What Is Dual Agency?
Before I start to get into dual agency I want to point out that this article is speaking only on being an agent in the state of Virginia. I’m not qualified to speak on any other state. Laws vary by state and this article won’t apply to, for example, transaction states. With that said, what is dual agency? In Virginia, I am required by law to explain agency law to a prospective buyer or seller at the first meeting or first substantive conversation about real estate whichever comes first. In Virginia a real estate agent can represent a seller, a buyer, or both. Dual agency is when an agent represents both the buyer and the seller in the same real estate transaction.
While most people recognize the benefits of having their own exclusive representation there are often questions that come up about agency because it hasn’t been properly explained. It’s not something a consumer deals with every day and if it’s not properly explained you may not know what you’re agreeing too.
If you consent to dual agency understand that your agent won’t be able to answer a plethora of questions. Examples…
Buyer Questions -
How much is the house worth?
What should I offer on the house?
Should I ask for closing cost assistance?
What repairs should I ask for after the home inspection?
Seller Questions -
Should I counter the buyers offer?
What should I do about a low appraisal?
What repairs should I agree too?
With dual agency it’s very important to know the agent does not represent your interests as a fiduciary. Dual agency is actually illegal in some states. I do not agree with dual agency and believe it only benefits the agent.
In an exclusive agency agreement with your agent, your information is kept confidential, your agent will push for your best interests throughout the transaction, and advise you throughout the entire process. Your agent will also (and this is a big one) disclose ALL information that is relevant to you as the client. Bottom line, your agent will always be working to achieve the very best outcome for you. With dual agency that is all out the window.
Yes, it is legal in Virginia for an agent to represent both the buyer and the seller in a real estate transaction but, only with the consent of both parties. When acting as a dual agent the agent legally has to be neutral in regard to any conflicting interests of the buyer and seller. What does
that mean? A dual agent cannot satisfy the duties of full disclosure, advice throughout the entire transaction on every step, or even loyalty.
I compare dual agency to a lawyer representing the plaintiff and the defendant in the same case. If you were facing a lawsuit would you hire the same lawyer the plaintiff is using? No! That doesn’t even make sense to think of. It’s not possible to represent multiple parties in the same transaction and maintain each of their best interests at all times.
Again, agency differs from state to state and it’s important to understand how it works in your specific state. In my professional opinion dual agency doesn’t benefit the buyer or the seller and it’s something I never have and never will practice. You should hire an agent whom you trust to exclusively represent your best interests.