What is Dual Agency and Why To Avoid It
As a real estate agent, one of my duties when working with clients is to explain agency law – who represents who in a transaction. Buyers are represented by Buyer Agents and Sellers are represented by Listing Agents. Dual agents, however, ‘try’ and represent both the Buyer and the Seller in a transaction. I say ‘try’ because I don’t believe there is any way you can truly represent the interests of both parties in a single transaction.
Most people recognize the benefits of having a real estate agent on their side in a transaction. The process can be long and complicated with many pitfalls along the way. And most people only buy or sell a home several times in their lifetime. With an agent on your side, you have someone fighting for your interests, negotiating for you and protecting you from situations that can be detrimental to your interests.
An agent owes their client a fiduciary duty – the highest standard of care. In legal terms, the person who has a fiduciary duty is called the fiduciary and the person to whom he or she owes the duty is typically referred to as the principal or the beneficiary.
Except with Dual Agency. In dual agency, the agent can’t push for what is best for either side. It’s simply not possible.
I’ve always avoided dual agency because I see it as a conflict of interest. In addition, it has been reported that more agents get written up for an ethics violation trying to do dual agency than any other reason. And more buyers and sellers who have experienced dual agency have a lower level of satisfaction with the buying and selling experience in terms of agent support, focus and agent allegiance.
Why would an agent act as a dual agent?
Simple, because they want to collect both sides of the commission.
Why would a buyer or seller agree to dual agency?
Simple, because they don’t know any better or feel pressured in to accepting it.
Dual Agency in the Commonwealth of Virginia & The District of Columbia
Dual agency is legal in VA & DC, but there are important distinctions in how it is defined.
In DC and Virginia, it is legal for one agent to act as a Dual Agent and represent both parties. In DC & Virginia, if two separate agents have the same Managing Broker, the agents are considered Designated Agents.
In all cases, both parties must consent, in writing, to agree to dual agency. You can consent to dual agency when you start working with an agent, but you need to consent again once a specific property you want to buy is identified or if you are the seller, once you receive an offer on the property.
In Virginia, the written disclosure is pretty clear on what you are not receiving by consenting to dual agency:
That following the commencement of dual agency or representation, the licensee cannot advise either party as to the terms to offer or accept in any offer or counteroffer; however, the licensee may have advised one party as to such terms prior to the commencement of dual agency or representation;
That the licensee cannot advise the buyer/tenant client as to the suitability of the property, its condition (other than to make any disclosures as required by law of any licensee representing a seller/landlord), and cannot advise either party as to what repairs of the property to make or request;
That the licensee cannot advise either party in any dispute that arises relating to the transaction;
That the licensee may be acting without knowledge of the client’s needs, client’s knowledge of the market, or client’s capabilities in dealing with the intricacies of real estate transactions; and
That either party may engage another licensee at additional cost to represent their respective interests.
Knowing that, why would you ever consent to dual agency?