What is a Dual Real Estate Agency?
- February 20, 2020
What is a dual agency in real estate?
- What is a dual real estate agency?
- Advantages of dual agency
- Easier communication between buyer and seller
- Possible savings
- Full disclosure of information
- Disadvantages of dual agency
- A potential conflict of interest
- Difficult to understand
- Substandard advice
Whether you’re a first-home buyer or a seasoned real estate purchaser, you’re always seeking to make a good deal on a property. Some of the advantages you’re watching out for include financial benefits, the quality of the property, and the convenience of the location. A practice that might help you land a good deal on a property is called a dual real estate agency.
What is a dual real estate agency?
A dual agency is a situation wherein both the buyer and the seller are being represented by a single licensed real estate broker whose goal is to settle on an agreement or a deal between the two parties.
There are many types of agreements you can enter into with licensed real estate brokers concerning the purchase of your new property. In traditional settings, it is not uncommon for you — the buyer — or the property seller to have different representative agents. Both these agents have the best interests of the client they’re representing. It’s rare for these licensed professionals to pander to the interests of the other party.
This is, however, not the case with dual agencies.
Advantages of dual agency
Engaging in a dual agency practice has its many advantages such as easier communication, possible savings, and full disclosure of information.
Easier communication between buyer and seller
Aside from the prospect of landing a potentially excellent deal with the seller of a property, one of the primary goals being aimed for in real estate transactions is to have smooth communication between both major parties involved.
In a dual agency setting, the absence of two different persons of contact for both the buyer and seller makes it easier for them to communicate with each other without having to wait long periods of time before a deal is potentially reached.
For example, a buyer eyeing a house and lot for sale in San Juan might find it inconvenient to have to wait for several days or weeks before hearing from the agent representing the seller. A dual agency set-up removes this barrier because the licensed broker in question would be responsible for handling both the party’s documentation, schedules, and deadlines.
With only one port of communication, both the buyer and seller need only to contact their agent to get the instant response they both need.
In a traditional transaction wherein different licensed brokers are representing both the property seller and the property buyer, the usual way by which the agents get paid is through a commission that the agents both split according to their terms of the agreement.
The situation is much different in the case of a dual agency set-up. Because there is only one broker negotiating deals between the property investor and seller, the licensed brokers’ tendency is to accept a lower commission from the seller.
The lower commission is due to the fact that the agent won’t have any other agent to split it with, thereby giving the seller more potential to gain savings.
Full disclosure of information
Another positive benefit either a property buyer or a seller can get from a dual agency set up is the full disclosure of information that the sole agent has to accord to both parties.
By also representing the seller, the licensed dual agent is required to disclose important information about the property to the same buyer they’re representing. This information will include anything that a buyer might find useful before purchasing the house, including grout problems or other potential plumbing issues.
However, the seller will also be disclosed with information regarding the buyer’s expectations – whether it be the price of the listing or any misgivings they might have about the property.
Disadvantages of dual agency
A property buyer and seller entering into a dual agency set up may also run into a few disadvantages with the agreement. Some of the disadvantages include potential conflict of interest, difficulty in understanding, and substandard advice.
A potential conflict of interest
The goal of every property seller is to be able to sell their property at the highest price possible, while the goal of every property buyer is to purchase a property at the lowest price possible.
Because the licensed dual agent is pandering to the wishes of both the parties, they have to ensure that they’re not favoring either party over the other. In some cases, this situation might even present unideal results for either buyer or seller because none of them will be able to acquire the deal they’re aiming for.
In the traditional setting of having different agents for the buyer and seller, each of them can be assured that their agent will negotiate the optimal outcomes for their respective financial benefits.
Difficult to understand
Another possible danger for sellers and buyers entering into a dual agency agreement is the lack of understanding of the rules and regulations of the set-up.
Laws in certain places contain very nuanced language, which makes even the practice of dual agency illegal in these areas. If you’re a buyer looking to enter into this type of agreement with your seller, then it would do well for both of you to keep abreast of the various laws and regulations regarding the practice.
In most common types of property buyer and investor setups, each party benefits from different licensed brokers who have their best interests. Because a dual agency setting involves only a singular agent handling the affairs of both parties, there is a possibility the agent won’t be able to provide useful advice which might help advance the agreement towards a more favorable result.
Another disadvantage a dual agent might bring to the table is the lack of quality in the advice they provide to both parties, resulting in a potentially non-comprehensive deal.
In real estate transactions, it’s important for both buyer and seller to become aware of all information leading into a potentially substantial and beneficial property sale. If both are looking to enter into a dual real estate agency agreement, the most important thing to always consider is the needs of each party.
If you want to know more about dual agency dealings, click the button below to have your favorite real estate brokers accommodate you.