Should a Buyer Use the Same Realtor as the Seller?

The process of buying or selling real estate involves many considerations. A significant aspect is understanding the role of real estate agents, who guide individuals through complex transactions and help navigate market conditions and contractual obligations. Understanding how agents represent different parties is important for anyone engaging in a real estate transaction.

Defining Real Estate Agency Relationships

In a typical real estate transaction, agents operate under specific agency relationships, each with distinct responsibilities. A seller’s agent, also known as a listing agent, represents the interests of the property owner who is selling their home. Their duties include advising on pricing, marketing the property, organizing showings, and negotiating offers to secure the best possible sale price and terms for the seller.

Conversely, a buyer’s agent is a licensed professional dedicated to representing the interests of the homebuyer. This agent helps clients find suitable properties, provides market insights, and negotiates on the buyer’s behalf to achieve favorable terms and prices. Both buyer’s and seller’s agents owe a fiduciary duty to their respective clients, a legal and ethical obligation to act solely in the client’s best interest. These duties include:
Loyalty, ensuring the agent prioritizes the client’s needs
Confidentiality, safeguarding sensitive information
Disclosure of all relevant information
Obedience to lawful instructions
Accounting for all funds
Exercising reasonable care and diligence

Dual Agency Explained

Dual agency arises when a single real estate agent represents both the buyer and the seller in the same transaction. This situation can also occur if the buyer’s agent and the seller’s agent work for the same real estate brokerage firm. For example, a buyer might directly approach the listing agent of a property they are interested in.

In dual agency scenarios, informed consent from both the buyer and the seller is required. This means both parties must provide written permission after being fully informed of the potential conflicts of interest that can arise. The legality of dual agency varies by state, with some states permitting it under specific conditions, while others prohibit it entirely due to inherent conflicts.

Variations of dual agency exist, such as “designated agency” or “appointed agency.” In designated agency, two different agents from the same brokerage represent the buyer and seller, respectively. Although different agents are involved, the brokerage itself is considered a dual agent. Another model is “transaction brokerage,” where the agent acts as a neutral facilitator, assisting both parties to complete the transaction. Transaction brokers focus on ensuring paperwork is in order and contractual obligations are met, rather than providing full fiduciary duties or advocating for either side.

Considering Dual Agency

When an agent represents both the buyer and the seller in a dual agency arrangement, the nature of the agency relationship significantly changes. The agent’s ability to provide undivided loyalty and advocacy to either party becomes inherently limited. Unlike traditional single agency where an agent fully advocates for their client’s individual interests, a dual agent must transition to a more neutral role. This means the agent cannot advise either party on strategies that might disadvantage the other, such as suggesting the lowest offer a buyer should make or the highest price a seller should demand.

They are unable to provide confidential advice or negotiate solely in one party’s best interest because they are obligated to treat both sides fairly and impartially. For instance, a dual agent cannot disclose to the buyer that the seller is willing to accept a lower price, nor can they inform the seller that the buyer is prepared to pay more than initially offered, without explicit permission from the respective party. This neutrality means that while the agent can streamline communication and paperwork, they cannot offer the same level of strategic guidance or negotiation support that a dedicated agent would. The primary goal for a dual agent often becomes closing the deal, as their compensation is tied to the sale, which can sometimes overshadow the individual financial objectives of the buyer or seller.

Exploring Other Representation Options

Alternatives to dual agency emphasize independent representation for both the buyer and the seller. In this model, a dedicated buyer’s agent works solely for the homebuyer, and a dedicated seller’s agent works exclusively for the seller. Each agent’s sole fiduciary duty is to their respective client, ensuring their best interests are prioritized throughout the transaction.

This independent representation model allows each party to receive full advocacy, negotiation support, and confidential advice without any conflict of interest. The buyer’s agent can aggressively negotiate for the lowest price and best terms for the buyer, while the seller’s agent works to secure the highest possible price and most favorable conditions for the seller. This clear division of loyalty ensures each party has a professional championing their individual goals, providing support and guidance.