Hiring a real estate agent comes with numerous benefits. But have you tried working with a dual agent? What is a dual agency?
Well, most probably you landed on this page because you have heard about the term and want to know more about it. Or you have heard about a dual agent and are wondering if you should consider working with one. Would it be the right approach for your real estate deals? Below, we will explain what a dual agent is and advise on their viability.
What Is a Dual Agency?
A dual agency, overall, is where both the listing agent and the buyer’s agent work under the same brokerage firm. This occurs when the brokerage firm is very large with lots of listings. A dual agency is also a situation when a real estate agent works with both the buyer and the seller. The dual agent is simply both the seller’s and the buyer’s agent, combining both roles into one. For instance, a buyer might fall in love with an investment property where the agent they have hired happens to represent the seller. In other instances, a seller prefers their agent to also represent the buyer for reasons we will explain below.
Note that dual agents in some states are illegal because real estate agents are bound by fiduciary duties. Such duties require undivided loyalty to customers, whether sellers or buyers. Certain states, however, permit a dual agency as long as it’s disclosed to both the buyers and sellers. Make sure to study real estate laws in your state to learn about the regulations that govern a dual agency.
The Advantages and Disadvantages of a Dual Agency/ Dual Agent
Smoother and Faster Communication
When a real estate agent represents both the buyer and the seller, the agent then would not have to wait for communications between both parties. This streamlined communication ensures a smoother transaction because the agent represents both sides in a transaction. The dual agent is in charge of all the paperwork, scheduling, and deadlines for both parties.
For the sellers and the buyers, the transaction will be made much faster since one party would not have to wait for the other party’s agent to attend to their duties. Moreover, when you, as a buyer, have inquiries about a property, you would not have to wait for the listing agent to call your agent back to answer any questions may you have. You and the seller have the same point of contact and both can get your questions answered immediately.
Access to a Pool of Potential Sellers or Buyers
Remember that a dual agency does not only refer to an agent who is representing both the seller and the buyer. A dual agency also applies to brokerage firms that have seller agents and buyer agents. The buyer, per se, will have the advantage to learn of many potential sellers and properties since the agent representing them will have access to a pool of investment properties given that the agency also represents sellers and has access to many properties for sale. Thus, properties within a dual agency will most probably sell faster. On the other hand, buyers will also benefit and land on a property much faster.
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You Could Save More Money
As a real estate investor, you could be saving yourself some money when working with a dual agent. How could that possibly happen? An investment property seller usually pays a commission to their agent, who then splits that commission with the buyer’s agent. Because dual agents represent both sides of a transaction, they tend to accept a lower fee from sellers. As a seller, you should be negotiating the commission and lowering the percentage paid, since your agent will not be splitting the commission with the buyer’s agent.
The Disadvantages of Working with a Dual Agency/Dual Agent
When you work with a dual agent, expect to get minimal real estate investment advice. There’s a conflict of interest here: The seller wants to land on as high of a price as he/she could while the buyer wants to pay as little as possible. Thus, the agent cannot take sides fearing to lose one side of the transaction. The dual agent will always remain neutral. This poses a disadvantage to many buyers and sellers. On the contrary, when you hire an independent or single agent, you are more likely to get the benefits of being a principal while receiving fiduciary benefits.
A Dual Agency Is Difficult to Understand
A dual agency is a complicated service; you should understand clearly the regulations and laws that govern it. Read the contract thoroughly to avoid being misrepresented. A lack of diligence in understanding the rules and the contract can leave you at a disadvantage.
For example, you might not know whether the agent is truly representing the interests of both sides. In some cases, dual agents have failed to ascertain equal opportunities to both sides of a transaction. On the other hand, dual agents are prone to making mistakes too. This is particularly true because the dual agent is the only agent involved in the transaction; therefore, the chances of missing something can be higher. To ensure a perfectly facilitated transaction and one that is error-free, assess a potential dual agent cogently before hiring them.
Does Having a Dual Agent Suit Your Goals?
Well, you should assess the pros and cons of having a dual agent before making the decision to hire one. Would you rather save some money and have a streamlined process or have your agent negotiate the best price for you? If you have previously had an arduous experience dealing with two agents to make a transaction, then you might want to consider hiring a dual agent.
A dual agent who represents both the seller and the buyer in a transaction can be beneficial to real estate investors who thrive for a more facilitated and streamlined process. A dual agency, moreover, will offer you a pool of potential buyers or sellers and you will most probably close on a deal faster than if you were to hire a single agent. On the other hand, if you are more concerned about landing the best price for an investment property, then we recommend looking into a single agent. This is because dual agents refrain from giving advice and remain neutral across a transaction.
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