This may be an unpopular opinion in my industry, but I hate the dual agency designation.  I hate it so much that I explicitly exclude it from all of my listing contracts.  Why? I don’t believe that an agent can act in the best interest of both the seller and the buyer in the same transaction. Period.

What is Dual Agency?

Dual agency, or dual representation as it is sometimes known, is when one real estate agent represents both the buyer and the seller in the sale of a particular property.  Sarah hires Agent Mike to sell her home.  Agent Mike tells Sarah that he is also working with a buyer named Jane.  Jane wants to buy Sarah’s house and Agent Mike wants to represent both Sarah (seller) and Jane (buyer) in the sale. Dual agency is legal in Massachusetts as long as the relationship is properly disclosed to all parties and both the buyer and the seller agree to it in writing. It is worth noting that dual agency is illegal in eight states.

Why do Buyers and Sellers Agree to Dual Agency?

The parties may sign off on dual agency because they think it will streamline the sale.  If everything is being filtered through one agent, there is the perception that things will get signed faster, communication will be quicker amongst the parties and the closing process will be more efficient.

Buyers also perceive value in working directly with the listing agent because they think they will get more information on the property and have better negotiating power with the seller.

There is also the potential for saving money on commission if the agent represents both parties. As long as the seller negotiates a reduced commission rate for dual agency in their original listing contract, having their agent simultaneously represent the buyer will save them money at the closing table.

What are the Downfalls of Dual Agency?

Dual agency creates a conflict of interest.  The same agent is now representing two separate parties in the sale who often have different motivating factors.  When representing a seller, the agent is responsible for finding ready, willing and able buyers and sell the home for the highest price possible.  In contrast, when an agent is representing the buyer, their goal is to help their client purchase the home at or below market value to maximize their client’s investment.  An agent representing the buyer will be able to run comparable sales to determine if the listing price for a property is too high.  The agent representing the seller has no duty to analyze the price for buyers or tell them if it is listed above market value. See the conflict? If the agent is operating in dual agency, it is impossible for them to look out for the best interests of both the buyer and seller at the same time.

There is also the issue of confidentiality. Agents (and sellers) are legally responsible for disclosing any and all known defects or information about a property that would factor into a buyer’s decision to purchase.  Agents are not responsible for disclosing confidential conversations they have with their client about their motivations for selling or buying.  For example, the agent may know that their seller is willing to take less than what their property is listed at. Or the agent may know that the buyer is preapproved for a higher amount than they disclosed and are able to pay more than what they are offering. In both situations, the agent is responsible for keeping their client’s confidentiality. In a dual agency situation, the agent is unable to uphold their fiduciary responsibilities to both parties if they are keeping this information to themselves. I believe this puts the buyer and seller at a disadvantage.

My Summary on Dual Agency

I don’t believe dual agency benefits either the buyer or the seller. My duty as an agent is to fully represent my client and their best interests at all times.  I think that buyers and sellers are at a disadvantage if they do not have their own independent representation in the sale. Streamlining the sale shouldn’t be a reason to elect dual agency. If the buyer and seller are both working with professional agents who know how to organize the transaction, there is no added benefit to having a single agent close the deal. Also, not all agents have the same level of experience.  Having a second agent involved in the sale can act as a sort of check and balance to ensure things don’t get overlooked. If a seller is looking to save money, dual agency isn’t the most efficient way to do it. Saving money on the commission in dual agency only works if the seller negotiates the reduced rate ahead of time.  Otherwise, in most cases, the seller is still responsible for paying the full commission because they are contracted with the agent’s brokerage, not the agent themselves. Renegotiating commission rates after a listing contract is signed would be at the discretion of the brokerage and isn’t guaranteed. In short, dual agency is a slippery slope. It might be legal in Massachusetts but I personally choose not to participate. I prefer to give my clients 100% of my time and attention. I think it benefits everyone in the long run.