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Duel Agency, Has Your Agent Explained it?

Updated: Mar 8, 2019

If you are currently buying or selling a home and you have not heard the term "Duel agency", you have a problem. For many buyers and sellers the transaction process can be a bit overwhelming. Finding an agent you can trust is critical for easing the stress and creating an enjoyable process. There may however be danger lurking in the shadows.

All real estate agents are bound by "Fiduciary Duties" to their clients. These duties are as follows:

  • Obedience: As an agent of your client, you must obey their instructions, barring illegal, unethical requests, or requests which contradict terms of the contract.

  • Loyalty: As the agent for your client, you must be loyal and keep their best interests ahead of those of any other party, including yourself. How much commission you might make, particularly in competing offer situations, should not be a consideration and would be disloyal to your client.

  • Disclosure: In many states the law requires a real estate agent, whether in an "agency" capacity or not, to disclose material facts to their client. Material facts are those which, if known by the buyer or seller, might affect purchase or sale actions.

  • Confidentiality: Your fiduciary duty of confidentiality means that you do not disclose anything that you learn about your client, their business, financial or personal affairs or motivations.

  • Accounting: Accounting for all documents and funds in the transaction is a fiduciary duty. Accurate reporting of the whereabouts of all monies pertaining to the transaction and their ultimate disposition is a fiduciary responsibility.

  • Reasonable Care: This duty is one to which special care should always be paid. The words "reasonable care" are only finally fully defined in many cases by a judge or jury when it's too late to change your actions, but amount essentially to the duty owed to any client by an agent/brokerage through state and Federal agency/common law and Federal regulatory law.

Really what all this means is I, as your agent, will will act in your best interest (not my own) while representing you in the transaction. Loyalty is where California agents sometimes find themselves in a grey area.

Duel agency is really pretty simple. I am legally allowed to represent buyer and seller simultaneously in the same transaction. This may seem like no big deal on the surface, but if you look into the potential ramifications of agreeing (yes you have to agree to allow your agent to do this) to this type of representation, there is often some conflict.

Part of my fiduciary duties to you is to be loyal to "you". But if I am being loyal to my other client, can I be loyal to you as well in the same transaction? Buyers and sellers both divulge sensitive information regarding why they are buying and selling a particular home, including concessions they may be willing to consider as a last resort. If I am wearing both hats (buyer and seller agent), it becomes very difficult to be completely loyal to both parties. Does my relationship with either party determine what sort of recommendations I will make (price, inspection request, appraisal concessions)?

Who's interest am I representing? Most sales involve two separate agents spliting an agreed upon comission, generally paid by the selling party. Often times duel agency means dual commission. This can be very appetizing with the prices of SoCal homes. By representing both parties I can double my commission on the sale of the home. Which does make sense as I am doing double the work to close the transaction.

Ask Yourself:

  • Did my agent have any influence over which offer was accepted?

  • Did she market the home effectively to get offers from outside agents?

  • Did he convince me to hold the property off market?

  • Did they do everything they could to get me the highest and best offer?

These are the questions you need to ask when your agent suggest duel agency, if he ever does (sometimes this is slid in last minute along with the "only" offer that came in). Agents are required by law to submit all offers to sellers, even if the offer is completely unreasonable.

Too often greed outweighs ethics and agents ignore their duties to you the client. They begin to restrict buyer access to showings, sometimes never even allowing outside agents to show your home. They convince you that a quick sale is better than a going on the market. They tell you they have a book of buyers ready to write top dollar offers. They divulge the sensitive motivations you have in order to double end the deal. They make recommendations that are not in either parties best interest in order to "keep the deal together". Often times the real motivation is only their bank statement.

There are however times where duel agency does make sense. We as agents are working with both buyers and sellers simultaneously. More often than not in the same communities. I owe it to my buyers to show them the homes that match their criteria. Likewise, I owe it to my sellers to expose their home to as many buyers as possible. At times these two intersect. The key to a successful duel agency is how I, as the agent, handle this crossing of paths.

The key is to only act in the best interest of the represented parties. Agents must not use their inside knowledge to influence the outcome of a transaction unless you give written consent do so.

Effective January 1, 2019, dual agents are now prohibited from disclosing any confidential information to the buyer or seller without their express, written permission. “Confidential information” includes facts such as the clients’ financial positions, motivations, bargaining positions, or other personal information that may impact the terms of sale (i.e. Price, contingencies, timeline). It also includes the old restrictions that you cannot tell if one party is willing to pay more or accept less without written approval. The law has only applied this restriction to dual agents at this time.

Hopefully you and your agent have had the discussion about duel agency, if not do so today. Or better yet, come talk to me. This business can bring out the best and worst in people. There is nothing worse than finding out your agent took advantage of your trust. Be vigilant, ask questions and be cautious of any agent that only presents an offer from their buyer or only shows you houses they are listing.


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