Is a Seller's Agent or Dual Agent Better for Direct Buyers?

Save 2% When You Buy a Home: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
Save All 6% When You Sell: https://www.hauseit.com/agent-assisted-fsbo/Show more

Listing agents often mistakenly think that the only way they can work with a direct buyer is by acting as a dual agent. Some might even think that the only way for them to earn both sides of the listing commission is to convince the buyer and the seller to agree to dual agency.
In fact, nothing could be further from the truth as we’ll explain in the following article. Commission has nothing to do with the type of agency relationship the listing agent has with a direct buyer, and everything to do with whether there is an outside, “buyer’s agent” or not.

Furthermore, we’ll explain in this article that it’s dramatically easier and more sensible for the listing agent to remain as the seller’s agent, and to not complicate matters by trying to enforce dual agency on walk-in buyers.

Difference between seller's agent vs dual agent
The agent listing a property for sale, often known as the listing agent, can also be called the seller’s agent because he or she represents the interests of the seller.

However, a listing agent can also be called a dual agent if he or she simultaneously represents the interests of both the buyer and the seller.

For this to occur, a dual agency relationship must be disclosed to and agreed by all parties involved, meaning both the seller and the buyer. The listing agent must present a New York agency disclosure form to all parties with the proper dual agency box clearly checked.

Neither the seller nor the buyer needs to agree to dual agency for a direct deal to proceed. The listing agent can represent only the seller.

Seller’s Agent
A seller’s agent is hired by the seller to find a buyer for the seller’s home at a price and on terms acceptable to the seller. A seller’s agent represents the interests of the seller, and is able to provide reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account.

Dual Agent

A real estate broker may act as a dual agent and represent the interests of both the seller and buyer if both give their informed consent in writing. A dual agent will not be able to provide the full range of fiduciary duties to either party.

Why do listing agents try to be a dual agent?
Listing agents often try to get direct buyers to agree to dual agency because they mistakenly perceive that is the only way for them to be the only agent on the deal, and thus collect both sides of the commission.

They are afraid that if they don’t try to also be the buyer’s agent, the buyer will come back with an outside buyer’s agent which means they’d have to split the commission.

As a result, both new and experienced listing agents often rush to try to be a dual agent when doing so is completely unnecessary.

As we’ll discuss in detail in the following section, not only is dual agency complicated to explain and potentially scary sounding to a potential buyer, it also distracts the conversation away from the property itself.
Why push for dual agency when it’s not necessary in the first place? In fact, stepping into a dual agency relationship is often not necessary for a sale with a direct buyer, and doing so is often equivalent to the listing agent shooting him or herself in the foot.

Complications from a dual agency relationship
A dual agency relationship, if agreed upon by all parties, makes communication extremely difficult between the dual agent and either the buyer or the seller. The buyer and the seller won’t be able to speak in confidence and discuss thoughts, fears or tactics with his or her agent, because the agent also represents the other side.

Worse still is the possibility that the buyer or seller won’t remember or realize that that the agent is now a dual agent, and will casually let slip information that could be detrimental if revealed to the other party.

What if the seller reveals damaging information about the property during lunch with the dual agent? What should the agent do?

Let’s say the dual agent is having lunch one day with the seller and the seller casually lets slip that the house has a serious bedbug infestation that the buyer never found out about. Then the seller instructs the dual agent to keep it a secret, and that the buyer should never know about it until after the closing.
What should the agent do? If he or she reveals this information to the buyer, then he or she is breaching the fiduciary duty of confidentiality and loyalty to the seller.

Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
_
#hauseit #hauseitnyc