Updated July 2011.
Anyone that is a regular reader of this blog knows that I feel strongly about single agent dual real estate agency, and you can find lots of material in our Agency Category regarding the perils of dual agency.
One of the biggest arguments that agents use to advocate the use of dual agency, is it will save my seller money. Some listing agents may have a listing clause that reduces the amount of commission due if the Agent represents both the homeowner and purchaser in a resulting transaction. Usually, this is a gimmick given to the Seller to appease a request for a reduction in commission. The vast majority of real estate transactions are not single agency – dual agency, therefore does not entitle the seller any commission discount.
In dual agency, the Listing Agent has duties to get the highest and best price for their Seller, but is now also trying to represent the purchaser to get them the best deal. Kind of like having an attorney represent both spouses in a complicated divorce.
I think that having an single agent represent the homeowner, and another represent the purchaser is in the best interests of all parties. However, sometimes a savvy Client comes along and does not wish representation. In those cases my suggestion is for them to use a Buyer Non Agency Agreement. This is a standard California Association of REALTORS® (CAR) form also known as BNA.
Since I don’t practice single agent dual ageny, this would be the only way that I would complete a transaction for my Seller if purchaser agent was not involved – and I would only consent to this at the insistence of the purchaser, and the agreement of the homeowner.
The form is pretty clear in paragraph 2 of who represents who:
2. NO REPRESENTATION OF BUYER BY LISTING BROKER: Buyer understands and agrees to the following:
Listing Broker does NOT represent Buyer and Listing Broker will NOT be Buyer’s agent during any negotiation or transaction that results between Buyer and Seller regarding the Property. All acts of Listing Broker, even those that assist Buyer in entering into a transaction or performing or completing any of Buyer’s contractual or legal obligations, are for the benefit of Seller exclusively. Any information that Buyer reveals to Listing Broker may be conveyed to Seller.
B. Listing Broker does NOT represent Buyer and Listing Broker will NOT be Buyer’s agent even though Listing Broker may provide Buyer forms describing agency relationships as required by law or otherwise.
The form goes on to say the following:
4. REPRESENTATION OF SELLER BY LISTING BROKER: Listing Broker will act as the agent of Seller exclusively during any negotiation or transaction regarding the Property.
If explained properly, many purchasers will decide they don’t want to go at it alone. They don’t really have the expertise to prepare the purchase agreement to protect their interests. Having a your own Agent that can advise them how to structure the purchase agreement is a wise investment.
Coming up soon, we will look at the Seller Non-Agency agreement used for the purchaser that has agent representation and the Seller that does not.