Home buyers not using a buyer’s agent are subject to “dual agency” – something to avoid at all costs. This occurs when one agent represents both the seller and the buyer of the same home. The buyer wants to spend the least amount of money on a home; the seller wants to capture the highest price possible, neither benefits. The agent however, collects both ends of the commission. Yet and still, some buyers insist on not utilizing a buyer’s agent to represent them and some sellers allow buyers to work with their listing agent. Dual agency is especially common with new construction – either due to a lack of understanding or the misguided notion that the buyer will “save money” or get a “rebate”. There are a number of important reasons to have a buyer’s agent when buying new home, representation is just one of them. The bottom line is that with dual agency there is one clear and consistent winner; the agent.
New home sales agents represent ONLY the builder. There is a CONTRACT regarding commissions; unrepresented buyers do not change the commission and do not get “rebates”.
The most likely place a prospective buyer will encounter dual agency is at an open house, whether for a previously owned home or new construction. The agent on site represents the seller, not the buyer walking in. With new construction, builders use their own representatives and their own documents when buyers come calling. Buyers need to be educated and should not count on having the 3 percent commission credited to them because it won’t happen. There is no savings, the developer pay a set commission to the listing broker regardless of buyer representation. Use a buyers agent, there is almost always no cost to the buyer!
Georgia law allows both parties to agree to have one agent or broker represent them in a real estate transaction at the same time. In other words, the agent or broker has a client relationship with all parties to the transaction without acting in a designated agency capacity. In these situations, neither party is exclusively represented by a designated real estate agent. This type of brokerage relationship is called “dual agency”. Georgia law allows real estate brokers to act as dual agents if they first get the written consent of both parties. The written consent must contain the following:
How can one agent effectively represent a buy and seller? The buyer wants to pay as little as possible, the seller wants them to pay as much as possible. How can an agent be an advocate for both sides if issues pop up with the inspection, appraisal, survey…? Only the agent wins with dual agency.
- a description of the types of transactions in which the licensee will serve as a dual agent;
- a statement that as a dual agent, the licensee represents two clients whose interests could be different or even adverse;
- a statement that the dual agent will disclose all adverse material facts regarding the transaction known to the dual agent to all parties to the transaction except for information that is made confidential by request of another client and that is not allowed or required by law to be disclosed;
- a statement that the licensee will disclose to each client in the transaction the nature of any material relationship the licensee or his or her broker have with other clients in the transaction other than incidental to the transaction;
- a statement that the client does not have to consent to the dual agency; and
- a statement that the client’s consent has been given voluntarily and that the client has read and understood the brokerage engagement agreement; This special consent is required because of the potential for conflicts of interest in dual agency transactions.
Dual agency has been outlawed in four states, ten others have it under consideration. The idea of having one agent control both sides of the transaction is foolhardy by both parties as the conflict of interest simply cannot be cured. Not having individual, client level representation by an experienced real estate agent will cost both the seller and buyer money. Don’t do it.