Pros and Cons of Using a Dual Agent to Help Buy an Oregon Home

Be sure to weigh the risks and rewards before binding yourself to a real estate agent that also represents the opposing party.

In Oregon it is possible have a single real estate agent represent both the buyer and seller throughout the entire home sale and purchase. This can create a sticky situation if the parties are not careful, so it is important to understand what a “dual agent” is and what risks you face if you proceed with one.

What Is a Dual Agent Under Oregon Real Estate Law?

In Oregon it is common, if you buy or sell a home, to have a real estate agent assist with the transaction. Often, a “buyer’s agent” will represent the buyer and a “seller’s agent” will represent the seller. A third type of agent also exists, commonly referred to as a “dual agent" or “disclosed limited agent.”

A dual agent represents both the seller and the buyer. In Oregon, dual agency can occur in one of two ways.

The first way is when a single real estate agent represents both the buyer and the seller in the same home sale. The second way is when a single real estate brokerage firm represents both the buyer and seller, but with two different real estate agents (one representing the seller, the other the buyer). In this second case, though, only the brokerage is treated as the dual agent, not the individual agents.

When a real estate agent represents you, that agent has “fiduciary duties” to act on your behalf. This means the agent has a legal obligation to look out for your interests. If a real estate agent represents both the buyer and seller as a dual agent, those fiduciary duties are owed to both parties and the agent must:

  • treat both the buyer and seller impartially
  • be loyal to both the buyer and seller
  • disclose pertinent information, including material defects, and
  • keep certain information confidential, such as whether the buyer is willing to pay more for the home, or the seller willing to accept less for the home.

Performing these duties, when owed to two opposing parties, is easier said than done. For instance, will the dual agent always disclose a material defect to the buyer when such disclosure will likely terminate the sale before closing (and ruin the agent’s chance at a big commission)?

Ways a Dual Agency Relationship Might Arise During the Purchase of an Oregon Home

While you can end up with a “dual agent” in a number of ways, there are few situations that commonly lead to such a relationship. An open house is one. Often, the seller’s agent will host an open house where prospective buyers stop by to look around. If the buyer does not have a separate “buyer’s agent,” and if the buyer likes the home, often the seller’s agent will draw up an offer from the buyer.

Similarly, if a buyer does not have a buyer’s agent, and sees a listing online, in the newspaper, or on a “For Sale” sign in the home’s front yard, the buyer will often call the listed phone number. The number will direct the buyer to the seller’s agent, who may then invite the prospective buyer to tour the home. The seller’s agent will likely be the one who shows the buyer around the home, and if the buyer likes the home, may end up being the one to draw up the offer, as well.

Dual agency can even occur when a buyer initially hires a buyer’s agent. For example, a buyer may end up making an offer on a home that the buyer’s agent is also acting as the seller’s agent. In other words, the buyer’s agent lists the home for sale on behalf of the seller and then subsequently shows it to the buyer.

Oregon Agents Must Disclose and Obtain Written Consent for Dual Agency

In Oregon, after a real estate agent makes “first contact” with either a home buyer or seller, the agent must provide an “Initial Agency Disclosure Pamphlet.” “First contact” occurs when the agent has sufficient information about the buyer or seller to provide a copy of the pamphlet. Sufficient contact can occur by meeting in person, talking over the phone, or even communicating by email.

The pamphlet includes an explanation of the duties and responsibilities an agent will have to the parties, including duties owed if the agent only represents the seller, only represents the buyer, or represents both parties.

If an agent undertakes to represent both the buyer and seller as a dual agent, the agent must obtain written consent from both parties. The consent document will be titled “Disclosed Limited Agency Agreement.”

It’s Not All Bad: The Pros of Using a Dual Agent

Although it can be awkward to balance the duties a dual agent owes to the different parties, there can be benefits for the buyer and seller.

  • For both parties, the transaction may proceed more efficiently.  By using a dual agent, one step of communication is eliminated, so that things move more quickly. Normally a buyer’s agent will prepare an offer or counteroffer and send it to the seller’s agent. The seller’s agent will then send it on to the seller. Likewise, the seller’s agent will communicate with the buyer’s agent on behalf of the seller. This means if one of the agent’s is on vacation or otherwise slow to respond, the transaction gets put on hold until communication is restored. With only one agent, such delay is less likely.
  • For buyers, a dual agent may have better information about the property than a buyer’s agent.  Since a dual agent is the same agent that lists the property, the dual agent will be very familiar with the property. A buyer’s agent, on the other hand, may know only as much as the buyer about the property.
  • For sellers, a dual agent may agree to a reduced commission.  Since a dual agent will not have to split the commission with a buyer’s agent, the agent may agree to reduce the real estate commission. On a $300,000 home, the standard commission is 6%. If the dual agent agrees to lower the commission to 5%, that results in a $3,000 savings for the seller. These savings may also create an opportunity for the buyer to negotiate a lower purchase price.
  • For buyers, a dual agent may provide more negotiating power.  A dual agent may be able to draft a more competitive offer for a buyer, because the agent knows what will be attractive to the seller. This may be more of an advantage when the market is hot and the seller will receive multiple offers.

Sounds Good, What’s the Big Deal? The Cons of Using a Dual Agent

In the wrong situation, hiring a dual agent can give rise to the following concerns:

  • For buyers, a dual agent may be over-incentivized to close the sale.  A dual agent may be overly eager to sell the home, since the real estate commission will not be split with a buyer’s agent. For buyers, this may be particularly true if you only met the agent at an open house or through the agent’s efforts to market the home. The agent may be most concerned with getting the home sold and not finding you a perfect home.
  • For both parties, a dual agent owes a duty of loyalty.  This may not sound like a con, but how can an agent be loyal to both a seller trying to get the highest price possible for the home, while at the same time, be loyal to a buyer trying to get the best deal on the same home?
  • For buyers, a dual agent may not be entirely forthcoming about whether the listing price is fair.Prior to listing a home for sale, a dual agent will advise the seller on a fair listing price. That same agent may be hesitant to tell a buyer that the listing price is too high and the buyer should offer less.
  • For buyers, dual agency reduces options if legal problems arise.  Since only one real estate brokerage will be involved, if a problem arises requiring legal action, instead of being able to sue both the seller’s agent and buyer’s agent (and tapping into their respective insurance proceeds), a buyer will be stuck with suing only the dual agent.

That said, there is a time and a place for using a dual agent. For instance, if you are a buyer in a hot market and find your dream home, you may not have time to retain a buyer’s agent before you need to make an offer.

However, it is important to know the extent of your agency relationship. In most transactions, it will be to a buyer’s benefit to have a real estate agent who is concerned only with the buyer’s interests, and not with balancing the interests of two opposing parties.

If you are considering using a dual agent, or are in the middle of a transaction with a dual agent, you can retain a real estate attorney. The attorney can review documents on your behalf and make sure it does not appear the dual agent is acting partially in favor of the other party.

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