If you are buying a home in Richmond, Virginia – or selling your home in Richmond – one of the things you should be discussing with your Realtor is about the agency relationship you will have with your Realtor! Dual Agency is something that is allowed in Virginia – so the question is: is dual agency good or bad???
At first, dual agency sounds great – for the seller it may be one less agent to have to deal with, it may lead to a smoother and quicker transaction and maybe the seller can save some money! For the buyer, they may be thinking that by having one less agent in the mix, they will also be able to get a better deal on the house since the agent will most likely cut their commission! Of course, that is a myth, because the commission that is paid to the agent is negotiated between the seller and the agent and there is no guarantee that the agent is willing to cut their commission!
I have talked to homeowners who said that they just called the agent on the sign or who was hosting the open house and they sold them the house and they had no problems with the transaction! I say Congratulations to them!
If you do have an agent who is a dual agent on a transaction, there is nothing to say that the transaction won’t be a smooth one! But there is also nothing to say that it won’t be fraught with many problems. So let’s talk about why I don’t practice dual agency!
First we need to know just what a dual agent is! If I list a home for sale then I am representing the seller and I am the seller’s agent! If I hold the house open on a Sunday afternoon and you, the buyer, come to my open house, and are unrepresented by a Buyer Agent and tell me that you want to write up an offer on the house, and I agree to represent you as well, then I am a Dual Agent! This means that I am representing both you and the seller in the same real estate transaction!
So why would you want to use a Dual Agent to buy the house? After all, this is most likely the biggest financial purchase you will be making! If you are getting a divorce, would you hire the same attorney as your spouse you are divorcing? Most likely not!
But here are the problems with using the listing agent to also represent your interests in buying the house!
First, think about the commission to be paid – that is based on the price of the house. So, if you are the buyer, do you think the agent is really trying to get you the best price possible for the house?
Second, as a seller, you may want to know whether or not the agent is feeling pressure to get the house closed quickly so they can collect their commission quicker!
Third, there is a potential conflict of interest. Most transactions go smoothly – until they don’t!
Fourth, in trying to get the transaction closed quickly, the agent may inadvertently overlook some details that may turn out to be important!
So let’s look at a situation involving a dual agent.
I list a house in the Midlothian area of Chesterfield County for say $500,000. I then go ahead and begin to market the property to get buyers! One of my marketing tools is the open house.
So on Sunday afternoon I host an open house – a buyer with no agent representing them comes to my open house and decides that they really like the house and want to make an offer. They begin to ask questions about the house, including how much I think they should offer for the house! As a dual agent, I must tell them “Sorry I can’t help you with that because I am a dual agent”.
How much help did that buyer get in making their decision? Very little! But let’s say they still decide to make an offer of $480,000 for the house (as they are hearing on the news that the market is cooling down and there are no longer bidding wars going on). So I agree to go ahead and write up their offer of $480,000!
I take the buyers $480,000 offer to my seller – who then asks me “Should we counter this offer? And if so, how much should we counter this back at?” Of course, I now tell my sellers, that I am sorry but I cannot advise you on this as I am a dual agent!
As you can see, as a Dual Agent, both the buyer and seller have very little guidance on this transaction. As a Dual Agent I am now nothing more than a facilitator – moving the paperwork from one side of the transaction to the other!
And in a transaction, there are lots of questions that will come up! If I am a Dual Agent, I cannot answer questions such as:
- Should I, the seller, agree to the buyer’s repair requests/concessions on an inspection addendum?
- What repairs should I, the buyer, ask the seller to do per the inspection report?
- Are there any sex offenders living nearby that I need to be concerned about?
- The appraisal has come in low – how do I, as the seller, dispute the appraisal?
- What should I, the buyer, offer on the house you have listed for sale?
- Is the automated estimates I see on Zillow and other sites correct?
- Do you know of anything about the house or neighborhood I should be aware of?
If you are a seller, is it worth giving up the representation your Realtor would give you if they were not a Dual Agent? If you are a buyer, are you saving enough money to justify giving up the representation a Buyer Agent would give to you if they were not a Dual Agent?
In my opinion, the only person who really benefits is the agent who is the Dual Agent! In my mind, an ethically minded agent always puts their clients needs first, even if it means giving up a larger commission. It is the reason why I do not practice Dual Agency and have not done so in the 26+ years I have been a Realtor!
If you are buying a home, whether it is your first or you have purchased before, or if you are seller, and have questions on Dual Agency, feel free to let me know. I am happy to answer any questions you may have! Just let me know how I can help!