- Real Estate Agent Representing Both Buyer And Seller Commission
- What Is The Difference Between Dual And Designated Real Estate Agency?
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- Reviewing Dual Agency In Illinois
Real Estate Agent Representing Both Buyer And Seller Commission – Eric J. Written by Eric J. Martin Written by Martin Arrow Right Contributor, Personal Finance Eric J. Martin is a Chicago-area-based freelance writer/editor whose articles have appeared in AARP The Magazine, Reader’s Digest, The Costco Connection, and The Motley Fool. The Fool and other publications. He frequently writes on topics related to real estate, business, technology, health care, insurance and entertainment. Eric J Martin
Edited by Michelle Petrie Edited by Michelle Petrie, Arrow Right Senior Editor, Home Lending Michelle Petrie is a senior editor leading the site’s real estate content. Connect with Michelle Petrie on LinkedIn Contact Michelle Petrie via email Email Michelle Petrie
Real Estate Agent Representing Both Buyer And Seller Commission
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What Is The Difference Between Dual And Designated Real Estate Agency?
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In most real estate transactions, the buyer and seller are each represented by their own separate agents – a buyer’s agent and a seller’s agent. Each agent protects the interests of his individual client. However, it is also possible for both buyer and seller to work with the same real estate agent. This arrangement is called dual agency.
Having only one agent or broker involved in the transaction can simplify the process. But it also presents the risk that the agent may favor one party over the other. In fact, in many states, dual agency is actually illegal. Still, that doesn’t mean it’s never worth considering. Here’s what you need to know about working with a dual agent, whether you’re a buyer or a seller.
Typically, when a buyer searches for and buys a home, they do so with the help of a buyer’s agent – an agent who works specifically for them, helping them find and buy the right property. Meanwhile, the home seller works with his or her own dedicated agent, whose job is specifically to market and sell his or her home. Each agent in the transaction acts on behalf of his or her respective party under a principle known as fiduciary duty, which means that each must act in the best interests of his or her client. But in a dual agency situation, the same real estate agent represents both the buyer and the seller of the home (hence the term “dual agent”).
Dale Sorensen Real Estate Agent James Edmunds, Representing Both Buyer And Seller, Lists And Sells Luxury Estate In Just 10 Days
Dual agency typically occurs when the home buyer and seller use the same brokerage. This can also occur when a buyer contacts the listing agent directly, such as through a for-sale sign or online listing, without being represented by their buyer’s agent.
Here’s an example: Let’s say you’re looking to buy a home but you’re not working with a buyer’s agent yet. You attend an open house, love it, and interact with the agent hosting it, who is representing the seller. You contact that agent and decide to work directly with them to submit a deposit, make an offer, and buy the home. If that agent agrees, they are now a dual agent, representing both parties in the transaction.
“In my area, our rule of thumb is that whoever shows you the property will represent you in the transaction,” says Deb Tomaro of Deb Tomaro Real Estate, Bloomington, Indiana. “If the same agent or brokerage also represents the seller, it is dual agency.”
Whether you are a buyer or a seller, it is important to understand how you are being represented in the transaction. Both parties should agree to a dual agency arrangement, says real estate investor and FortuneBuilders founder Than Merrill. “In order for an agent to represent both parties in a real estate transaction, they must receive informed consent from the buyer and the seller,” he says. “If the buyer or seller is not comfortable with the idea of using a dual agent, they reserve the right to back out of the deal.”
Reviewing Dual Agency In Illinois
As with all real estate agents, the dual agent’s commission is based on how much the home sells for. The higher the selling price, the more money they will make. “So they are incentivized to increase the sales price,” says Merrill. “This does not mean that all dual agents do not have their clients’ best interests in mind, but rather that the incentive is inherently “Work in favor of sellers.”
It also raises potential ethical questions. “Dual agency is not unethical in itself, but there are actions and strategies that may be covert,” says Farid Yaghoubatil, an attorney at Downtown LA Law Group in Los Angeles. He notes that “Both buyers and sellers may be under the impression that the agent is biased toward or favoring the other party, which can result in suspicion, distrust, and anger.”
However, overall, buyers and sellers can generally count on getting fair representation in dual agency transactions, but not perfect, says Tomaro. “For example, if I’m the agent in a dual agency arrangement, I can’t suggest to the buyer how much to offer, because that’s not a fair representation of the seller,” she says. “If a buyer tells me they want to see a list of all the 2,000-square-foot homes that sold last year in the same neighborhood, I can run that report. But I can’t help him explain it or point out the differences. “I can only provide facts.”
For these and other reasons, some US states actually prohibit the practice of dual agency. “The fact that it is illegal in many states should be enough to give some parties pause and further consideration,” says Yaghoubtil. Real estate dual agency is illegal in these eight states:
Dual Agency: Everything Sellers And Buyers Need To Know
“Since both the seller and the buyer are working with the same agent, documents can be prepared and signed more quickly,” says Raj Dosanjh, founder of rental agent-matching platform Rentround. “There will be one person who knows everything about the property. This can eliminate excessive questions in the mind of the buyer or seller.
Another plus? seller has more leverage
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