I have written often about dual agency in real estate and how to choose the right agent but there is an excellent article from the Consumer Federation of America which goes into great detail on the downside of consumers using the listing agent to help them negotiate their home sale or purchase.
Here are some of the highlights of the article:
- Consumers believe that the real estate agent they hire is working solely for them and in their best interests, but they may not understand the agent’s relationship with the seller in a dual agency situation. There are several designations for an agent-consumer relationship, most commonly in Los Angeles in a “Single Agency” where the agent is solely working for either the seller or buyer, or in a “Dual Agency” where they are supposed to be representing both the buyer’s and seller’s interests equally. It should be noted that in California it is required that the agency relationship be disclosed in writing.
- A single agency agreement means that the buyer or seller can rely on their agent having a fiduciary (legal) duty to advance the interests of their client. When representing a seller the agent’s goal is to help the seller find a buyer for their home in a timely manner for the most money. And if representing the buyer their duty is to find a home for their client for the least amount of money. Think how difficult a task that is for an agent to represent both parties equally.
- Dual agency also applies to two agents working under the same brokerage. The agency relationship applies to the brokerage not the agent. Sometimes a listing agent will pass the buyer along to someone from the same brokerage who may feel beholden to them. There is still a conflict of interest under this scenario.
- The seller may not be well served under dual agency as the agent, wishing to retain the full commission, may try and convince the seller to take a lower offer from their client than one presented by a buyer with their own agent.
- Negotiations don’t stop after acceptance of contract when the buyer does their due diligence on the property and may come up with a list of requested repairs. This is where their agent needs to be completely in their court.
Both buyers and sellers need to be clear on what their relationship is with their agent, certainly more on the buyer’s side. They may believe they are going to save money and be the successful buyer by going through the listing agent, but how comfortable will they feel that they got the best deal?
Some more posts on hiring a real estate agent
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