What is dual agency?

Question: Dear Kari, I am going to be selling my home soon and my question is what is dual agency? Answer: Thanks for insightful question. When you are buying or selling a home, it's important to understand the concept of "representation." Understanding who is representing you and what they are bound to by law is important to making an informed decision. The legal structure within which real estate agents work with is called "agency." A good analogy is a triangle: The brokerage firm the real estate agent works through is the top point of the triangle. As the buyer or seller, you are the "principal," or customer, the second point of the triangle. The real estate agent you hire is the third point. The three points form the agency as the legal structure. Your real estate agent's responsibilities are defined by state law, referred to as Code of Ethics (industry guideline). The general principles of agency (remember the triangle: the brokerage at the top; then the principal; then the Realtor) are: the duty of your real estate agent to exercise good faith, undivided loyalty to your best interest, and full/fair disclosure about the property and the transaction involved. Real estate law imposes these duties on real estate agents through various laws, rules and regulations. A real estate agent representing both buyer and seller on the same home may act as a dual agent only with the consent of all parties involved. Under the Fiduciary Duty Act, Section 2079.16, the consent to dual agency must be by written agreement of all parties involved. In addition, dual agency occurs when the same brokerage firm is handling the business transaction of both the buyer and seller. It also occurs when the real estate agents representing the buyer and the seller are employees with the same brokerage company, even if they work in different branch offices. It's important that you are aware that dual agency has some limitations. Since the real estate agent has promised confidentially, loyalty and full disclosure to both parties simultaneously. The real estate agents must restrict these duties and is required by law not to disclose. For example, if the buyer is willing to pay a higher price than their offer has written then the real estate agent must not disclose this to the seller party. On the other side of the coin, the real estate agent must not disclose what price the seller is willing to accept. Also, the real estate agent will not disclose personal information about either the buyer or the seller unless authorized in writing. Finally, in a dual agency situation, the real estate agent must disclose to the buyer any and all defects about the condition of the property of which that real estate agent is aware. The conundrum for the real estate agents in this situation is painfully clear. As a consumer, you always have the choice to consent or not consent to the practice of dual agency. I wish you the best in your home selling process. Kari McCoy owns the Kari McCoy Group, Residential Real Estate at Lyon Residential Real Estate. She can be reached at 916-933-5274 or sold@karimccoygroup.com. #00841588