In the past, all real estate agents worked for the benefit of the Seller. This was called “sub-agency.” If you told your agent, “Let’s offer $450,000, but we’ll go $460,000 if we have to,” that agent had a LEGAL duty to tell the Seller that you would go $460,000. Luckily, sub-agency was done away with in California quite a while ago.
There are now three basic types of agents—1. Buyer’s Agent. 2. Seller’s Agent. 3. Dual Agent. A Buyer’s Agent owes “A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer.” A Seller’s Agent owes this fiduciary duty to the Seller exclusively. A Dual Agent has a shared duty of “fair and honest dealings” to both the Buyer and the Seller.
Here is how this works in real life: You are out looking at open houses without an agent and see a home that you’d like to buy. You have a couple of options at this point. Let’s say that you already have a relationship with an agent. You would leave the open house, and then call your agent, who will help you write up an offer. In this case, your agent will represent you and try to get you the best deal, and the listing agent will represent the Seller and try to get them the best deal.
Now let’s say that you’ve just arrived in town that morning so you don’t have a relationship with an agent. The listing agent who is there seems friendly and trustworthy. You decide to write up an offer with the listing agent. In this case, the listing agent will be representing both you and the Seller as a Dual Agent.
As a third option, you don’t have an agent yet, but don’t feel comfortable using the Seller’s Agent. In this case you would again leave the open house and do some quick research to find an agent to represent you, hopefully a referral from someone you trust.
In my next article I’ll discuss the pros and cons of using a Dual Agent versus having your own Buyer’s Agent.