Dual Agency – Should I Work With The Listing Agent?

(updated 3/1/2020)

Many buyers think they can buy a house without a Realtor because they think it is better to work directly with the listing agent (seller’s representative) when buying a home.

What is Dual Agency?

When a broker represents both seller and buyer in a home purchase it is called Dual Agency. You might assume this means a single person representing both sides, but in California dual agency is when the same brokerage represents both parties.

Most people are comfortable with two different people within the same brokerage (for example, Coldwell Banker is a brokerage), but when only one person is involved it is less clear. For purposes of this article, we assume the same person is representing both the buyer and the seller.

There are many reasons people prefer buying a house without a real estate agent.

When you buy a home without a real estate agent you are automatically working with the listing agent because in California, a buyer can not buy a home without representation. “No agent” means “dual agent”.

Here are the top reasons people use the listing agent when buying a home:

Direct communication with the seller. Some buyers distrust the idea of intermediaries. They believe that working directly with the listing agent will give them an immediate “in” with the seller. They also feel that the seller will trust them more and perhaps be more flexible if they work directly with the seller’s chosen agent.

The agent will negotiate a lower price. The buyer believes the agent will convince the seller to sell the home for a lower price in order to make a larger commission.

The agent will rebate a part of their commission. The buyer believes the agent will do a “volume discount” if they represent both sides. They assume there is little extra work in dual representation.

The agent will give them a competitive edge. Multiple offer situations are very stressful. The buyer believes the seller’s agent will give them exclusive “inside information” that will help them beat out the competition.

Much of the above is true.

There are a LOT of starving real estate agents. Is it too crazy to imagine some of them might cut a few corners in order to make a buck?

But- are you completely sure this will always be in your favor?

How Dual Agency Is A Mistake

You will not get a “better deal” with a commission rebate. Home prices are sky-high, so a rebate from a dual agent is very tempting and seems like a smart move. But the amount of a rebate is very small compared to the savings of a competent negotiator. In fact, a great negotiator can save you tens of thousands with dozens of tiny negotiations that happen after the contract is signed.

You reveal your hand to the dual agent. You are going reveal sensitive information to the listing agent – that you are pregnant, obsessed with this style of home or your mother lives down the street. A dedicated buyer’s agent keeps that to themselves!

You assume the contract is the only negotiation. Written offers and counteroffers are a small fraction of all the negotiations that happen during a home sale. There are numerous conversations outside of your hearing during a home sale process. Each of those conversations can have a huge effect on your outcome and ta dual agent is only interested in completing the sale, not in your best interests.

The “pocket listing” is rarely in your benefit! The vast majority of agents only list one or two homes a year, so most are lying when they say they’ve got a pocket listing coming up.  But top agents (like us!!) are always getting a few homes ready to go on the market. But how does that help you? Today’s home sellers know the power of the open market. They will only sell “off-market” if you are willing to pay an over market price.

This “deal” is more important than you. A dual agent loses a lot of money if you don’t buy this home, so they don’t care about what is best for you.  in fact, they have a big incentive to withhold information, shade the facts, or out and out lie to make sure you buy this home and no other. A dedicated buyer’s agent, on the other hand, is willing to take time to find the right home in the right neighborhood.

You might actually get LESS information from the listing agent. A dual agent is legally prevented from telling you everything they might know. So – all that information you need to find negotiation leverage? You are not going to get it.

Who has the stronger relationship? A listing agent has probably know their seller for a lot longer than they have known you. Chances are high that the seller has already referred friends and family to that listing agent. Is it crazy to think the agent has an unconscious bias toward the seller’s best interests and not yours?

Find out what a great buyer’s agent can do for you or just contact us directly – 818-482-1885 direct or text 818-946-0106. We always promise straight talk, no sales talk.

About Kendyl Young

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