This sponsored, biweekly Q&A column is written by Andrew Goodman, broker/owner of Goodman, Realtors. Based in Bethesda, Andrew serves clients in Maryland, D.C., and Northern Virginia. Please submit comments, questions, and opinions in the comments section or via email.
Question: What is dual agency and why am I always asked to sign a disclosure about it?
Answer: Dual agency could occur when the buyer is interested in a property listed by a real estate broker that’s also affiliated with the seller’s agent. A real estate broker is a person who has taken the necessary classes and exams, and has met all requirements to have the ability to own, manage, or operate their own brokerage.
All real estate agents must work for a real estate broker. Goodman, Realtors®, Long and Foster, Remax, and others are all real estate brokerages (companies) with a broker that has the responsibility for all of the real estate agents who work for the brokerage.
Per the Real Estate Commission: “A broker acting as a dual agent does not exclusively represent either the seller or buyer; there may be a conflict of interest because the interests of the seller can buyer may be different or adverse. As a dual agent, the real estate broker does not owe undivided loyalty to either the seller or buyer.”
Before the buyer and seller can proceed to be represented by a broker acting as a dual agent, they must both sign the Consent for Dual Agency (disclosure). If the buyer has previously signed Consent for Dual Agency, the buyer must affirm that consent for the purchase of a particular property before an offer to purchase is presented to the seller. If the seller has previously signed Consent for Dual Agency, the seller must affirm that consent for the sale of the property to a particular buyer before accepting an offer to purchase the property.
In a possible dual agency situation, the buyer and seller have the following options:
1. Consent in writing to dual agency.
If all parties consent in writing, the real estate broker or the broker’s designee (the “dual agent”) will assign one real estate agent affiliated with the broker to represent the seller (the seller’s “intra-company agent”) and another agent affiliated with the broker to represent the buyer (the buyer’s “intra-company agent”). Intra-company agents may provide the same services to their clients as an exclusive seller or buyer’s agent, including advising their clients as to price and negotiation strategy.
2. Refuse to consent to dual agency.
If either party refuses to consent in writing to dual agency, the real estate broker must terminate the brokerage relationship for that particular property with the buyer, the seller, or both.
If the seller’s agreement is terminated, the seller must then either represent him or herself or arrange to be represented by another real estate company. If the buyer’s agreement is terminated, the buyer may choose not to be represented by an agent of his or her own but simply to receive assistance from the seller’s agent, from another agent in that company or from a cooperating agent from another company. Alternatively, the buyer may choose to enter into a written buyer’s agency agreement with a different company.
Why wouldn’t you choose to consent to dual agency?
Well, some buyers and sellers believe that if you work with an agent within the same office of the other agent, then some confidential information may be shared with the other party. However, dual agents and intra-company agents must keep confidential information about a client’s bargaining position or motivation.
Per the Real Estate Commission, here is what must be kept confidential:
1) Anything the client asks to be kept confidential (unless it is regards to material facts about a property).
2) That the seller would accept a lower price or other terms
3) That the buyer would accept a higher price or other terms
4) The reason why a party wants to sell or buyer, or that a party needs to sell or buy quickly; or
5) Anything that relates to the negotiating strategy of a party.
Dual agency is quite simple. If both parties agree to it, an intra-company agent would represent each party. A real estate broker would not be able to represent either party nor would he or she owe undivided loyalty to either the seller or buyer. The intra-company agents would owe loyalty to their party. A brokerage that does not consist of at least two real estate agents, other than the broker, cannot participate in dual agency, as there wouldn’t be an intra-company agent to represent each side of the transaction.
This all boils down to trust. If you don’t trust the agent you are working with, then you shouldn’t be working with that agent anyway. Trust is key and you must trust the agent that you are working with, plain and simple.
