Dual agency is the devil’s breath

Dear Glen,

My husband and I have been approved for a home loan and are ready to take the plunge and buy our first house! One thing though, we’re not sure what to do about how to deal with all these realtors.

My husband just calls the number on the sign or on the website, but I think we should call my cousin who sells real estate on the side.

Does it really matter?

Please help,

Anxious in Altoona

Dear Anxious,

You raise a couple of great questions and frankly ones that should be asked waaaay more often.

Most people do what your dear hubby is doing. They call the number on the sign or contact the agent on the website figuring it’s the easiest way to get what you want. For some people this works out just fine. For others, not so much.

To get you where you need to go, how about a short lesson in agency. (Sorry—I wouldn’t do this to you if there were any other way).

In the world of real estate, there are only a handful of agent options: Buyer agents, Seller agents and Dual agents.

Buyer agents work only for the buyer with the goal of finding them the best house for the least amount of money and the fewest headaches.

Seller agents work only for the seller with the goal of getting the most amount of money in the least amount of time from the first buyer they can.

Dual agents work for buyer and seller with the goal of…um…closing the deal. I guess you could actually say dual agents work for neither buyer or seller. They can’t—it’s illegal. Here’s a quote from our friends at Realtor.com that helps explain it:

“A dual agent is supposed to be neutral, helping clients on both sides of the deal equally. But staying truly neutral can be difficult. For instance, since an agent’s commission is a percentage of a home’s sales price, it’s inherently in an agent’s best interest to get a high selling price, because he’ll make more money. That’s good for the seller, but not so much for the buyer.”

OK—lesson over. Thanks for hanging in there with me.

Based on what you read above, it seems like dual agency is the devil’s breath—and you’d be right. In fact, in some states it’s not even legal. That being said, it happens every day in real estate.

One agent can legally represent one side (buyer or seller) or NO sides (dual agent). The most used illustration of this is the idea of being sued and choosing to use the other guy’s lawyer because it’s more convenient. Not too many people would do that.

So why would anyone use a dual agent? Usually because the buyer and seller don’t fully understand what’s happening. In short, both sides assume the agent is looking out for their side. Fatal mistake and one that most dual agents will happily let you go on believing.

What your husband is doing is classic risky buyer behavior and can lead to unwanted dual agency in no time. Calling the number on the sign means you are calling the seller’s agent. Their job is to get the most amount of money they can for the house.

Is that your goal? I didn’t think so.

Your goal is to find the best house for the money. This agent, by planting a giant sign in the seller’s yard, is declaring that they are working primarily for the seller.

If you don’t have your own agent, the seller’s agent is going to be a dual agent and work for neither of you.

Either way—no good for you.

The best way to buy is to go get yourself a good buyer’s agent (probably not your cousin) and work exclusively with them. A good buyer’s agent will be able to save you a lot of time, money and hassle.

I won’t bore you with the details of that here, but if you’re interested, check out my post on selecting an agent here.

And for the record, I already know your cousin isn’t a good fit. Here are two solid reasons off the top of my head:

First, you should be very very cautious about doing this kind of business with a family member. If they are a close family member, it’s not worth losing them over something like this. If they are not a close family member, you don’t really care what they think anyway.

Second, the fact that your cousin is part-time is enough to disqualify them immediately in my book. Trust me.

If you really feel the need to support your cousin, tell them you don’t want to jeopardize your relationship over one transaction and ask them to refer you to someone they trust. Your cousin gets a referral commission and your relationship stays safe. That is how I handle all relatives and it has never backfired.

Anyway, for now, tell your beloved it’s ok to call the seller’s agent if you just have a quick question, but stop there. Do not give the seller’s agent any information that could come back to haunt you later.

For example, they might ask, “What are you looking for?” Your boo innocently replies, “Oh I dunno, something in the $250-275k range close to the city.”

No big deal right? WRONG!!!! (LOUD GAMESHOW BUZZER SOUND)             


Fast forward two months. You and your buyer’s agent are in the heat of battle with a seller and guess who represents them? That’s riiiiiiiight.

While your agent is busy trying to convince their agent that you can only go to $235k, their agent heard it right from your other half that you can go up to $275k. Information can seem innocent at first and cost you some dollars in the end.

When you get serious, choose your agent before you start any heavy-duty house hunting. Declaring your loyalty up front will make sure your buyer’s agent is all in on your purchase and gives them a chance to get to know you and your goals from the get go.

They will no doubt cover agency in a more formal way, but once you establish that they will only ever work for you and not a seller, you’re on the right track

You’ll thank me later. You might even name a room after me. That’s how good this advice is.

Best of luck on your journey. Buying a house is fantastically exciting—I’m kinda jealous.

In the meantime, keep sending your questions. Your best bet is to send a message here and I’ll do my best to get right back to you.

Take care,

P.S. Still looking for more info? Be sure to sign up for my newsletter below, not only will I keep you up to date on everything you need to know about real estate but I’ll send you a freebie just for signing up!