Q: What is Dual Agency and Where Is It Practiced?
A: Self interest and the profit motive play a big part in the ongoing effort by multi-office real estate brokerage companies to continue the practice of dual agency. When a buyer buys directly through the Listing Brokerage, that relationship is called dual agency…one agent representing both sides in the same transaction. Agency is tested on a company level, not on an individual person level. The company is the agent, not the salesperson.
How Can One Company Represent Both Buyer and Seller?
When a property is listed for sale, the agent (company) agrees to use their skill, knowledge and expertise to market the property and negotiate the highest price, the best terms, the fastest sale with the fewest problems for the seller. The agent’s legal and ethical duty is to represent the seller’s best interests only. However, in California the apparently dubious practice of dual agency exists, even though it is a contradiction in terms. How can an agent be an advocate for both sides with conflicting agendas?
Is Dual Agency Legal?
Dual agency is legal in California only when it is properly disclosed. Proper disclosure means that both the buyer and seller must know about and agree to permit the agent (company) to represent both parties concurrently in the transaction. Without full prior knowledge and consent, dual agency is illegal in every state and the penalties are severe.
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Raymond Stoklosa, Broker/Co-Owner
Chela Stoklosa, Realtor/Co-Owner
Raymond,
Great article on Dual Agency. As you know, this has been a hot-button in the industry for quite some time, and many have called the legality of the practice into question since numerous states prohibit Dual Agency.
I can’t imagine that Dual Agency (by the terms of your definition above) will ever be outlawed in California. This would mean that a large, established brokerage wouldn’t be able to represent a buyer for its own listing. This alone would put most brokerages out of business.
However, the practice of the same salesperson representing both sides of the transaction is a something you may see disappear in time. The perceived conflict of interest is very palpable in this situation.
Great work on your site!
Chuck
Chuck,
Interestingly Colorado and Florida, for example, has given real estate practitioneers the ability to opt-out of agency by acting as facilitators and not agents. New York is one of the states that declared dual agency illegal.
Dual agency as it is practiced in California clearly benefits the multi-office brokerage firms who will fight tooth and nail to maintain the status quo because it is so very profitable.
Thanks for checking in with your opinion.