The Dual Agency Debate

September 22, 2006 |

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One thing that I find most enjoyable about the blogoshpere is the good debate that takes place on a regular basis.  For the most part, it is all very civil and very interesting.  I came across a post from Greg Tracy at the Blueroof.com Blog that offers a view of dual agency that is very different from my own.  Greg’s main point is this:

When used properly, it[dual agency] is not only good for both buyers and sellers in a real estate transaction, but can actually be better for
both. Think about it- one of the greatest challenges to a real estate
transaction is communication. Honest and timely communication between
parties. Having one agent representing both sides can eliminate much of
that challenge.

I completely agree with Greg that effective communication can be one of the greatest obstacles to a smooth real estate transaction.  On the other hand, dual agency may streamline communication, but it also limits communication.  Namely, it limits the amount of communication that an agent can have with his clients.  He cannot tell the client everything that he would tell the client, were he not a dual agent.  The flow of communication my be streamlined at the expense of the quality of that communication.

I’ve said this before, and I will keep saying it:  THE ONLY REASON DUAL AGENCY EXISTS IS SO THAT AGENTS CAN TAKE HOME MORE MONEY.

Don’t get me wrong, I am not against anyone making more money, I just don’t think it should be done at the expense of the client’s representation.  In my opinion, any potential benefit of dual agency is far outweighed by the risk assumed by the agent.  Sure, the agent may not get sued today, maybe not tomorrow, but I’m not ready to risk my livelyhood so that I can make double the commission.  Problems may not arise during the transaction, but there are no guarantees after everything is over.  Read this comment left on the blog by Brianne regarding dual agency:

Thanks for bringing this up! When I had my home listed with one
realtor, they actually mentioned briefly that they offered dual agency
but them proceeded to completely skip over what that really meant.
Later we found out and were very upset and disappointed to feel like
our agent was playing both sides of the field. As a seller, how can you
expect to get good service knowing that your agent isn’t really looking
out for your best interests, but their own? I agree - this practice
isn’t on the up-and-up, and more buyers and sellers need to be aware of
it.

You can call it "hand-wringing" if you want, but I think dual agency is evil, and it needs to go. 

My hat is off to Greg.  His post is the first cogent, reasonable defense of dual agency that I have heard or seen in a long time.  I don’t agree with it, but it is definitely beneficial to be able to have the debate. 

Posted by Daniel | Filed Under Dual Agency, Industry Issues 

Comments

One Response to “The Dual Agency Debate”

  1. Jeff Brown on October 4th, 2006 10:33 pm

    In my experience dual agency has been profitable both to me and my clients, but I’m on the investment side of the industry. The majority of my transactions are tax deferred exchanges, which can be screwed up royally by a cooperating agent. I have many clients over the years who’ve become friends with other clients due to the times they’ve bought each other’s income properties.

    They prefer buying my listings if possible and everything else equal because they know their exchange isn’t going to be blown up by a non-performing agent or buyer/seller on the other side. A botched exchange can and does cost investors their tax deferred status. This results in some cases the payment of capital gains taxes in excess of $100K.

    My sellers are told up front and as clearly as I can put it that they would probably get a higher price if I marketed the property and put it on the MLS. They’d much rather have a smooth exchange, sleep at night, and deal with someone they’ve learned to trust.

    The residential agent has a whole different field on which to play. I can see where dual agency there would, or at least could become a real hornet’s nest.

    When all is said and done, the real issue is integrity. Either the deal is good on its own merits or it’s not.

    [Reply]

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