Dual Agency

In my previous blog I indicated that I would touch upon the topic of dual agency in a future blog, and therefore, I will discuss this very important relationship today. 

A real estate agent must disclose in writing the duties, which arise from certain agency relationships, the broker's status as agent of the seller, agent of the buyer, or agent of both the seller and the buyer. This disclosure must be made as soon as practical.* An agent can represent a seller, a buyer, or both.

If the broker represents both the seller and the buyer, the agency relationship is called "dual agency".  The responsibilities of agency as they apply to licensed brokers and licensed sales people are: 

• The agent must inform the principal of all facts pertaining to the handling of the principal's property.
• An agent must put client's interest above interest of self or others (fiduciary relationship).
• The agent may not gain any monetary interest in the property without the principal's prior consent.
• An agent may not use the principal's property to his or her own advantage.
• An agent must exercise honesty, reasonable skill and care, fair dealing and good faith in dealing with a third party.

BROKER REPRESENTS SELLER
SELLER  ï FIDUCIARY            ïBROKERð HONEST & TRUTHFUL  ðBROKER 
(Principal)             RELATIONSHIP                 (Agent)                           RELATIONSHIP                     (Third Party)

BROKER REPRESENTS BUYER
SELLER  ï        HONEST & TRUTHFUL     ïBROKERð FIDUCIARY  ð BUYER 
(Third Party)         RELATIONSHIP                                (Agent)                           RELATIONSHIP       (Principal)

BROKER REPRESENTS BOTH PARTIES (BUYER & SELLER)
SELLER  ï FIDUCIARY            ïBROKERð  FIDUCIARY       ð BUYER
(Principal)             RELATIONSHIP                 (Agent)                            RELATIONSHIP             (Principal)

First time home buyers should educate themselves about the home buying process before they embark on what will no doubt be the biggest investment of their lives.  It is common for individuals to walk into an open house, fall in love with the house and begin what unbeknownst to them could be a dual agency relationship with the agent hosting the open house.  I personally think it is better that a buyer, especially a first-time home buyer, hire a real estate agent that will be working exclusively for the home buyer.

*Note: This type of law differs from state to state.  In California it applies to all sales of residential property that contains one to four units.

Have a happy day!