What’s Dual Agency in a Real Estate Transaction and Why Should I Avoid It?

Question

I'm planning to sell my home, with the help of a real estate agent. I keep hearing that I should avoid "dual agency." What’s dual agency and why should I avoid it?

Answer

As a homeseller, you want your real estate agent to represent your interests and help you achieve your goal: to sell your home quickly, for as much money as you can get.

On the other side of the table is the buyer, who’s hoping for the opposite: to get the property for as little as possible.

As you can imagine, it would be difficult for one agent to represent the interests of both the buyer and the seller, in what’s called a dual agency.

Some agents prefer dual agency, because it means they don’t have to split the commission with another agent. (The seller normally pays his or her agent 5% to 6%, and then that agent splits the commission with the buyer's agent.)  

But you want to avoid dual agency. If you’re going to pay a full commission, you want someone who fully represents your interests. If an agent asks you to consent to a dual agency, flatly deny the request.

Somewhat less onerous than the dual agency is a designated agency. In this situation, the buyer is represented by another agent in the same brokerage as your agent. Technically, this is a form of dual agency, because each agent works for the same broker. Unlike a dual agency, you get personal representation from a designated agent. But you must fully trust your agent to represent your interests and not divulge your bottom line to the buyer’s agent.

If you’re willing to participate in a designated agency, you might request a reduction in the commission, based on the fact that the brokerage will make twice as much as it otherwise would have on the deal.

See Negotiate the Agent’s Commission When Selling Your House for more on the subject.

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