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.