Is it legal for real estate agents to get paid by both sellers and buyers?

When you buy a house, working with a seller's agent is always an option, but should you? Picture it: You enter an open house and meet the agent of the seller who looks really cool. You're going to make an offer, but you don't have your own agent. So, what's the damage of just working with the agent of the seller? In the real estate biz, a dual agency is called an agent representing both the seller and the buyer. Although in some states it is legal, many real estate agents— and also household hunters — see dual agency as a conflict of interest. Let's dive into why it's actually a bit more complicated to work with a seller agent than it sounds.

What is a dual agent?

Legally speaking, a dual agent is an immovable broker or agent working for the same broker who acts in a transaction on behalf of both the seller and the buyer. A broker in California is only allowed to act as a dual agent if both buyer and seller are aware of the dual agency and consent to it.

Generally speaking, the goal of a seller is to get the highest price possible for a property, while the goal of a buyer is to pay the lowest price possible. So how can a dual agent properly represent a buyer's and a seller's competing interests? In some situations, using a dual agent may make sense; in others, on your side, you may want your own agent. In California, your relationship with the broker must be confirmed in writing when you work with a real estate broker. Most brokers will submit a form called "Disclosure Regarding Real Estate Agency Relationships" at some point before making an offer on a house. This disclosure form identifies the broker and the facts of your particular transaction should also be part of the basis of your decision. For example, in a hot market, where your broker's office represents the home seller (but with another agent directly representing the seller), where you're concerned about beating a number of other competitors, and where you've done enough research to get a good sense of how much the home is worth, it might make sense to accept dual agency. But if you've just started your search for your home, don't really know the market and meet an over-impatient agent in an open house who urges you to sit down and make an offer, think twice.  involved in the transaction. It also describes the duties of the agent of the seller, the agent of the buyer, and an agent representing the dual agent, both the seller and the buyer.

Pros Involved

1.      The transaction can be streamlined by using a dual agent. Many agents feel that when a buyer and seller both work with the same agent, it is possible to prepare and sign forms and documents faster and it is possible to communicate offers and counteroffers faster. What usually happens in a home sale transaction in California is that a buyer, with the help of the buyer's agent, will prepare an offer. The realtors in miami florida of the buyer will then send this document to the agent of the seller, who will share it with the seller afterwards. Communication is faster and more efficient when you take out one of the intermediaries.

2.      Usually a dual agent will have more property information than an agent acting for the buyer alone would have. When working with the seller, the dual agent acquires property information that the agent can share with the buyer. In many cases, this will alleviate the need for the buyer's agent to contact the seller's agent on an ongoing basis to get answers to questions about the condition of the property, again accelerating the transaction.

3.      Dual agency can facilitate communications within one brokerage office. In a situation where both the seller's agent and the buyer's agent work for the same real estate brokerage firm but the buyer and the seller work with different agents, both agents can effectively negotiate, communicate and leverage their pre-existing relationship while advancing their separate clients ' interests separately.

Possible Cons

1.      Only because you share an agent, you won't receive special, confidential information from the other side. Dual agents do not share (or should not) the confidential information of the other party. You might think working with a dual agent is a great idea because you might find things like how low a seller is willing to sell for, or what would motivate the seller to accept a lower price. However, a dual agent may not disclose to the buyer under California law that the seller will accept an offer below the listing price, unless the seller specifically agrees to this disclosure.

2.      Every agent owes the client a duty of loyalty, requiring the agent to advance the interests of the client. A seller agent is supposed to get the seller's highest and best price. A buyer's agent should get the buyer's lowest and most competitive price. When an agent owes a duty of loyalty to two parties with opposing, competing interests, the agent may find it difficult to advance either party's interests, or worse, it may end up choosing one party's interests over another.

3.      An agent of a seller approached at an open house by a buyer has a goal of selling the property to the seller, not finding the property that is the buyer's best fit. If you choose to use the agent as a dual agent, you may lose the opportunity to search for properties by a dedicated agent and represent you in the home buying process.

The facts of your particular transaction should also be part of the basis of your decision. For example, in a hot market, where your broker's office represents the home seller (but with another agent directly representing the seller), where you're concerned about beating a number of other competitors, and where you've done enough research to get a good sense of how much the home is worth, it might make sense to accept dual agency. But if you've just started your search for your home, don't really know the market and meet an over-impatient agent in an open house who urges you to sit down and make an offer, think twice.