If you’re looking for a home to purchase, it’s helpful to know about dual representation and the potential risks that come with it.
In most cases, the homes you look at during your search will be represented by real estate agents other than yours. However, it’s possible that you’ll come across a situation where the seller of a property you like is also represented by your agent. This may seem convenient at first glance, but this “dual representation” actually carries a lot of risk.
“The biggest problem with dual representation is it can create a conflict of interest, mainly because buyers and sellers typically have opposite goals,” says Heidi Hart, owner of California Dreaming Real Estate in Santa Cruz County. “The buyer is looking for the lowest possible price while the seller is looking for the highest possible price, so it’s difficult for the agent to please both parties.”
According to Heidi, the California real estate industry has implemented standards to prevent such conflicts of interest. “Per the standards of the California Association of Realtors, an agent has top fiduciary duty toward the client they were working with first in the transaction,” she explains. However, even with such standards in place, there’s no sure way to avoid the potential risks that come with dual representation, which is why Heidi generally advises against it. “It’s usually best to have your own representation as a buyer, especially if you aren’t familiar with the property. That way, you’ll have someone looking out for your best interests.”
Heidi says there are a few instances where dual representation can be beneficial. “If you’re already familiar with a property or know the selling party personally, dual representation can be quite convenient. In this type of low-risk scenario, not only can a dual agent streamline the transaction, but you can usually get them to reduce their commission since they don’t have to pay for listing or advertising.”