Good Homes Good People

What is agency?  Agency with regards to real estate is how a real estate agent must act toward a customer or client.  For example, if you hire a real estate agent to represent you in the sale of your home, you are the agent’s client and they are obligated to certain actions and responsibilities based on your state’s law of agency.

Here’s where it gets sticky:  if the real estate agent represents BOTH the buyer and the seller, then they become a DUAL agent.  ”How in the world does that work?” you may ask…  It’s sort of like an attorney representing both the plaintiff and the defendant.  I’ve always felt that no one truly gets fair representation with dual agency and I personally have refused to ever engage in such a practice.  In some states, dual agency is illegal.  In states where it is legal, it must be disclosed.

Redfin wrote a post yesterday attempting to answer the question, “Will I Make More Money if My Listing Agent Also Represents the Buyer?”  They examined every real estate sale in 22 counties across 9 states over a one year period (over 230,000 transactions total).  Here is a synopsis of what they found:

• In about 25% of the transactions, the real estate agent was a dual agent.
• In every county measured, the list price discount was higher when dual agency was involved.
• On average, dual agency costs the seller $4789
• Traditional home sales are more likely to have a dual agent involved than foreclosure sales

Many sellers are under the assumption that if their listing agent also represents the buyer, they will get more money because the agent won’t charge as much.  In many cases, this is just false.  Also, based on this data, the savings you may receive from your agent would most likely be eaten by the loss in average sales price due to dual agency.  In addition, how can one agent TRULY negotiate on behalf of both a seller and a buyer?  They can’t!  Someone (or everyone) will probably get shafted.

Now, there are real estate agents out there who will adamantly argue that only THEY know the house well enough to sell it to a potential buyer.  They may be correct.  Let them sell it to a buyer.  Let them yell from the mountaintops about how wonderful the house is; but let them represent the buyer and the seller?  I just don’t think it’s a good idea.  And now, the statistics prove it’s not a good idea.

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