The term “agency” means the relationship that you, as a buyer or seller, have with your real estate agent. Dual agencies can occur with two agents or with a single agent. Dual agency happens when the buyer’s agent and the listing agent are the same or they both work for the same brokerage firm. The broker’s relationship with the buyer and the seller is what determines dual agency since the brokerage benefits from both sides of the transaction.
Your Real Estate Contract and dual Agency:
Dual agency circumvents a real estate agent’s legal duty to be loyal to you. An attorney might advise you to be cautious of what you say around your agent. Even if agent continues to be legally obligated to keep your private information confidential and although he can’t use it to give his other client in the transaction an unfair advantage over you.
Advantages of dual agencies:
Dual agency relationship speeds up some response times. You won’t have to wait for the listing agent to call your agent back with any important information, that would divulge privileged information, because your agent and the listing agent are one and the same.
Scheduling various events is a little easier in case of dual agency as there is one fewer agent in the mix. This also streamline the transaction process whether you’re the buyer or the seller.
Disadvantages of dual agencies:
Dual agency imposes some restrictions on a real estate agent. The agent has to be fair and honest while dealing with both buyer and seller.
Full disclosure has to be provided by the agent concerning the property to the buyer, but no confidential information can be revealed about the seller. When the time comes to make an offer, a dual real estate agent can neither advise the buyer on how much to offer nor can they advise the seller to accept or reject an offer.
In a New York Department of State memo, consumers are advised to be wary of dual agency relationships. The memo states that when a person enters into a dual agency relationship, they are forfeiting their right to that agent’s loyalty. The agent then cannot advance the interests of either party.
Many complications arise in dual agency transactions that are problematic for all parties—including the agent. Furthermore, a dual agent is usually tempted to go for a higher selling price in order to put more money in his pocket via the commission. This is one of the reasons that dual agency isn’t legal in all 50 states.
Dual-agents don’t double check the agreement. Having two separate agents, brokers, or entities involved can mean that one party might—or at least should—notice if the other takes a misstep so the issue can be corrected. An agent that’s responsible only to one party is called a single agent, and their loyalty is much clearer.
Single-agent create a more level playing field and make a more flawless transaction. No one person or entity is holding all the cards. This can be particularly important when an agent isn’t entirely scrupulous and might be willing to fly in the face of his fiduciary responsibilities.