Most real estate transactions involve two agents, one representing the buyer and one representing the seller. Situations arise, however, where only one agent represents both sides of the transaction. This is legal in the state of Ohio and is referred to as dual agency. You should be aware of some restrictions dual agency can put on an agent and how it might affect you.
What is Dual Agency?
“Agency” is a legal term that refers to the relationship you have with a real estate agent and broker when you’re a buyer or seller. An agent representing you as a buyer or seller has your best interest in mind and coaches you on the best tactics to take to get a house at the lowest price or sell the house at the highest possible price. If one agent represents both the buyer and the seller, there is the obvious conflict of interest on negotiating price or any other terms of a purchase agreement for both parties. A dual agent still needs to protect confidential information for both sides as well as disclose any pertinent information about the property in terms of defect.
Because of the inherent conflict, by law, both parties must sign a disclosure document that says they agree to the dual agency and understand what it means. When two parties agree to dual agency under one agent, the agent becomes more of a facilitator than a coach. He cannot tell you whether to say yes or no to a price nor offer an opinion on whether you’re getting a good deal or not. He must treat both parties equally, fairly, and honestly.
People who trust their agent’s fairness and don’t need a lot of hand-holding in a real estate transaction may find no problem with using a dual agent. On the flip side, people who depend heavily on the advice and expertise from an agent might be better off using their own agent for representation. It’s a personal decision and neither party should ever feel coerced into accepting dual agency under one agent if it’s not right for them. Some people think using a dual agent is too risky because they want their interests prioritized. Others see it as a convenience for everyone that lessens the chance for miscommunications between two agents.
How is Commission Handled with a Dual Agent?
Since one agent represents both the buyer and seller, a dual agent’s broker is entitled to the full commission that the seller agreed to pay in the listing contract. In other words, the dual agent would receive both the buyer and seller sides of the commission from her broker. Sometimes parties agree to use one agent because the agent will lower the commission. For example, instead of a 6% commission, the agent agrees to 5% since that is still more than the 3% commission half if another agent were involved. Buyers and sellers can’t rely on this reduction, however. Not all agents or their brokers will agree to these terms.
The more you understand dual agency, the better you’ll know if it’s right for you should the situation arise in your real estate transaction.