information on dual agency is illegal in some states was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at firstname.lastname@example.org or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ years.
Are you thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.