I know I am going to get a lot of flack on this, but I am NOT a fan of Dual Agency unless it’s totally unavoidable.

Although the listing agent can legally represent both the seller and the buyer in New Jersey, (called disclosed dual agency), the listing (SELLERS) agent acting also as a buyers agent has split fiduciary duties to BOTH the seller and buyer.  As a disclosed dual agent, they cannot always “legally” advise/counsel you (not “give” legal advise) as well as if you had your own buyer agent working for you. These limitations are listed in the “dual agency agreement”, some form of which you SHOULD be signing before entering into this type of transaction

Let me also clarify something. Although an individual “agent” lists a home, they technically work for and represent their “broker of record/agency”. That means that if Mrs. Smith of XYZ Realty lists a home, whether you call Mrs. Smith, or even if you use Mr. Jones of XYZ Realty to help you write a contract and buy the home, XYZ Realty “owns” the listing and the agent AND company represent the seller and buyer equally.

It doesn’t serve you as a buyer any real purpose to contact a listing agent/agency to buy their listing. You don’’t save money since the seller pays commission anyway. The person who profits most is the listing agent, because he/she gets both sides of the commission (sell side and buy side).

Most of Northern and Central New Jersey areas use attorneys to further negotiate and modify the contractual conditions, once the seller and buyer agree to price (called the attorney review period).

Imagine if, during the attorney review process, both the seller and buyer were using the same attorney…you’d say conflict of interest, right? In my opinion, its the same thing as using the same real estate agent representing the seller and buyer.

With a “regular” sale, there are several steps along the way that a sole buyer agent can help you with, which a dual agent cannot. First would be preparing a Comparative Market Analysis (CMA) of recently sold similar properties to help you determine your offer price. As I said, in a dual agency situation, the agent (acting on behalf of both parties), has limited abilities to advise either party.

My company Dual Agency Addendum states:

  • We cannot disclose any price the seller may take other than the listing price without the written permission of the seller,
  • We cannot disclose any price that the buyer may be willing to pay other than the offer price without the written permission of the buyer.
  • We cannot recommend or suggest an offer price to the buyer OR a counter-offer price to the seller.
  • We can provide information on comparable sales so that both parties can assess the property’s market value.
  • We will explain real estate terms and principles.

Especially if you are a first time buyer, with no IDEA of how the process works, imagine sitting down with the CMA, trying to make head or tails of it and not being able to ask “so what should our offer be”. Or, as a seller, getting an offer, and not being able to ask “should I counter-offer and if so, what should I counter at?”

The agent can only present the CMA and let both parties make a decision on their own.

Then there is the home inspection which the buyer pays for out of pocket. Imagine if there are several issues in the inspection report, and you as a buyer need some guidance as to what may be important and what is negligible, or not what the purpose of a home inspection really is for. The dual agent can only “explain about real estate terms and principles”, but cannot counsel you on what, if anything, you should ask to be repaired. Split fiduciary duties. I often wonder what you would need an agent for in the first place if a good portion of the beginning of our “job”, like preparing a sound offer strategy and negotiating the contract, and counseling on the inspection issues, are taken away from us.

Short sales are another matter. The sale price is set by the bank, so there really is no price negotiating. You get the CMA, make an offer based on the CMA, but the bank is the ultimate decision maker of the sales price (regardless of the fact that the owner signed the contract). The offer is sent to the bank…the bank will look at the offer, and say, “yes we will take the offer”, reject the offer outright, OR they will counter-offer with the price they will take to make the short sale work. These sale are most often “as is” sales, so usually no inspection issues are corrected/repaired, so the “dual agent” really doesn’t have the need or opportunity to advise you on price or counsel you after an inspection. PLUS, since the sellers agent is usually the only one who has permission to contact the bank on the sellers behalf, to get updates on the progress of the sale, so you have one agent in the loop, informing both parties as to the progress.

See this link to read about the Short Sale Process:  http://www.prudentialnewjersey.com/mary.petti/Blog/Short_Sales_a_not_so_brief_description_of_the_process

With rentals too, for the most part dual agency isn’t such a problem. More often than not, the listed rental price is what the renters are willing to pay, and even if the renter decides to offer a hundred or so less, the negotiation is less intense.

Bottom line is, if you are buying a typical resale, get yourself an agent from a company OTHER than the listing company, and proceed that way. It serves your best interests and helps each side be represented individually and to the best of each agent’s abilities.

 

 

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