Why dual agency should never happen

This article was originally published on July 6, 2021 as part of my regular column on Inman News under, “Why the ongoing DOJ vs. NAR battle matters” Links may send you to articles behind Inman’s paywall. 
For the budding copyright attorney, relax. My agreement with Inman allows me to republish.

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Anyone remember back in the early days of blogging — this was before Facebook was even a gleam in Zuckerberg’s eye — when someone would pen a hot-topic post and a (usually) civil debate would ensue?

I miss those days.

Seems today everyone gets bent out of shape, slings some bad juju around and civil discourse devolves into junior-high arguments and name-calling.

We need more spirited, civil debates. So what say we spool one up?

Over the years, one thing that has always resulted in a good debate is dual agency. You know, the practice of the same agent/brokerage representing both the buyer and seller in the same real estate transaction.

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Let me be clear. Dual agency is perfectly legal in many states. But, just because something is legal doesn’t make it right or what is best for all parties involved.

I didn’t like dual agency when I was an agent, liked it even less as a brokerage owner, and to this day, I am not a fan.

In particular, my beef is with single-agent dual agency — where one person represents both a buyer and a seller for the same piece of real estate. Dual agency also applies if any two agents within a real estate brokerage represent both the buyer and seller.

With “mega brokerages” having hundreds (sometimes thousands) of agents, intra-brokerage dual agency is sometimes impossible to avoid.

What’s wrong with single-agent dual agency?

Ask any seller of real estate what his or her primary goal is. I’ll bet you a commission check they say, “Getting as much money as possible for my property.” Ask any real estate buyer what their primary goal is, and I’ll throw in a first-born child if they don’t say, “To buy a home at the lowest price possible.”

How then can the same agent facilitate reaching both of these conflicting goals?

I don’t care how much experience you have, I don’t care how fair you are, I don’t care if you can walk on water. One agent cannot get the seller the most money and save the buyer the most money in the same transaction. Period.

Single-agent dual agency is a stunningly obvious conflict of interest.

Back in my real estate selling, brokerage owning days, this was said by my state association’s general counsel: “A dual agent must not advocate or negotiate on behalf of either the buyer or the seller.”

And this surfaced in an Arizona Association Q&A:

Q: May a dual agent aggressively work to secure the best possible price for one party?

A: No. A dual agent can do nothing to advance the interests of one party over the other.

You can’t advocate for your clients, you can’t negotiate — you can do nothing to advance the interests of your client.

And this is OK? This serves the consumer — how? Seems to me the only thing it really serves is the agent’s checking account.

The argument for dual agency

Follow any dual agency debate, and you will see references along the lines of, “as long as it’s disclosed, there is nothing wrong with dual agency.”

Yep, that’s the lawyers take — properly disclose dual agency and go forth and double-end transactions to your heart’s content.

Because I’m licensed in Arizona, I’ll use that state as a reference point. As with anything real estate, local and state law varies. Arizona is pretty typical of a state where dual agency is legal, so let’s take a look at its disclosure form.

We need look no further than the title of the form itself: Consent to limited representation.

In case you missed it, let me point out a key word there: limited representation.

Yessir. If you want the same agent working for both the buyer and the seller in the same transaction, you have to consent to, let’s all say it together, limited representation.

The form itself, the very form that many cite as what makes dual agency OK, is telling you that the agent’s duties will be limited.

Someone out there right now is rolling their eyes, saying out loud, “I’m a kick-ass agent. I can fairly represent both parties in the same transaction.”

Of course you can be fair. But can you really get the best for both clients? I never sold real estate with the goal of “being fair” to my clients. I took my fiduciary responsibility seriously. I wanted the absolute best deal for my clients. Not just what’s “fair.”

You can’t get what’s best for both buyer and seller at the same time. There will be conflicts in your duties, it says so right in the precious disclosure form.

So why would an agent practice dual agency?

Beats the hell out of me.

Could it be for the windfall payday it can produce?

I won’t say this is why all the agents who practice dual agency do it, but it’s certainly important for the homebuyer and seller to be aware of.

It’s called “double-siding” or “double-ending” or “double-dipping” the transaction.

I have witnessed brokers and agents whooping and hollering and high-fiving when they close a double-sided deal. Are they carrying on because both of their clients were fully served and represented? No, they are acting like they scored a game-winning touchdown because they just got a big fat paycheck.

It makes me want to puke.

Someone tell me how the clients benefit from dual agency?

Please. Just one example of how a buyer and seller both have a more fruitful, beneficial experience. Tell me not how you benefit, but how the clients benefit from dual agency.

Someone is going to say, “One agent can pull together a deal better and faster than two agents.” Faster, eh maybe. But I want details as to how it’s “better.”

Someone is going to say, “There are lots of lousy agents out there. If I represent both parties, I don’t have to worry about a bad agent blowing the deal.”

What a load of nonsense. Yes, there are lousy agents out there. Like most agents, I can’t tell you how many times I’ve done almost all the legwork on both sides to get a transaction to the closing table. I did both jobs to hold the deal together. That’s what any good agent does.

No decent agent is going to let incompetence on the other side blow the transaction. That doesn’t mean both parties have to be represented by the same agent.

“But sometimes dual agency can’t be avoided!”

Why not? If you have a listing, and a potential buyer calls who isn’t represented, you say, “I represent the sellers and their interests. You should have your own representation — focused exclusively on your interests.”

Then, give them some instruction on how to find an agent, or give them some names to chose from of agents you respect who you know will represent them well. How hard is that? No one has to conduct dual agency. Sure, you’ll make less money. Maybe significantly so. But you’ll be doing what is best for your client.

Seriously, I would love to hear one compelling argument for how the clients benefit from a dual agency relationship. Please, leave a comment if you’ve got one. I’ve been searching for one for over 14 years now.

I get how an agent and brokerage benefit from dual agency — super-sized commission checks are nice.

What I want to know is how consumers win with limited representation and having an agent who can’t advocate on their behalf.

The comment thread is now open.

Jay Thompson is a real estate veteran and retiree in Seattle, as well as the mastermind behind Now Pondering. Follow him on Facebook or Instagram. He holds an active Arizona broker’s license with eXp Realty.