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Dual Agency in Real Estate
Old 08-26-2013, 02:00 PM   #1
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Dual Agency in Real Estate

In the process of selling a vacation condo, we have spoken with a couple of realtors to determine who would be best for us. One of them had sent an example of the "exclusive listing agreement" they use ahead of time, with info on our listing filled out. On that agreement, the option for Dual Agency was checked-off, indicating we as sellers were consenting to dual agency showings, whereby the agent could represent both the seller and buyer with the acknowledgement of both. Not being familiar with the term I did just enough online research to confuse myself even further. On the face it seems like a conflict of interest, but I found several references that suggest it's just how most RE transactions are done these days. Before I get into it with the realtor, I'd be interested in anyone's experience in the land of dual agency. (FWIW, the condo is in NH.)
Thanks!
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Old 08-26-2013, 03:22 PM   #2
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In the process of selling a vacation condo, we have spoken with a couple of realtors to determine who would be best for us. One of them had sent an example of the "exclusive listing agreement" they use ahead of time, with info on our listing filled out. On that agreement, the option for Dual Agency was checked-off, indicating we as sellers were consenting to dual agency showings, whereby the agent could represent both the seller and buyer with the acknowledgement of both. Not being familiar with the term I did just enough online research to confuse myself even further. On the face it seems like a conflict of interest, but I found several references that suggest it's just how most RE transactions are done these days. Before I get into it with the realtor, I'd be interested in anyone's experience in the land of dual agency. (FWIW, the condo is in NH.)
Thanks!
In my opinion, dual agency is usually positive for the buyer, negative for the seller. I was represented in dual agency by the seller's agent. I knew exactly what my terms and limits would be, and in effect was able to benefit from her as an information conduit.

Another thing to consider is that you represent a possible future seller and client, whereas the seller may be downsizing, pulling up stakes, annoyed if s/he thinks money was left on the table, etc.

I would never sell under these dual terms, making the assumption that others would be as quick as I was to see the buy side advantages.

Ha
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Old 08-26-2013, 03:32 PM   #3
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Have used Dual Agency before and only agreed to it after I negotiated a lower commission in the case that the property was sold by the listing agent to one of their clients. Seems to me that it probably does favor the buyer more than the seller but was comforted by the fact that I would pay a smaller commission if it did happen.

Guess it also depends on how fast/badly you want to sell the place and/or use that real estate agent.
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Old 08-26-2013, 03:42 PM   #4
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I have used it as a seller and in one case it resulted in a very, very fast sale of my house. The listing agent was a husband/wife team where the husband did most of the listing work and the wife did a lot of work on corporate relocations helping buyers find houses. They both met with us and she said she thought the house would be attractive to the buyers that she represented. We listed with them and the first day the listing was live she showed it to 2 customers, one of which was one of her buyers - in town for 1 day to look at houses. An offer was made and we sold without ever having had a sign in the yard. We were happy with the pricing.

FWIW, I don't feel the agent told the buyers anything "secret" about our listing and, in any event, I don't ever tell the agent anything like our bottom line price or anything of that nature. So I really wasn't worried about it.
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Old 08-26-2013, 03:50 PM   #5
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FWIW, I don't feel the agent told the buyers anything "secret" about our listing and, in any event, I don't ever tell the agent anything like our bottom line price or anything of that nature. So I really wasn't worried about it.
I am not suggesting anything secret. Only that agents are not clueless as to reading people, and this can be helpful.

At any rate, I may be mistaken, and I may have received no aid from taking one person out of the chain of the telephone game. Everyone always makes her own judgment.
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Old 08-26-2013, 07:54 PM   #6
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I had a negative experience with dual agency. The agent was so invested in closing the deal he failed to advocate for us (the buyers) and there were substantial red flags on the property we were too inexperienced to see.

I think it is possible to do it well, but I wouldn't do it again. Also, if this agent is so spiffy why would they send you a contract with terms checked off that they hadn't explained? Seems a bit presumptive.

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Old 08-26-2013, 08:20 PM   #7
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My daughter just went through this. Bottom line is this- keep what you are willing to accept to yourself, as well as how urgent the sale might be.

In a dual agency, the firm represents both parties. Ultimately, the realtors want a sale. In a dual agency, the agent may share info they know about you and the house with the other agent/parties.
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Old 08-26-2013, 08:37 PM   #8
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I'm generally agreeable to a dual agency relationship as long as the total commission paid is reduced from 6% to 4.5%. This way the broker gets an extra 1.5% over what they would have received if two brokers were involved, and I get to save 1.5%.

