Show Be wary of entering an arrangement where the seller's agent supposedly represents you, too.Let's say you decide to buy a new home in California, and call a local real estate brokerage office and speak to an agent there. After explaining what you're looking for, the agent shows you various properties, some of which are listed for sale with other brokerage offices, and some of which are listed for sale by your agent's brokerage office. If you decide to buy a home that was listed with your agent, it's possible that your agent, or at least the broker's company, will end up acting as a "dual agent," representing both you and the seller in the transaction. Another common way that dual agency can arise is if you visit an open house before you've signed up an agent to represent you as a buyer, express interest in the house, and are then told by the agent for the seller that writing up an offer for you will be no problem and might even save you money. Before entering into any of these types of dual agency agreements, you want to understand the legal implications and how it might affect your ability to get the best possible deal in buying a home. Normally, a seller's goal is to get the highest possible price for a property, whereas a buyer's goal is to pay the lowest possible price. How, then, can a dual agent properly represent the competing interests of both a buyer and a seller? In some situations, it might make sense to use a dual agent; in others, you will want your own agent on your side. What Is a Dual Agent?Legally speaking, a dual agent is a real estate broker, or agents working for the same broker, who act on behalf of both the seller and the buyer in a transaction. A broker is permitted to act as a dual agent in California only if the buyer and seller are both aware of and consent to the dual agency. California Agents Must Disclose and Obtain Consent for Dual Agency RelationshipsIn California, when you work with a real estate broker, your relationship with the broker must be confirmed in writing. Brokers are expected, at some point before you make an offer on a house, to present you with a form titled, "Disclosure Regarding Real Estate Agency Relationships," the language of which is prescribed by state law (Cal. Civil Code § 2079.16). This disclosure form identifies the broker and agents involved in the transaction. It also describes the duties of the seller's agent, the buyer's agent, and an agent representing both the seller and the buyer, the dual agent. As explained on the disclosure form, all real estate agents (buyer's agents, seller's agents, and dual agents) owe each client a special fiduciary duty to act in that person's best interest. This includes a duty to exercise reasonable care and skill in working for the client, a duty to be honest and deal fairly and in good faith, and a duty to disclose all facts within the agent's knowledge that materially affects the value or desirability of the property and of which the client is not aware, or that the client would not become aware of through diligent attention or observation. As discussed below, a dual agent, attempting to act on behalf of both parties to a sale, risks violating the fiduciary duty to act only in the best interest of one client, because the agent might have to balance the interests of both clients. Pros of Using A Dual AgentHere are some of the positive aspects of sharing a real estate broker with the seller:
Cons of Using A Dual AgentBefore you're persuaded by all the positive aspects of using a dual agent, take note of the negative or risky ones:
Although you might feel like you have to make the decision whether to accept a dual agent on short notice, don't let this sway your decision. It's possible to find a buyer's agent to step into the transaction and assist you in a matter of hours. Your decision should also be based in part on the facts of your particular transaction. For example, in a hot market, where it happens that your broker's office represents the home seller (but with a different agent directly representing the seller), where you're concerned about beating out a number of other competitors, and where you've done enough research to have a good sense of how much the home is worth, accepting dual agency might make sense. But if you've just started your home search, don't really know the market, and meet an over-eager agent at an open house who urges you to sit down and draw up an offer, think twice. |