'The Property Shop' shows the dangers of dual-agency in real estate
Yet somehow I can't stop tuning in every Thursday at 10:30 PM ET. On the latest episode, Tatiana takes the listing on a duplex, even though she admits to believing that it's overpriced by $100,000 at $459,000. A young couple comes in and wants to offer $409,000, and Tatiana takes the potential buyer on as a client, making her a dual-agent, representing both the seller and the buyer in the same transaction. Tatiana suggests that they start with an offer of $380,000 and then heads back to the sellers' home to present it.
That's where it gets interesting: The sellers rejects the $380,000 offer and then Tatiana tells them straight-up that her buyer is willing to go into the 4's on the home.
Here's the problem: As an agent of the buyer, she has a responsibility to keep confidential information they provide that might harm their negotiating position: If Tatiana is going to tell the seller that they're willing to go into the 4's, what is the point of making an offer in the 3's?
Real estate agent and Diary of a Real Estate Rookie author Alison Rogers tells me that "Ethically, Tatiana should either say to the buyer 'I'm an agent of the seller and anything you tell me is going to the seller, so watch what you say in front of me.' Or, she should say 'Here's what you can tell me in confidence.' But she can't play both sides.'"
Rogers is also troubled that Londono, as an agent of the seller, advised the buyer to make a lower offer. "There are few cut and dry rules in representing sellers, but one is that getting a higher price is generally better."
What does all this mean for prospective home buyers?
Dual-agency is perfectly legal in some states, although specific rules vary. But even if it is legal and the agent recommends it, which you can be sure he will since a double commission is on the line, it's still not something you should do. There is too much potential for sticky situations and conflicts of interest and no particular benefit to the buyer, in most cases. Rogers tells me that it's "not generally in a buyer's best interests" to use the same agent as the seller. "You're walking into a negotiation and it's better if you have someone to negotiate for you. Bring your own person to the table."