Dual Agency: How it can hurt you in a real estate transaction.

Dual Agency: How it can hurt you in a real estate transaction.


hi I’m Bob Woolverton I’m with Pure Real
Estate in Bellevue Washington but here on YouTube I’m known as your Northwest
Realty Advisor today I want to talk about a very serious concern in real estate
that most people don’t understand and it can cost you a lot of money by not
understanding how this issue affects you and that issue is dual agency when we
come back in eight seconds I’ll explain what dual agency is and why it can cost
you tens of thousands of dollars dual agency is a simple concept but its
ramifications are a bit more complex dual agency is a situation where one
real estate agent represents both the buyer and the seller in a single
transaction dual agency is legal in 43 states and Washington state is one of
those states where dual agency is legal Washington state law requires that each
party in a real estate transaction gets a copy of a brochure called the law
of real estate agency Washington state law also requires the parties in the
transaction to initial the pamphlet indicating receipt of the pamphlet and
also requires both parties to sign acknowledgments that their agent is
acting as a dual agent and that acknowledgment happens elsewhere in a
real estate contract however this pamphlet on the law of real estate
agency that you get here in Washington state only defines what dual agency is
it does not explain the real-life ramifications to you as a party in the
transaction and in most cases the real estate agent merely has the client
initialed the brochure but does not explain the full impact of dual agency
now to give you some insight into the full impact of dual agency in July of
2018 in the state of New York there was a class-action lawsuit filed regarding
dual agency transactions the lawsuit identified the lack of representation by
the agent and more specifically the lack of disclosure in a dual agency
transaction the attorneys are arguing that the disclosure form does not and
was not intended to relieve brokers of the common law duty to obtain informed
consent through full disclosure of the implications the implications of the
proposed dual agency relationship rather the form is the beginning of full
disclosure and is not a substitution for the rigorous duties of full disclosure
in the common law that’s exactly what I’m hoping to accomplish here with this
video that is to help you understand the full implications of dual agency how it
can cost you tens of thousands of dollars and why I and most of my
colleagues prefer to avoid dual agency transactions primarily because we feel
it’s unethical in that same New York lawsuit the attorneys continue
their claim by asserting dual agents must explain to both the buyer and the
seller that the agent is acting for the other party as well and explain the
possible effects of dual representation including that their consent would mean
they are giving up their right to undivided loyalty now when we talk about
giving up your right to undivided loyalty the legal counsel for the
Arizona Association of Realtors stated this a dual agent must not advocate or
negotiate on behalf of either the buyer or the seller
well this statement by the Arizona Attorney resulted in a follow up
question for clarification and that question was may a dual agent
aggressively work to secure the best possible price for one party and the
answer was no a dual agent can do nothing to advance the interest of one
party over the other so what does this mean to you as a party in a dual agency
real estate transaction let’s say the dual agent has a listing where the
seller has their home listed for five hundred and fifty thousand dollars but
is willing to accept five hundred thousand dollars as their bottom line
well let’s say in the same circumstance the potential buyer is making an offer
at five hundred thousand dollars on the five hundred fifty thousand dollar
listing but wants the home so much they’re willing to pay the full listing
price if necessary in hopes of getting this home so the seller wants to sell
for five hundred fifty thousand and the buyer wants to buy for five hundred
thousand how can one agent facilitate reaching both of these conflicting goals
according to the legal counsel for the Arizona Association of Realtors they
can’t remember what they said a dual agent must not advocate or negotiate on
behalf of either of the buyer or the seller even the Washington state
pamphlet on the law of real estate agency says the dual agent must take no
action that is adverse or detrimental to either party’s interest in a transaction
so obviously if the dual agent were to negotiate a lower selling price that
would be detrimental to the seller whereas if the agent were to advocate
the buyer raising their offering price especially knowing the seller is
willing to accept a lower price that would be detrimental to the buyer one
agent cannot get the most money for the seller and save the buyer the most money
in the same transaction it’s impossible now why would a real estate agent enter
into a dual agency transaction because they are getting the Commission as both
the sellers agent and the buyer’s agent essentially doubling their payday so
what I’ve seen even as recently as a few months ago is a listing agent entering
into a dual agency transaction by enticing the potential buyer by saying
because the agent was getting both Commission’s they are willing to credit
$3,000 of their commission to the buyer but in our earlier example of the
$550,000 listing even if the agent advocated to the buyer to raise their
offer to 525,000 merely splitting the difference between the two which he
would be which would be an illegal act by the agent for advocating the buyer to
raise her offer and being completely honest with you splitting the difference
as a negotiation tactic infuriates me but that’s the topic for a whole ‘nother
video ultimately to the buyer in exchange for a $3,000 incentive that
home still cost the buyer $22,000 more than it may have otherwise and likewise
it needlessly cost the seller $25,000 in a reduced selling price remember what I
said earlier one agent cannot get the most money for the seller and save the
buyer the most money in the same transaction it’s impossible there are
very few instances where I believe dual agency is acceptable one might be where
a homeowner is selling their home to a relative they’ve already agreed to the
terms of the sale and they merely need someone to write the contract and
facilitate the closing process or something like that but more importantly
regardless of what the situation is if you are going into a dual agency
situation it is important that you understand the implications of reduced
representation that is implicit with dual agency like the New York attorneys
are asserting merely having someone initial their receipt of a pamphlet does
not fully disclose the impacts of dual agency on you and
your money I hope this video provides some insights so if you’re presented
with a dual agency situation you’ll know exactly what to expect and make an
informed decision if that’s the route you want to take so I hope you found
value in today’s video if you did click that subscribe button now and click that
reminder bell if you liked today’s video give it a thumbs-up because that’s
feedback to me that I’m giving you information of value. And last but not
least please share this link with someone you know who can benefit from
the information on this YouTube channel if you have any questions or addition or
want additional information you can find my email address and telephone number in
the video description below call me or email me I would love to hear from you
I’m Bob Woolverton I’m with Pure Real Estate in Bellevue Washington here on
YouTube I’m known as your Northwest Realty Advisor. Every week I post new
videos about buying, selling, or investing in real estate as well as some home
tours and listing videos. I’ll see you next week

2 thoughts on “Dual Agency: How it can hurt you in a real estate transaction.

  1. Great Video. Just Subscribed 🙂

  2. One thing you are missing is where the broker is benefiting from both sides of the sale. You can can have two separate agents and the broker is receiving the full commission. The bottom line however is that both agents are commissioned salespeople and will do what is in their best interests. Buyer beware.

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