Double Ending & Dual Agency

Definition Of Double Ending

When one agent represents both the buyer and the seller, the agent is said to have double ended the sale.

One agent trying to negotiate the lowest price from his home seller for the benefit of his home buyer while simultaneously negotiating the highest price from that buyer for the benefit of his seller, would seem to be attempting the impossible or at least the very unlikely.

When you consider that the agent would be paid for representing the seller and also paid for representing the buyer, it is easy to imagine that the agent is double-ending the sale for his own profit rather than for the benefit of both his seller and his buyer thus failing to represent them fairly. A second failure to fairly represent both buyer and seller could be that the agent favors either the buyer or the seller over the other.

There are instances where one agent can represent both the buyer and the seller with minimal conflict of interest. One of the instances would be when the seller cares about nothing other than getting the most money. He could review the offers with his agent and simply pick the highest offer. This of course assumes that his agent didn't know what the competing offers from other agents were and thus didn't guide his buyer using inside knowledge. This can be accomplished by having a firm offer date and informing other competing agents to keep the details of their offer secret until all offers are listened to and reviewed by the seller.

Definition of Dual Agency

The definition of dual agency could seem identical to double ending. A critical difference comes from the fact that real estate sales agents work under a real estate broker. The broker is responsible for representing the interests of all of his clients but is considered to have assigned part of that duty to sales agents working under his supervision. It is possible that the broker is not involved in any sales negotiations, rather he reviews the documents prepared, and the actions of agents working under him, to be certain the best interests of each and every client are attended to. However, if one agent represents a buyer who purchases a home from a seller who is represented by a different agent and both agents work under the same broker, then the broker is acting with dual agency. Double ending most often describes an agent simultaneously represent both the seller and buyer for a sale. Dual agency, in part because there is a dual agency disclosure which must be given to both seller and buyer, generally refers to a broker who either directly represents both buyer and seller or who has an agent under his supervision who represents the seller and another agent under his supervision who represents the buyer. An agent who double ends the sale is also required to provide the dual agency disclosure to both seller and buyer.

Problems and Risks With Double Ending

Even if an agent acts in the best interests of both his seller and his buyer, double ending can still cause problems. After a purchase offer is accepted, any contingencies will have to be removed, financing obtained, and escrow closed. If an inspection turns up a problem with the condition of the property, the agent will have to again simultaneously represent the best interests of both the buyer and the seller. Either the buyer or the seller could decide that the agent either can't or isn't acting in his best interests and decide to cancel the purchase rather than accept a negotiated agreement to remove the contingency.

During escrow it is common for family, friends, co-workers, and even other agents to talk with either the seller or the buyer. Their knowledge of the details of the sale may be minimal but they may give friendly advice or simply make comments which raise doubts. An agent needs to have the trust of his client to resolve problems and get the sale to complete. Double ending easily weakens the needed trust.

Problems With Dual Agency

By not having the same person benefit from "negotiating" on behalf of both the buyer and the seller, the opportunity and likelihood of a broker not acting fairly on behalf of both is significantly reduced but not eliminated. The broker may become involved in settling any disputes and favor one agent over the other.

Disallowing dual agency creates a significant penalty for both buyers and sellers. A buyer who is being helped by an agent from the brokerage which has the listing would have to change agents and use an agent from a different brokerage in order to make a purchase offer.

Are Dual Agency or Double Ending Problems Only Due to Agents

Although it is easy to imagine how agents can be motivated to not treat both buyer and seller fairly, many buyers hope to take advantage of dual agency issues. They will constantly seek out the listing agent to represent them when they make a purchase offer. The simple reason is that they believe they will get better consideration from the sellers' agent. In essence they believe if the sellers' agent is not trustworthy, they will be more like to benefit than suffer. They don't believe that the sellers' agent, who has been working with the seller for a long time, would give substantially better consideration to his seller.

What many home buyers do not understand is that real estate agents need to have the trust of other agents. If a buyer's agent thinks the listing agent didn't act fairly, the buyer's agent will talk to other agents to get their opinion. Many agents will begin to have doubts about the listing agent. The doubts will lead to caution which can reduce the ability of a buyer's agent to resolve escrow problems and will likely reduce the ability of the listing agent to get offers on homes he has for sale. A real estate agent's success is quite dependent on what other agents think of them.

Everyone involved in the sale and purchase of a home: agents, buyers, and sellers, must make personal judgements. Those personal judgements may be affected knowingly or unknowingly by greed. Agents wanting to be in business for a long time and having completed numerous sales should be better at avoiding the loss of trust from other agents and from clients. Most often a top agent will have a team and have ways they can represent buyers and sellers fairly.