| The Dangers of Dual Agency | July 1st, 2008 |
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Dual agency, when a Realtor represents the buyer and seller, creates relationships with clients and customers that aren’t that clear-cut. A Realtor who chooses to become a dual agent can no longer advocate on behalf of either party because each client has opposite goals. She is also unable to disclose some types of information from each party, like how much the buyer is prepared to pay and how low the seller is willing to go. And she is also not allowed to offer specific negotiation strategies to either party. A different kind of dual agency is created when two agents from the same company represent the two parties. This happens with a fair degree of regularity at Paragon because we have so many productive sales people. Some buyers and sellers get confused when Paragon represents both sides. They worry that our company will place its own interests above theirs. It helps them to understand that as independent contractors we individually represent only the interests of our client — and that their is no personal economic incentive for us to do a deal “in-house.’ Sometimes we list a property for sale and have a buyer ask us to represent them in the transaction. Their hope is that by having us represent both parties we will be able to either reduce the selling price or a cut our commissions. My practice has always been to reject requests for dual agency. I’m not comfortable representing both parties because it limits my ability to advocate for either side. And even the appearance of not acting in my seller’s best interests is not worth the extra money to jeopardize my relationship with them. This tactic is also unfair to other agents with buyers interested in the property who won’t have the advantage of a level playing field when competing with other offers. If I do meet a buyer who wants to make an offer on my listing and they need representation, I refer them to another agent in my office. If there are multiple offers on the home, I ask that they are all submitted at the same time so I can be sure not to give my associate an unfair advantage. Again, this is to assure all parties involved that no one is getting inside knowledge on what price and terms to offer. The best agents build their reputations one deal at a time. While I always guarantee my clients the best representation possible, I’ve also always make sure to treat all parties fairly on every sale I handle. Leave a Reply |
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The most common legal arrangement in the business of buying and selling real estate is for a listing agent from one company to represent the seller and a buyer’s agent from another company to represent the buyer. The advantage to this scenario is that each party their own representative acting in their best interests.