When you hire a Realtor whether Buying or Selling, that agent is working for you under what is called a designated agency.
What is a designated agency?
In a designated agency, the brokerage and its clients agree that one or more licensees engaged by the brokerage will be designated to act as sole agents on behalf of each client. In this agency model, it is the designated agents who have the primary duties of undivided loyalty, obedience, and confidentiality to their client.
When working with a designated agency occasionally in unique circumstances some questions may arise such as:
What happens if you contact the listing agent who is selling a home you are interested in and ask the agent to represent you in making an offer on that home?
What if the Realtor has two Buyers that want the same house?
Can the same agent represent both sides?
The answer: Yes they can, with written permission from both parties, an agent can represent both sides of the transaction. This is what is referred to as limited dual agency.
In a limited dual agency, the designated agent represents both the buyer and seller in the same transaction or two buyers competing for the same property. In this arrangement, the REALTOR® cannot be concerned exclusively with your interests in the transaction, since they are acting on behalf of the other party as well. When a REALTOR® has given consent to work as a limited dual agent, he/she must adhere to the following restrictions:
- The REALTOR® is required to handle both parties with impartiality
- The REALTOR® must disclose to the buyer any defects about the physical condition of the property that are known
- Have a duty of disclosure to both clients, except that:
The REALTOR® must not disclose price, terms or motivation or personal information to the other client.
This can complicate things and requires a delicate balance on behalf of the representing agent. In the past when faced with this kind of situation, I always disclose upfront to the seller, before committing to the buyer, and am confident that all parties agree on the scenario before moving forward. Often when I approach these situations the seller is on board initially, however usually after a conversation regarding what is in their best interest, that changes.
After much consideration on the issue, I have decided that going forward I will no longer offer dual agency to my clients. It is my opinion that this creates more loyalty to the initial client, by not representing more than one interest at a time. I prefer to make sure my clients get the best outcome in their particular circumstances, on each and every deal. I will not be surprised if in the future dual agency agreements are no longer an option.
If you have any questions or would like more information on these types of agreements, feel free to get in touch any time!