Realty agents’ roles explained
Published 9:00 pm Saturday, August 26, 2006
Question: What is dual agency? We have signed a contract to list our home for sale. Now the real estate company wants us to sign a dual agency agreement. What should we do? – N.J., Snohomish
Answer: Real estate agency law has evolved a great deal over the past two decades. In the old days, when I started out in real estate, agents always worked for the sellers. We had a responsibility to get the best price possible for the sellers of the homes we were showing. But this caused a lot of confusion among homebuyers who logically assumed that the friendly real estate agent who drove them all over town every weekend was actually working for their best interests.
In fact, the real estate agents often felt the same way because they spent most of their time with the buyers, but they were legally obligated to represent the seller’s interests when writing up a purchase offer.
That changed in 1987, when the state passed a law that required real estate agents to disclose in writing who they were representing in a transaction. Purchase and sale agreements now contain language that specifies exactly who each agent is representing.
The selling agent (who works with the buyer) has four choices: The selling agent can represent the buyer, the seller, both parties or neither party (acting as an impartial facilitator). The listing agent typically represents the seller, but the listing agent can also represent both parties (buyer and seller).
When the agency law first changed and homebuyers were given written notice that the agents with whom they were working were, in fact, representing the seller, many were not too happy.
That caused some real estate agents to start working as buyer’s agents, representing the buyer rather than the seller. Once they disclosed that they were representing the buyer, these agents were free to try to get the best deal possible for their clients without violating a responsibility to the seller.
They would try to get the lowest price possible and negotiate the best possible purchase terms for the buyer. Over the years, more and more real estate agents began to work as buyer’s agents until it became the most common form of agency.
Today, real estate agents typically represent the buyer, unless they are the listing agent for the home. As I mentioned above, in some cases the listing agent acts as a dual agent representing both the seller and buyer when the agent produces a bona fide buyer for a home that he or she has listed for sale.
However, this must be disclosed in writing, and both the buyer and seller must agree to accept the dual agency role of the agent. I assume that is the kind of agreement you are being asked to sign, so that the agent listing your home can also represent buyers who may wish to make a purchase offer.
This is not really a problem as long as everybody understands and agrees that the agent is representing both parties. For example, don’t tell a dual agent that you are willing to accept a significantly lower offer than the asking price on your home if you don’t want that information to be passed on to the buyers.
If you don’t want to accept dual agency, state law allows real estate agents the option of representing nobody in the transaction. They can simply act as facilitator without a fiduciary responsibility to either the buyer or the seller in the transaction.
In that situation, you cannot depend on your agent to give you any advice because he or she is no longer representing your interests. In other words, you are on your own.
The bottom line is, as long as everyone agrees, the agent can represent whomever he or she chooses. Just be sure you understand the different ramifications of each type of agency.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435 or e-mail him at economy@heraldnet.com.
