Dual Agency ~ Twice the Compensation, Three times the Work, Four times the Responsibility & Five times the Liability
Representing both the buyer and seller in a real estate transaction, while outlawed in many states, its perfectly legal in California. Some licensees are adamantly opposed to the practice as is Greg Swann of Arizona. Many licensees such as Kris Berg, of California, when used prudently, feel dual-agency has its place. Licensees who eagerly use dual-agency whenever possible, facetiously claim "I get along well with the other agent." Real estate attorney Ron Rossi, refers to licensees who go out of the way to seek out dual-agency opportunities, as "lawsuits waiting to happen."
Two times the Compensation?
Somehow, consumers have actually been advised to ask for dual-agency. Sellers might ask their representative to reduce their fee if they "represent the buyer and the seller." Flawed thinking. I always respond with the comic verse in the title of this post, and that a skilled dual-agent should increase the brokerage fee. Buyers appealing to the greed of a seller's agent, and/or to "get the house," ask, "if I don't have an agent, will you represent me to buy this house."
Three times the Work
Consumers think dual-agency means less work for the licensee. Wrong. Done correctly, there is a third party to the transaction. The imaginary real estate attorney that will easily rip a licensee to shreds, if one "t" is not crossed, and/or one "i" not dotted. Dual-agency means more face-to-face meeting with every aspect of the transaction. More confirming emails regarding each action based on which options and ramifications were discussed.
Four times the Responsibility
When both the buyer and the seller want the best price, terms and conditions, in dual-agency transactions, either can feel that he or she is being short-changed, slighted, or that the licensee is favoring the other side. However, even if the licensee is doing a fine job, it is hard to unwind those feelings, especially after a purchase contract has ratified. Insurance companies know these ramifications of this all too well. The Broker/Owner's annual application for "Errors and Omissions" insurance asks the question on the first page: What is your company's policy on Dual-Agency?
Five times the Liability
Even if a dual-agency transaction is completed and successful in appearance. The licensee should treat each closed dual-agency file as if it is a stick of dynamite. That also applies when another licensee working for the same agency handled the "other side" of the transaction. Real estate attorneys l-o-v-e dual-agency cases. Whether they're representing a regretful seller or a remorseful buyer, attorneys claim the licensee always loses the litigation "beauty contest," with the first question: "Mr. licensee, how much did you make on this transaction?"
Pat Kapowich, "Negotiating Smooth Transactions Throughout The South Bay" SiliconValleyBroker.com