Beware of the greedy dual agent

In a real estate transaction, there are normally two real estate agents. One agent represents the buyer and one agent represents the seller. In rare cases, the same agent facilitates the transaction for both the buyer and the seller. This is know as “dual agency”. Not all states allow dual agency, but it is allowed in Washington state. When dual agency exists, the potential for conflicts of interest between the agent and their clients are substantial, particularly when negotiating price. The agent must be impartial and questions like “how much should I offer?” or “what do you think the house is worth?” must be left unanswered by the agent.

greedyI came across a stunning example of a dual agency agreement today from a long-time agent in Seattle. Here is what it said:

“I understand that the property listed at 12345 Any Road NE is listed by Agent A. I have elected to utilize her services on the purchase of this property and not obtain a separate buyer’s agent. I understand she represents the sellers in this transaction.”

If you called Agent A to see the home that she listed, she will happily show you the home, but then try to get you to write an offer and sign this agreement. She tries to get you to use her services and not use a separate agent, and then she represents only the sellers in the transaction. The contract fails to mention the important part, which is she will be paid DOUBLE the commission if you don’t get your own agent. (She gets to keep the commission for both agents.) She gets paid double for making sure that the home sells for the highest possible price for the seller, while potentially knowing damaging information about the buyer’s situation. This is motivated by pure greed. Do not sign such an agreement if you value the advice you will receive from your real estate agent, since any advice she gives is “representing the seller.”

In most cases, dual agency is a bad idea. Any agent who agrees to a dual agency arrangement should be forthcoming about their compensation and must remain impartial, otherwise the buyer is subjected to a severely one-sided negotiation.

  • Jim

    Beware the agent that will work for half price. They are usually new and inexperienced. Whats that old adage…you get what you pay for. Maybe it would be a good idea for you to find a half price doctor to do your lifesaving surgery too!!! How bout a half price dentist??? So why not trust the biggest investment of your life to a half priced newbie.

    Or Not

  • Jim,
    If you are referring to findwell, we are not new or inexperienced. I am happy to send you comments from our customers to show you just how happy our customers are, despite our lower prices.
    Checking on the Northwest MLS, it appears that our agents have sold 3x as many homes as you have this year. In fact, one of our agents closed as many transactions last month as you have closed all year. Closed transactions are the true measure of experience in this industry.

  • Jim,

    If you are referring to findwell, we are not new or inexperienced. I am happy to send you comments from our customers to show you just how happy our customers are, despite our lower prices.

    Checking on the Northwest MLS, it appears that our agents have sold 3x as many homes as you have this year. In fact, one of our agents closed as many transactions last month as you have closed all year. Closed transactions are the true measure of experience in this industry.

  • Jeffalverez

    Thanks, for the post. I am in South Georgia, Thomasville, GA. we are also a dual agency state and I can say we have a lot of realtors that like to play and take advantage of the dual agency loop hole and not in a good way…….

  • Rattus Turpis

    Stay away from Dual Agency in Washington State. I was thoroughly scammed by a ReMax agent and her buddy who bought property from me. When I thought about suing I was told her “Errors and Omissions” insurance would cover her and I would have to cover my own expenses. What a wonderful duo and “protected” by the Dual Agency laws they lobby to pass.