What Is Dual Agency?
When a single real estate agent or broker works for the buyer & seller in a real estate transaction
Why should a home buyer care?
When a buyer or seller agrees to dual agency, one agent representing the buyer and seller in a real estate transaction, they are agreeing to limited representation. Washington D.C. and Northern Virginia allow dual agency in real estate transactions.
According to the Northern Virginia Realtor Association:
“The agent will be unable to advise either seller or buyer as to the terms, offers or counteroffers (except, however, that the dual agent may have already provided such advice to the seller prior to representing the buyer);
2. The agent cannot advise the buyer as to the suitability of the property, its condition (other than to make any disclosures as required by law of any licensee representing a seller), and cannot advise either party as to repairs of the property (to make or request);
3. The agent cannot advise either party in any dispute that might later arise relating to the transaction;
4. The agent will be acting without knowledge of the clients needs, clients experience in the market, or clients experience in handling real estate transactions unless he has gained that information from earlier contact with the client.”
If a home buyer does not agree to dual agency, the listing brokerage may offer to assign another agent to the buyer. In this case, two real estate agents working at the same brokerage will represent the buyer and seller.
Note: Two lawyers from the same law firm would never agree to represent the plaintiff and the defendant in a case. In fact, they would likely be disbarred from practicing law if this happened. This type of representation happens every day in real estate.
How does dual agency affect a home buyer?
The listing agent has a signed agreement with the owner of the property. Part of the listing agreement is the goal of obtaining the highest offer and best terms for the seller. The listing agreement is signed before the home goes on the market for sale.
Dual agency for a home seller means the listing agent can bring a home buyer to the property. If the buyer wants to make an offer, the listing agent can agree to “represent” them in the transaction.
At this point, the listing agent and seller have already signed an agreement with the goal of getting the highest offer and best terms for the seller. Can the dual agent now promise to obtain the lowest offer and best terms for the home buyer?
Does the listing agent have more knowledge about the property?
The homeowner provides property information to the listing agent who then shares this information to the public. In some cases, the homeowner details the age of the roof, HVAC and appliances. More often than not, the homeowner does not provide information on the property which puts this responsibility on the home buyer. The bottom line-the listing agent has a fiduciary relationship with the seller and will only provide the information allowed by the homeowner, nothing more.
Will there be complications with negotiations in a dual agency transaction?
As you read in the paragraph above from the Northern Virginia Realtor Association, it is impossible to represent the best interests of opposite sides of a real estate transaction. In fact, the power of negotiating on behalf of the buyer is gone. Not surprising, dual agency is illegal in many states.
Dual agency is legal in Virginia and Washington D.C. as long as both parties agree and sign the dual agency agreement. Buyer clients have said the dual agency agreement was presented to them as something “every buyer signs”. This is not true. Exclusive buyer agents will never ask you to sign a dual agency agreement. Buyers have a choice and can choose to have a real estate agent who is 100% loyal to their side of the transaction.
There is a type of dual agency in Maryland called designated agency.
Designated agency is when the same brokerage represents the buyer and the seller.
Here’s how it works
When a listing brokerage has a property for sale, they have a signed agreement with the seller. When a home buyer works with the same listing brokerage, they will be assigned an agent to work with them in the transaction. Designated agency is one brokerage representing the buyer and the seller in a single real estate transaction.
A final thought
At HomeBuyer Brokerage, we work exclusively for home buyers. We understand you are making one of the biggest financial decisions in a lifetime and believe you deserve 100% loyalty. Representation in real estate matters. We are members of the National Association of Exclusive Buyer Agents (NAEBA.org)
You will never sign a dual agency agreement with an exclusive buyer agent. While we have access to all homes for sale listed on the Multiple Listing Service and for sale by owner, we only work for home buyers.
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