Active Rain December 18, 2011

What You MUST Know About Dual Agency if You Are Selling a New York Home

Sellers may get top dollar if their agent does not have a buyer agent to deal withPop quiz:
In the State of New York, if I as the listing agent bring my own buyer to the closing table, does that automatically make me a dual agent?  

If you answered “yes” you’d be wrong. If a New York real estate agent sells their own listing to their own buyer they are NOT automatically a dual agent. As a matter of fact they probably shouldn’t be.

Dual agency is one of the most misunderstood and controversial topics in the real estate industry. Part of the problem is that even professionals can’t agree because the rules vary greatly across state lines. Earlier today, on a discussion board on improving industry standards and practices, a licensee from another state wrote that if a buyer who had no agent called to buy one of her listings that she would refer them to another agent. In her state, she would be doing the right thing.

I would assert that in Westchester County where I work, if a buyer were hot for one of my listings and I did anything short of scheduling a showing with the intention of producing an offer for my seller, that I would be acting contrary to what my seller client hired me to do. My seller want me to get that buyer to commit. As a matter of fact my seller client should want me to bring my own buyer. And not because of the urban myth that there will be a commission savings. 

The reason my seller should want me to sell their listing myself is, pure and simply, advocacy. The seller hired me to sell the house when they list. They are the client. I am their advocate by statute. If we get a call on a sign or Internet entry on a listing, that guy is a customer. He didn’t hire me. I am not his advocate. He just wants to see the house and doesn’t have an agent. I owe him fairness and honesty. But I don’t work for him. When a buyer deals directly with me as the listing agent, he has no advocate

What are the advantages to the seller? 

  • There is no buyer agent. The buyer has no counterpart to me working for him. 
  • There is no buyer agent. I don’t have to call that agent for an update and wait for them to call the buyer and then call me back. I just call the buyer. 
  • There is no buyer agent. There is no one with MLS or broker access to the comparable market activity to educate the buyer. 
  • There is no buyer agent. The buyer is negotiating the largest transaction of his life with me (and my 500 transaction background) with no professional help. 
Don't get taken for a rideAre you getting the picture? This is why we tell buyers they need an agent to represent them, because the listing agent may well eat their lunch! But when a guy walks in cold off the proverbial street to see one of my listings, that act alone does not hire me as his representative. He is a customer. The seller is the client. This makes exclusive buyer agents and consumer advocates cringe, but the consumer I work for is the seller client. If the buyer chooses to not be represented, he does so at his own peril. 
Moreover, if a buyer comes in cold off the proverbial street and the listing agent proposes dual agency on his own listing to induce the buyer to work with him, a fantastic case can be made that the listing agent is throwing the seller under the bus. The seller didn’t hire me to split my loyalty at the drop of a hat. They hired me to procure the best terms possible.  
The only time dual agency comes up (or should come up) is when you have two clients. For example, if that home seller who has been my client for 6 months asks me to represent him in his next purchase and then expresses interest in one of my listings, I have a client on both sides and dual agency arises. But that is another post
If you are a seller, you can plausibly want your listing agent to “double end” the sale for the reasons above. And if you as a buyer have a listing agent propose that they can be a dual agent and also represent you the first time you meet, that should tell you a thing or two about how loyal they really are. 
Note: In the State of New York, agency relationships must be disclosed to consumers in their first substantive contact with a licensee.