CNBC recently quoted me on this topic: (click here)
ALWAYS avoid dual agency – Hire a Small Firm
Dual agency happens when the brokerage firm you hired has also been hired by the other party to your transaction. Your broker somehow serves two masters – both the buyer and the seller. When this happens, Minnesota law says that it is illegal for your broker or agent to advocate for you. This happens to you when you are the least prepared – Right when you are ready to buy or sell your home. And when it happens you suffer a catastrophic degradation in service. You are on your own. This is not a good thing when you are buying or selling the most expensive asset you may ever own. But no need to worry, you probably signed a “disclosure” statement allowing your broker to do this to you…
Your dual agent broker has been converted from a fiduciary who represents your best interests into a predator who will get a double fee if they betray your interests. There is no good reason to hire a big real estate firm and subject yourself to this practice. It’s not a good deal for consumers. Undisclosed dual agency is considered to be fraud and is illegal for every other profession EXCEPT real estate.
It is Illegal for attorneys to do what Realtors do
I provide all the same services as a Realtor (plus legal representation) and yet it is illegal for me to be a dual agent because I am an attorney (I also hold a broker’s license). Yet, I am trained in how to manage complex conflicts of interests and I have no financial incentive to engage in dual agency. Contrast that to Realtors who don’t even need a high school education to get their license and have a huge financial incentive to steer you towards
Dual Agency is No Agency
The “Bait and Switch”
Perhaps the worst part about
Myth – there are different levels of dual agency
It doesn’t matter if there is one agent or two in your dual agency transaction. Legally the conflicts are exactly the same and so are the duties and (minimal) disclosures. Your contract is really with the broker, not the agent. If the broker represents both the buyer and seller in your transaction, then so do all the agents in your transaction. One type of dual agency is NOT worse than any other. Dual agency is a terrible choice.
Agents from large firms who claim to be good negotiators are not being completely honest
Agents from large firms who market themselves as being good negotiators are engaged in misleading advertising. What good is it if an agent is a good negotiator when it is illegal for them to provide those negotiating skills on any transactions involving their brokerage firm? Only small firms can provide exclusive representation and avoid dual agency.