So you’ve found the perfect home and made contact with the listing agent. They’re courteous, professional and friendly – just like you expected. But now it’s time to prepare a formal offer for the home and you’re not sure where to start. The listing agent offers to help you prepare the offer and work with you as a client. The listing agent is now wearing two hats and acting as the seller’s agent and the buyer’s agent. This is what the industry calls a “dual-agency” relationship – but what does that really mean?
Working with a dual-agency broker who listed the home can have potential pitfalls for a real estate buyer. Here are some key considerations:
- Conflicts of Interest: Dual-agency brokers represent both the buyer and the seller in the same transaction. This can create conflicts of interest, as the broker may prioritize their commission over your best interests. They may be less inclined to negotiate aggressively on your behalf.
- Limited Advocacy: Dual agents may not provide the same level of advocacy and advice that a buyer’s agent exclusively representing your interests would. They are legally obligated to remain neutral, which can limit their ability to advise you effectively.
- Information Imbalance: The broker may have inside information about the seller’s motivations, price flexibility, and other critical details that they cannot share with you due to their fiduciary duty to both parties. This puts you at a disadvantage during negotiations.
- Reduced Confidentiality: Your confidential information, such as your budget and negotiation strategy, may be shared with the seller, which can weaken your position in the transaction.
- Complexity in Negotiations: Dual-agency transactions can be more complex and legally intricate. It’s essential to ensure that you fully understand the implications and have legal representation if needed.
To mitigate these potential pitfalls and protect your interests as a buyer, consider hiring a buyer’s agent who exclusively represents your interests. They can provide dedicated advocacy, access to a broader range of listings, and negotiate on your behalf without conflicts of interest. If you decide to work with a dual agent, make sure to clarify the terms of the dual agency agreement and seek legal counsel if necessary to protect your interests.
