First, let me explain what a dual agent is.  When a seller wishes to sell a given property, the seller hires what is called a ‘listing agent’.  This agent does a number of things, including helping the seller prepare the property for sale and determining a price.  From a legal standpoint though, the key thing the listing agent is responsible for is representing the interests of the sellers.  This means that the agent cannot disclose any information about the seller to anyone else that would make them vulnerable in negotiations.

When a buyer wishes to buy a home, he/she will enlist the services of what is called a ‘selling agent’.  The selling agent helps the buyers locate properties and shows the buyers properties they are interested in.  Legally, though, the selling agent represents the buyer’s interests in the transaction.  This means that the agent cannot disclose any information about the buyer to anyone else that would make them vulnerable in negotiations.

A dual agent occurs when the selling agent and the listing agent are the same person.  This occurs when a buyer buys a home through an open house that the listing agent is holding or when the agent convinces buyers to place an offer on that agent’s own listing.

Because the agent must not disclose any information about the buyer or the seller to either part, when it comes to negotiations the agent cannot do much.  Instead, all the agent can do is carry the offers between the parties – but cannot offer much advice.  From the sellers’ point of view, they are paying good money for a service that they will now no longer receive.  From the buyers’ perspective, they likely think that the agent is acting on their behalf which is simply not true.

Each party deserves someone acting on their behalf, and for that reason an ethical agent should refer an interested buyer to another agent.  That agent will represent the buyers’ best interests and the listing agent can still negotiate aggressively on behalf of the sellers.

Another problem with dual agents from the buyers’ perspective is the fact that they are heavily motivated to sell the property for as much as possible.  After all, this is what they promised the sellers and, since they are paid a large percentage of the sale, they are also financially motivated.  Therefore as a buyer you are not as likely to get a good price for the home than if you had enlisted a separate agent to represent your interests.