On any given day, there exist a finite number of homes that are for sale. The overwhelming majority of them ( easily over 90%) are in the local MLS. This creates a great liklihood that dual agency may occur.
When a brokerage takes a “listing”, that brokerage has a financial incentive to “sell” that home to a buyer which the brokerage also “represents”. The dangers of dual agency are often discussed in terms of harm to a buyer. However, inherent in the term “dual” is the word two. So, the limited representation affects the seller as well.
So, in a dual agency situation, assume the buyer presents an offer that is contingent on the sale of a home. How does the agency fully inform the seller about the potential pitfalls of such a situation? Can the “dual agent” actually let the seller know about the pitfalls ?
Likely, the answer is no. Why ? For to do so is arguably against the interest of the buyer, who clearly wants to purchase that house.
Thus, the seller is compromised relative to obtaining professional advice in a dual agency situation as well.
CASE IN POINT
In the now famous 2016 Horiike Dual Agency case in California, the danger of dual agency to the danger and negative outcome to the buyer was buyer is obvious. In Malibu, a buyer relied upon “inaction” from a dual agent who kinda failed to let the buyer know that the livable square footage of the home was actually about 8700 sf, as opposed to the advertised 15,000 sf.
EXAMPLE COMPROMISE SITUATIONS OF SELLER
However, many a seller can have his or her situation compromised by dual agency situations as well. What happens if 2 or more buyers are presenting competing bids on a seller’s home? Whose independent advise does a seller rely upon at that point ?
What if the buyer has told the “dual agent” he/she is willing to pay up to 10% more for the home ? The dual agent cannot explain that to the seller. That would compromise the position of the buyer.
So, unless one wants to end up in court like the one pictured above, be careful about the real estate agent you chose.