The Advantages and Disadvantages of using a dual agent to aid in purchasing a California home (Part 1/1)

So you’ve decided that you want to purchase a new piece of real estate in California. You contact the real estate brokerage office in your area and discuss the matter with an agent. Once you’ve laid out your interests in a home, the agent takes a whole day displaying numerous properties, a portion being sold at discounted prices with additional brokerage offices, and a fraction marked down by your agent’s brokerage office. In the scenario that you choose to purchase a house recorded with your agent, there’s a chance the broker’s company or your agent could wind up performing as a “dual agent,” playing on both your side and the seller’s in the transaction process.

An additional course that can lead to the presence of a dual agency is if you attend the viewing of a house prior to hiring an agent to depict you as a purchaser, then vocalize your desire for the property, and are informed by the seller’s agent that providing you with a proposal won’t be any issue--and may even be cheaper.

Prior to agreeing to any of these dual agency arrangements, you need to make sure you comprehend the legalities and its potential to alter your chance to receive the top offer possible when purchasing a house.

In most cases, the final desire of the seller to make the most money off of the property, in contrast with a buyer who wants to pay the least possible. So in what way can a dual agent efficiently play for the conflicting interests of both sides of the transaction. During some circumstances, using a dual agent is the most logical choice, but in others, you may feel that it would be best to have your own personal agent.

Dual Agent defined.

In legal terms, when a real estate agent represents both parties in a real estate transaction, it is  known as dual agency. In the state of California, a broker is only allowed to perform as a dual agent if both sides of and agree.

California Agents

In this state, when you operate in conjunction with a broker, your connection needs to be documented on paper. A large portion of brokers will provide with a file naming your real estate agency association prior to you completing a proposal on a property. This disclosure document names the agents and broker included in the deal. It further details the jobs of the agent of the seller, the agent of the purchaser, and the dual agent.

Discussed on the form, each agent has to give each user a unique fiduciary duty to follow through in what’s best for that individual. This involves a term to enact practicable handling and tactic in operating for the client, a term of acting with high moral standards, and a term to inform of everything that the agent knows could alter the worth or want of the home, and of which the customer does not know of, or would remain oblivious to after detailed analysis.

Understandably, an agent trying to perform for both sides comes with the danger of going against the fiduciary duty of carrying out jobs solely because they’re what's best for an individual client, due to them measuring out both parties desires.

Dual Agent Advantages.

We’ve listed some of the benefits of utilizing a dual agent who works for both sides, with them being:

• Swift, smooth transaction process. An agent operating in the middle of both parts of the transaction, often means that files and other records are able to be formed and verified at a more rapid pace. This means that communication in the form of proposals can be dealt with aerodynamically since normally the selling process of homes in California involves the purchaser discussing matters with their agent. Then their agent would deliver this file to the agent of the seller, who will follow with discussing matters with the homeowner. When you remove this middle exchange, the process flows at a faster rate.
• Additional knowledge about property. An agent dealing personally with the homeowner receives more information concerning the real estate being sold, and can, therefore, pass this knowledge to the purchaser. In a lot of cases, this will lift the demand for the agent of the buyer to recurrently message the agent of the seller in order for queries to be answered, once again speeding up the process.
• Reduced commission agreement. A dual agent will probably be more willing to collect less payment as they are receiving profit from both ends of the deal.
• Higher bargaining ability for consumers. Dual agents are able to specifically design a proposal for the buyer that will persuade the owner. This allows for even more significant benefits when buyers are competing as your proposal will likely be the most appealing.
• Simpler contact. In cases where dual agency is used through two separate agents underneath the same brokerage firm, these agents are able to effectively bargain, compromise, contact one another, and use their association for maximum advantage on both sides of the sale.

Dual Agent Disadvantages.

It’s important to note all the dangerous aspects of hiring a dual agent as well:

• Confidential knowledge will not be shared. These agents are not allowed to spread the other side’s private information. A sneaky tactic that appears smart to some buyers is that they’ll be able to discover facts concerning the cheapest bid an owner will sell for or how they could be persuaded to take a cheaper price. As part of the law in California though, dual agents can’t reveal to the buyer how small of a proposal the seller would actually take if the seller does not permit them to. On the bright side for you though, this agent is also not allowed to reveal to the seller that you’d actually be open to spending a higher amount than your proposal unless of course, you’ve agreed.
• Obtaining commission from both sides may give the agent too much incentive to finalize the sale regardless of how things go. This may lead to moral or legal conflicts as the agent may feel too persuaded to avoid revealing a vital fact under the risk of messing up the deal and not receiving the huge commission, twice the size as normal.
• The agent vows to be loyal to both clients and handle matters in a way that ensures what’s best for the client. The property owner’s agent is meant to retrieve the top priced offer for the owner. The agent for the customer is meant to score the smallest and best bet price for the customer. So when an agent has a responsibility to both sides with conflicting desires, it can prove to be very challenging to improve the odds for both. What one side wants goes directly against what the other side wants, and this could lead to a detrimental situation where the agent decides to work toward the end goal for one side instead of the other.
• The agent for the customer is supposed to guide the customer towards the most practical price, but an agent also collaborating with the owner to set the listed value will feel more inclined to justify the price on the property.
• The current homeowner could have possibly collaborated with the agent on prior occasions and formed a strengthened connection of faith and allegiance. Being the purchaser under these circumstances would mean that it would a smarter decision to hire a different agent to only depict you and your concerns.
• A buyer who meets a seller’s agent at a house viewing will be faced with an agent whose end purpose is to promote and sell the real estate, not looking for housing that best suits the buyer. Working in conjunction with one of these agents could severely restrict your chance to work with a truly devoted agent that can aid you through the procedure and look for the best properties.
• Limited legal pathways if complications come up. In the situation that you’d like to sue, if you hired a dual agent, you’re limited to only a single broker’s office to file against. This means you’ll only receive financial assistance from one broker’s insurance company.

You might feel a bit overwhelmed as utilizing a dual agency is a big step to be decided in a little amount of time-- but don’t allow this to affect your choice. There are still ways to obtain a buyer’s agent to intervene in the sales process and guide you through it in the span of a few hours.

Your final selection needs to also be made according to details of your specific transaction. For instance, in a thriving real estate scene where it turns out that homeowner is also being represented by your broker’s office (but collaborating with another agent), and you’re wondering how to beat the competition, and under the precedent that you’ve studied to the point of understanding the property's value, working in conjunction with a dual agency could be the most practical. But if you’re a new inexperienced buyer who isn’t well acquainted with the market and you come into contact with an enthusiastic committed agent during a house’s visiting period who's ready to construct a proposal, then it may be advised to stick with the single agent.  

Sync Brokerage
Syncbrokerage.com

Woodland Hills Real Estate Agency
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Call at (818) 770-3660
Address: 22020 Clarendon St suite 200, Woodland Hills, CA 91367