No, dual agency is not James Bond deciding to spy for the Russians too.  If you are thinking about buying or selling real estate you should know about dual agency.  First, what the heck is it?

Dual Agency is when a real estate agent represents both the buyer and the seller in the same real estate transaction.  Agents call it being on "both sides of the deal." 

It is important to know that it is absolutely legal.  The state of Washington, along with most states allow real estate agents to represent both parties at the same time.  But just because it is legal, does not mean that it is necessarily a good practice. 

First - Linda and I do not normally practice dual agency; it usually is a bad idea.  That does not mean we have never done it, we have, but only if necessary.   Why do we think it is a bad idea? 

Some examples of common situations and how dual agency impacts the seller, the buyer and the agent...

1. People tell their real estate agent personal things which they usually do not want other agents or buyers/sellers to know.  An example would be that you have listed your house for $550,000.  You have told your agent that you are going to reduce the price to $499K if you don't get an offer in the next few days.  Imagine now your listing agent is sitting with a buyer preparing an offer on your house.  The buyer asks the agent - what do you think they will take?  By LAW the agent cannot tell the buyer what they know, that the seller is getting ready to lower the price.  Why can't the agent tell that to the buyer?  Because it is not something any other real estate agent knows, only the listing agent knows that, and he/she would be violating a personal trust to their seller client   At the same time, the agent cannot really help guide the buyer by suggesting an offering price, so he/she is not doing the best job they can for their buyer client.  The agent is caught in the middle, and neither party is well served.
2. Different scenario - a purchase and sale agreement is prepared, and the sellers accept the offer.  The offer is subject to a variety of inspections and conditions.  The home inspector finds a number of serious problems with the house, and the agent and buyer sit down to review the inspection report.  The agent, if they were totally independent of the seller, may recommend to the buyer that they cancel the transaction and find another home, because the problems look too severe and the house may be a constant problem. However it is not in the seller's best interest for the transaction to fall apart, and the agent represents the seller too.  Once again the agent is in a compromising position, with divided loyalties and conflicting obligations.

These are two very common examples of how it is difficult for the agent to properly represent the buyer and seller at the same time.  You deserve an agent who's loyalties are the same as yours, and it is very, very difficult for the agent to do that when representing both parties in a transaction

So what should you do if you are a buyer and you want to purchase one of your agent's listings?   A top notch agent will tell you "I'm sorry, but I don't feel I can fairly represent both you and the seller, so I am going to have another of our agents work with you in this transaction."  If they don't offer this, then you should tell them you are uncomfortable having them represent both you and the seller, so would they please arrange for another agent to represent you.  If the agent objects to doing this - go get another agent yourself. 

And what if you are a seller?  Your best bet is to have a discussion with your agent before you sign the listing and tell them you do not want them to represent anyone except you.  If you are thinking "But aren't I hiring them to find me a buyer?" and this seems wrong to you, then we need to talk some more about the role of the listing agent. 

And that would be a good topic for a later blog entry.  This one is long enough!