Friday, September 5, 2014
Never Agree to Dual Agency
Dual agency means serving two masters. No other profession is permitted to routinely engage in this practice that most professionals feel should be banned (see our attorney survey on this topic). No other profession has special laws written for them that automatically reduces their liability in these relationships. And real estate agents are perhaps the least qualified to handle this conflict. Dual agency occurs when real estate agents represent both the buyers and sellers on the same transaction. When that happens real estate brokers collect a double commission and they are prohibited from doing anything to the detriment of either party. That means that they can not help you negotiate price or terms of your real estate transaction. It means that they are getting paid twice as much for doing a tenth of the work.
Dual Agency is a conflictive relationship that strips buyers and sellers of service to a level that can best be described as abandonment. Dual agency arises when the real estate broker is representing both the buyer and the seller. It is illegal in every other fiduciary profession except under the most extreme circumstances. It is routinely practiced in residential real estate where there is the least amount of training. When a real estate broker engages in dual agency they may not work to the advantage or the detriment of the buyer or seller. In other words, all the reasons you hired your broker vanish - often with little warning.
Dual agents are legally prevented from negotiating price or terms (two of the most important reasons consumers hire Realtors). And perhaps the biggest problem with this betrayal is that it usually presents itself with little warning to the client - it is a bait and switch. The broker could be acting in the client's best interests all the way up to finding the house that creates a dual agency. At that point the buyer or seller are on their own.
In a dual agency, brokers don't have to share the commission with other brokers so they make twice as much money. They profit greatly from this practice. Realtors, who typically have no understanding of the legal ramifications of their own fiduciary relationship with their clients, often illegally counsel their clients of the so-called "benefits" of dual agency. We're here to tell you that there are NO benefits and that you should NEVER agree to dual agency. Find a small brokerage firm with highly qualified real estate agents and demand that they not engage in dual agency. The likelihood of dual agency arising with a smaller firm is far less than with a large firm.
Posted by BUZZWire-Publications at 12:08 PM