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