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Dual agency: what is it and should you be okay with it when buying a home?

On Behalf of | May 23, 2016 | Uncategorized |

If you have purchased a home before, or are considering doing so, you have probably given some thought to using a real estate agent vs. working with an attorney. We’ve previously written a bit about this issue on our blog, noting that the help of an experienced real estate attorney can be indispensable in residential real estate transactions. This is true whether or not a real estate agent is involved.

One issue that prospective home buyers may not give much thought to before they encounter a situation where it comes up is dual agency. In the world of real estate, dual agency refers to situations where a buyer is represented by the same brokerage firm that listed a property. In other words, dual agency is when a brokerage is working for both the buyer and the seller. The practice is fairly common, though it isn’t a universally accepted one.

Those who disfavor dual agency say it creates a conflict of interest and puts buyers and sellers at risk. Many states, including California, recognize that real estate brokerage firms have a fiduciary duty toward clients, though other states do not impose a fiduciary relationship between brokerages and their clients.

Among the rules that go with dual agency here in California is that no preference must be given to either the buyer or the seller. Brokerages providing dual agency must also keep certain types of information confidential so as to not disadvantage the buyer or the seller. In practice, that can sometimes be difficult to do, and it is easy for abuses to occur.

In our next post, we’ll look at a court case involving the issue of dual agency and some of the issues that can arise with its use.

Source: The Mercury News, “’Double agent?’ A rift over how real estate is bought and sold reaches the California Supreme Court,” Marilyn Kalfus, May 2, 2016.