Dual Agency, Compromised Representation and Special Interest Groups

Dual agency, also called limited agency, is where one agent represents both the seller and buyer during a property transaction.

There's not much room to negotiate when one agent represents both buyer and seller.

There’s not much room to negotiate when one agent represents both buyer and seller.

A real estate agent compromises his or her ability to fully represent either client, when representing both simultaneously. In most states this practice is legal. If explained properly, no buyer would ever do it, but because additional disclosures required by dual agency are often explained poorly, a buyer’s perspective and understanding of this compromising relationship is not fully understood. Little do buyers realize that their agent can no longer give either client a “contractual advantage”. This can be huge. For example, if a listing agent has been instructed by the seller to list a home for $100,000, and the agent knows it is only worth $90,000, he can only say to his new buying client that the property (by fiduciary obligation to the seller) is for sale for $100,000 – and not one penny less. Sadly, many unknowing buyers paid $100,000.
The carrot for Realtors is that the projected commission can double when both parties are represented. This is just as bad as a couple using the same attorney for a divorce. But the unethical practice will continue in most states due to the strong real estate lobbies at the state and national level. Special interest groups protect the groups that pay them, not the consumers who utilize the real estate industry’s services – food for thought for consumers who are buying or selling a house.


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