WHO DOES THE BROKER REPRESENT? DUAL AGENCY

The broker represents the principal, which is usually either the buyer or the seller. The broker has a strong ethical duty to zealously represent the interests of his or her principal. The duties of a real estate broker are analogous to those of an attorney to his or her client, although a different set of rules applies to the relationship.

It is possible for a broker to represent both buyer and seller in a given sale transaction. This is called dual agency. It is ethically permissible only if: (a) the nature of the dual agency is disclosed to all concerned, and (b) both principals consent to the dual agency. It is common for a broker in a sale of residential real property to represent both seller and buyer, because, ordinarily, the seller retains a broker and the buyer often does not.

You should know two things about dual agency. First, you do not have to consent to it. You have the legal right to have a broker who represents your interests only, and, unless you have good reason to trust the broker a great deal, you may be better advised to insist upon having your own broker.

Second, in the ordinary real estate deal, it makes a great deal of financial difference to the broker if you consent to dual agency or not. If there is one broker, representing both sides, he or she gets the entire sales commission. If there are two brokers, one per side, then ordinarily the two brokers split the commission. If you say, “yes” to a dual agency, you usually are doubling the agent’s commission from the transaction. Remember, the amount of commission which a broker is paid is negotiable; you may be able to negotiate a lower sales commission, if there is only one broker in the deal.

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