Dual Agency Question

I’m curious how dual agency works in regard to real estate sales.

I was in the process of purchasing a vacation rental property and my buying agent happened to also be the selling agent for the property. Since it’s a bank foreclosure, and the bank has rules against using dual agency, my normal agent had to find someone else to be my buying agent in this particular deal. So this is a hypothetic question for me.

If my agent had acted as both the buying and selling agent how could she have negotiated on my behalf against the seller’s interest? How could she give me untainted advice on what to offer since she likely knew what the seller would and wouldn’t be willing to accept?

I realize the seller is the one who decides what offer to accept, but sellers are heavily influenced by their agent’s recommendations.

Does this really work in practice? Has anyone ever used dual agency and had a positive or negative experience as a result?

Is it necessary where you live for the buyer to have an agent? When I bought my house, there was only one agent involved- and she worked for the seller. I didn’t pay her nor did I expect her to represent my interests- that’s what my lawyer was for.

I think it’s more of a good faith situation where you know you are going to buy the property at the price stated so why bother getting another agent involved.

I don’t know if it’s considered ‘necessary’ to have two agents, but where we live (Montana, USA) and where we used to live (California, USA) we have never needed a lawyer in any of our transactions. However, we always had two agents involved, one of them represented us either as the buyer or seller.

There are lots of rules around writing valid offers and I don’t know the ins and outs of the paperwork, let alone want to negotiate against a professional negotiator.

The seller pays the sales commission, typically 6% but that is negotiable, and it is then split between the selling agent and their broker, and the buying agent and their broker.

I don’t think dual agency is very common anywhere, and putting a single agent in the position of having to represent both interests at the same time seems likely to lead to interesting negotiations.

How this is done in practice is what interests me since it would seem to be fraught with danger from both sides of the deal.

Surely the problem is that the agency could set a very low price and sell the property to, say, a member of their own staff. This would cheat the owner out of a true market value.

It has happened over here in the UK where it is not unusual for the buyer and the seller to use the same legal advisor. It is not recommended though because of the risk of conflict. The ‘agency’ would only be concerned with selling the property, but many of them have a legal arm to steer buyers and seller towards.

There is nothing to say that either side **has **to employ a lawyer.

In effect you did: her commission came out of the amount you paid for the house, and the need to pay this affected the price the seller was willing to agree on.

Seems a bit strange to have things arranged so that a higher sales price for the buyer yields a larger commission for his agent.

Presumably it takes more effort to sell a $10M house than a $100K house, but is it 100 times harder?

In general the more expensive the house the bigger the commission for the agents involved, but most sellers of expensive houses negotiate a much lower commission rate, which decreases how much the agents make on the purchase.