Dual Agency
Understanding the concept of ‘dual agency’ is tricky. In most states within the United States territory, real estate laws allow one agent to represent both the buyer and the seller in a transaction. While that may be good for the agent, it’s not necessarily good for you. This is particularly the case in the luxury market.
When an agent enters into dual agency (also called disclosed dual agency in some areas) he/she must usually get consent from both parties. He/she must get the seller to agree to reduce his/her expectation of loyalty and obedience, while not increasing those for the buyer. Why? Because the agent must deal with each party fairly and equally. Things he/she knows about the seller because of their relationship cannot be revealed to the buyer and vice versa. Do you see the conflict? How can one person represent two sides at the same time without appearing to (if not actually) favoring one party over the other?
When buying a luxury home it’s simple, insist on engaging your own buyer’s agent. Don’t call or even talk to the seller’s agent, and certainly don’t agree to have the agent represent both of you. Would you want an attorney representing you and the person suing you?
These matters become even more tricky and complicated when you’re selling a luxury home. You can insist that the agent who lists your home work only for you, and that you will not accept dual agency. The agent can still show the house to prospective buyers as long as the agent informs the buyer that they represent you, the seller. If the buyer is not agreeable to that arrangement (and we contend they shouldn’t) then they can be directed to use an attorney or, as has already been suggested, their own buyer’s agent. Selecting this latter option means that the listing agent will have to split his/her commission. They might balk at that suggestion, but who’s the boss here? It’s you, isn’t it?
Where this really gets dicey is if the agency that represents you as the seller also represents the buyer in an Exclusive Buyer’s Agreement. This means they have a contract to represent the buyer in the same way as they have a contract (the listing agreement) to represent you. Unless you agree to accept dual agency in this case, this buyer will not be able to see your house.
Does all of this information make your head spin? Don’t worry most agents and many attorneys don’t understand this concept either. That’s why in the luxury market Mr. Sweeney has chosen to represent buyers only so that he avoids these conflicts!