If I were going to agree to this, I would need to be very comfortable with the market and current pricing trends so that I wasn't relying on getting advice from the realtor on this. Come to think of it, I wouldn't rely on a realtor to give me this advice even if it were not for dual agency. It's easy enough to research pricing in a local market that relying on the person who only earns a commission if your transaction completes is just bad business. Do your homework and just let the realtor close the deal and handle the paperwork.
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Old 08-26-2013, 08:53 PM   #9
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I can't speak to how dual agency will work for you, but we ran afoul of it about 7 years ago. We had found a house that we really liked. This was back in the boom, bidding war years. We were represented by an agent, and the other person who was trying to buy was represented by the selling agent. He manipulated timing and information to the seller to make it so that they would accept his buyer's contract, ensuring him both sides of the commission. There was nothing we could prove to take to the Real Estate police, but it became pretty obvious afterward when we got friendly with the sellers and they told us how it was presented. They were pretty PO'ed too, especially since he didn't give them a reduced combined commission.

It worked out for the best for us in the long run, but it definitely left a bad taste in our mouths for dual agency.
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Old 08-27-2013, 12:02 AM   #10
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I have agreed to it in most cases and without bad consequences. I believe it does give you a better chance of negotiating a lower commission. It is better to nail down commission discounts up front but we have even been successful at having the agent take a little less during final purchase negotiations just to help make the deal go through.

Maybe I am too synical, but I never forget that every agent, regardless of who they represent, simply wants a sale to go through. That is the only way they get money. Unfortunately seller agents often prefer you to ask less than your house is worth just to get it sold. The small additional amount they may make on a higher asking prices pales in comparison to just getting as many houses sold as quickly as possible. I hope it doesn't sounds too terrible but it may be safest to respectfully "trust nobody" and keep your cards very close to your vest.

On a separate note, I always refuse to sign any buyer's agent agreement prior to me making an offer. Even in that case, the agreement only applies to that property. We do this because we usually prefer to contact the listing broker for each property that we want to see. They are the ones that have the most flexibility to decrease commissions especially if they are getting both sides of the transaction. Plus it cuts out a middleman and usually makes things go more quickly and efficiently. This strategy often results in a dual agent agreement.

Just our experience but we haven't had any regrets so far. YMMV
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Old 08-27-2013, 09:53 AM   #11
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I used to practice in Colorado years ago (before I left the field and had to get back into IT), and there, we had something called a Transaction Broker. Normally, we were Sellers Agents, or Buyers Agents. But if we represented both sides, we had to be Transaction Brokers.

When I went through real estate school, one of the instructors summed it up as...an agent is like a coach, actively helping you to "win". A transaction broker is more like a referee, just there to interpret the rules and make sure both parties play by the rules, but not there to coach anybody.

I never got the chance to be a transaction broker, and not sure I would have wanted to. To me, it was too ripe with the possibility of being accused of "coaching" one side more than the other, and having a deal go sour. Or worse, being accused of something improper and being brought up before the real estate board.

Even though the thought of getting both sides of a commission sounds appealing, I think I would have preferred referring the buyer (the buyer was the party that was almost always lacking an agent) to another agent in our building and just getting a referral fee, rather than being a Transaction Broker.

Also, it was very common in our area for agents who represented both parties to get a reduced commission from the seller.

Personally, real estate is just complex enough I want my own agent/coach. I would never allow my agent to also represent the other party. I want them representing me, and me only.
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Old 08-27-2013, 10:37 AM   #12
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I am an active Realtor in MN.

When you hire an agent you are actually hiring the broker, not the agent. For example, RE/MAX, not John Doe of RE/MAX. Dual agency occurs when the buyer and seller are both represented by the same broker. This happens frequently but in a large % of the cases it's actually 2 different Realtors representing the buyer and seller.

When 1 Realtor represents the buyer and seller that does cause problems in my opinion as it limits the ability to negotiate on either parties behalf. I tell clients that I can't help them determine prices in that case - I can give both parties relevant market data but it's up to them to decide on offer/acceptance prices & terms.

I actually had a person call me yesterday about a vacant lot I have listed I told him I'd prefer if he found his own Realtor to write up an offer since the listing is with a friend.

Personally, I am definitely okay with 2 agents from the same broker representing different parties but would never recommend 1 Realtor handling both sides of the transaction. While I suppose that the agent may agree to a 1 or 1.5% reduction in the commission if they are getting both sides there is no guarantee of which party is going to see the benefit of that reduction and as an agent I don't want the increased liability risk associated.

Keep in mind that the commission reduction is only a possibility if 1 agent handles both sides - the vast majority of dual agency transactions involve 2 agents working for the same broker and there won't be a commission reduction at all in those cases.
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Old 08-27-2013, 11:01 AM   #13
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Think about objective advice, and if payment follows getting objective advice?

An insurance agent makes more money if the policy is $500k than $250k
A realtor makes more money if the house sells for $300k than $200k

Neither situation can provide objective advice. Get the realtor to agree to flat fee compensation to get best advice, IMO. Half fee payable up front, other half when deal closes.
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Old 08-27-2013, 11:23 AM   #14
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Same broker or two different brokers/agents, buyer or seller, imho it would be best to keep all financial and other information (needing to buy/sell, etc.) close to the vest and understand that you will never know what might be shared before or during contract negotiations.
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