The Confusion of Dual Agency

By
Real Estate Agent with Alain Pinel Realtors, Pleasanton, CA BRE#01732313

Two Stick People Shaking HandsDual agency is allowed in California real estate transactions.  The term is used quite broadly, but can have varying definitions. It can be really confusing, so let me break it down a bit. 

Dual Agency- Company. One real estate company can represent a seller, and the buyer in a single transaction.  This is quite common with large national brokerages as well as multi-office regional brokerages.  Those individual offices could have different managing brokers. There would be two different real estate agents in this scenario.

Dual Agency-Broker.  The same broker can be the broker of record for a number of franchises or offices.  So my brokerage, Alain Pinel Realtors may have the same broker in Danville for example, as the Livermore office.  The broker/manager may be different though in those two offices, as would be the two real estate agents. The agents may or may not know each other.

Dual Agency-Broker/Manager.  The same broker is the broker/manager of two different agents from the same office.  For example, agent Jane Smith represents the seller, and agent John Doe represents the buyer.  Both report to Broker Bob.  It is more likely that these two agents know each other. However, many agents work remotely or from home offices, so may never have met someone in their own office.

Dual Agency-Agents.  In this case the listing agent and the selling agent (buyer’s agent) are one and the same.  This is allowed in California, but is not permitted in some other states.

All of these instances are considered Dual Agency.  But the option with a single real estate agent, is the one that is most sensitive.  There are arguments for and against one agent representing both sides in a transaction.  And it is this level of agency that creates the most controversy.  Some consider that at the very least, a conflict of interest exists – one cannot serve two masters.  Others will say that one agent will handle both sides and make sure the deal stays together, making it to the closing table.  This is sometimes referred to as double-ending.

During the fast market of multiple offers, buyers and sellers frequently found themselves in dual agency situations.  When inventories were low, and properties were moving quickly, buyers were happy to get their offer written, presented and accepted.  They perceived that working with the seller’s agent might work in their favor.  However, now that our market dynamic has shifted, some of those same buyers and sellers look back and wonder if their best interests were served.

So when you begin a real estate transaction, make sure you fully understand agency relationships. Before you write an offer or list a home, your agent should be providing you with this disclosure.

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Comments 9 New Comment

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Rainmaker
153,775
Carla Dimond
(Silicon Valley)
CATARRA

Karen, nice post & I agree the legal definition of dual agency is not very clear 

February 23, 2011 02:00 AM
Rainmaker
262,505
Julie Baldino
Opening Doors to New Chapters...
Front Door Realty

Easy to read, and very clear explanation of agency law. Same laws apply in OR and WA where I work. Good post!

February 23, 2011 02:01 AM
Rainmaker
1,345,560
Andrew Mooers
Northern Maine Real Estate-Aroostook County Broker
MOOERS REALTY

If brokers, agents have trouble with dual agency, how do you think the average Joe and Jane feel after reading a run down of the options, what it all means to buy in to the concept? Glad I live where 95% of our sales are both sides, one broker, rural simple and easy. Our buyers are pretty savvy too when you come from a state not known for being flush with cash, gaudy or spendy. Small $30,000 home sale only has a pie so large to be broken up so many times. Simple economics.

February 23, 2011 05:10 AM
Ambassador
1,438,617
Liz and Bill Spear
RE/MAX Elite Warren County OH (Cincinnati/Dayton)
RE/MAX Elite 513.265.3004 www.LizTour.com

Karen, A nice breakdown of the conditions.  We have dual agency here also, but first time I've seen it listed beyond the office broker.  Our disclosures here don't specifically call it out at the company level, nor broker level of multiple offices.  Ours stops at the immediate office with two agents in the same office working for the broker.  Dual agency doesn't happen for us very often, and isn't our preferred transaction type.  In general we prefer having two separate agents so no one has doubts later about what happened.

February 23, 2011 06:14 AM
Rainmaker
895,352
Brian Madigan
LL.B., Broker
RE/MAX West Realty Inc., Brokerage (Toronto)

This is a difficult and challenging topic. It's a clear conflict of interest. I am not that bothered with the broker or brokerage. I think that matter can be resolved, but the single agent presents an issue.

February 23, 2011 09:33 AM
Rainmaker
92,567
Dianne Deming
RE/MAX Realty Group

Karen, very good explanation.  One other case of dual agency is two agents within the same team.  The team I work for is divided into listing and buyers' agents, which helps us cut down on conflict of interest issues.  We are still, however, considered dual agents by law and definition.

February 23, 2011 04:15 PM
Ambassador
671,101
Karen Crowson
Livermore Wine Country Homes
Alain Pinel Realtors, Pleasanton, CA

Andrew, I do think it's especially it's confusing for the consumer.  There is a lot to pay attention to when buying a home - this is just one piece that will be important to a buyer.

Lia and Bill, Brian.  I'm with you - I prefer that the agent handiling the sale and purchase are two different people. The same brokerage is less problematic. 

Dianne, I'm not part of a team, but so haven't encountered that per say, but there have been instances where another agent from my brokerage is in the same transaction.  As you say, technically dual agency.

February 23, 2011 04:37 PM
Rainmaker
966,366
Gary L. Waters, Broker Owner Waters Realty of Brevard, LLC
Personal Service, always.
Waters Realty of Brevard, LLC

No dual agency in Florida. I have never been one either. Not sure if I could either, Good explanation.

February 25, 2011 11:26 AM
Ambassador
1,859,287
Judi K Barrett
Broker/Owner, Integrity Real Estate Services -IDAB
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma

Most of the sales here are as a transaction broker.  No fiduciary responsibility. Taking care of both sides of the paperwork etc.  We do not have agency law at all.  The closest thing we have is when a licensee works as a single party broker. 

February 25, 2011 07:53 PM
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Karen Crowson

Livermore Wine Country Homes
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