I know for a fact, as every licensee completes their real estate course, they know “dual agency” is bad. An agent no-no. A, most definitely see your Broker kind of thing. But yet, when an agent actually comes across it in the field, all is lost. More often than not, these agents immediately think they are getting paid on both sides of the equation. And, why not?
Dual agency is NOT a bad situation. It simply needs to be managed. Do it right, and the agent comes off like a hero. Do it wrong, and they end up looking like a “con” man. There are very sound reasons why Brokers and franchisors are down on dual agency. Agents need to know these reason so they can turn it around and make it a positive for themselves.
First off, everyone needs to acknowledge the Real estate industry is a petri dish for financial scammers and criminals. It takes virtually nothing to get a license which allows, the less than honest, to operate within a largely unregulated industry. Ninety nine point something percent, of the agent community is legal and aboveboard. But, it’s the point something percent of that community that keeps Brokers up at night. The concept of one agent representing both sides of a negotiation is sketchy at best. In the wrong hands, dual agency is nothing but a huge legal liability for the Broker.
Instead of facing the issue of dual agency, it was easier for brokerages to simply ban it. Not allow it. Not even talk about it. Besides old school brokerages never wanted to promote a solution that required fewer agents. But, that was then. Today, we face dual agency all the time.
Unlike generations past, buyers are doing their own searches and research. In an ever increasing number of cases, buyers are finding their own homes. They think, they don’t “need” an agent. Well, they do.
Dual agency does not mean the Listing agent collects commissions on both sides of the transaction. Dual agency does not mean the Seller doesn’t have to pay a commission on the buyer’s side.
Dual agency does mean the Listing agent must take control of the situation. And, the first order of business is to ensure everyone is protected. This will require bringing in another agent. A “Transaction agent”.
Great news for home sellers. Buyers finding their home without an agent will realize significant savings. Instead of paying a whopping 3% of the home’s sale price to a buyer’s agent, they will pay several hundred dollars for a Transaction agent.
The buyer has found their new home. They have already fallen in love with it. They are measuring for new furniture. The idea of a Transaction agent is to NOT interfere or get in the way. Their job is to make sure the Buyer isn’t getting ripped off. (See the “point something percent” above) Think of Transaction agents as “sanity checks”.
Transaction agents review contracts to ensure they fall within a normal range. They will ensure contracts are written with standard protections and language. They help keep the contract focused and moving forward.
Instead of taking a “what’s in it for me approach”, Listing agents need to promote Transaction agents as a way sellers can save thousands while insulating themselves from any legal liability.
How much do Transaction agents cost? Depends on the property. Being a Transaction agent on a condo is much less than being one on several acres of raw land. Transaction agents are professionals and should be paid as such for their time. For them, a transaction in a well-established condo may only take a couple of hours. For land it could be weeks. As a matter of fact, let’s don’t go there. No one should be buying raw land without an experienced agent.
At Wynd Realty, an agent’s Brand Director can help manage any dual agency situations they come across. The Brand Director can handle it themselves or farm it out to specialty agent. Either way their job is to make sure the Listing agent looks good in front of their client.
Brokerages used to run away from dual agency. As a result, many home sellers unnecessarily overpaid their buyer’s commission. Sadly, home sellers paid the extra commission only because the franchise wanted to maintain their status quo.
Today we view dual agency as an opportunity to lead. When it falls in your lap, and it will, embrace it and manage it.