Dual Agency

By Jim Palmer Jr.

In 2010 the Real Estate Law of Agency in Washington State changed dramatically. The new changes were evolutionary and made the law conform more closely to actual practices. For example, sub-agency was abolished making it less confusing for sellers and buyers. Under the old law, buyer brokers were expected to be sub-agents of the seller, when in reality they acted like buyers brokers. The new law changed that awkward arrangement, and more closely mirrored public perception. Under the new law, listing brokers represent sellers and ALL other agents represent buyers. The new law also allowed for Dual Agency (when the same agent represents seller AND  buyer in the same transaction), even though that inherent conflict of interest makes some consumers uncomfortable.

Many brokers are reluctant to practice dual agency because they think the liability is too great. Other brokers are very comfortable in that role and don’t shy away from that situation unless the transaction is not simple or when they may have a difficult time being fair to both parties, such as when they have a long standing friendship or familial relationship with the seller.

The typical scenario is when a list agent advertises a property and a buyer contacts the list agent for a showing, then wishes to make an offer. The buyer may be unfettered by a Buyer Brokerage Agreement with another agent and have no qualms about dual agency. That means the listing broker represents the seller (with whom they have a previous written agency agreement), AND also represent the buyer.  Sound like a conflict of interest? That’s because it is!  Modern listing agreements account for that eventuality and give permission for the list agent to also represent a buyer. The buyer must also consent to that arrangement in writing, that way both parties understand and agree to the inevitable conflict.

The obvious disadvantage is that the buyer and seller take the risk that the dual agent will not or cannot fairly treat each party. The distinct advantage of dual agency is that the transaction will likely go smoother and be less cumbered by communication issues because the listing/buyer agent is the direct link between both parties and with equal professional courtesy and expertise can overcome obstacles more efficiently, without bias. In many cases a broker representing only one party becomes over-zealous, negatively influencing negotiations, because they feel they have to justify their existence. A dual agent representing both sides tends to be more of a peace maker instead of adversarial.