Quote from @John S.:
Quote from @Sean Hudgins:
Interesting story. I want to touch on something that stood out to me in the story first, and then I will give my opinion on the dual agency approach.
When you got the "Offer accepted," what should have happened was that the offer should have been signed by both parties and ratified. Now, I am in Virginia, and I will not pretend I know exactly how RE transactions are done in NY. But here in VA, an offer is only accepted once it is ratified, i.e. signed by both parties, holding both parties to the terms of the deal. It sounds like you got a word-of-mouth acceptance, and your agent should have pushed hard to get the signed contract completed so that the sellers would be in breach of contract by accepting another offer, and you would have grounds for a lawsuit if they did. To me, this was a big blunder on your agent's part.
Now, Dual Agency is a tricky business. My perspective on this as a buyer and investor is that if you are savvy enough to look out for yourself, then it can be a good way to get on the inside of the deal. Technically (once again in VA), if I represent both parties to a transaction with dual agency, I really no longer represent either party. The agent is only an intermediary between the buyer and seller at that point. Now, plenty of agents out there will see this as a way to double their commission, and they will push to make the deal happen, which is not ethical or legal.
As an agent, I don't like dual agency, and I would rather get a referral fee by sending the buyer to another agent so that I can do my job of representing the seller, which is what they are paying for. I have seen that usually, in a dual agency situation, one party feels like they lost out somehow and it opens up the way too many opportunities for me as the agent to get sued.
Thank you for your response. I found on Google: "Dual agency in New York is completely legal, however a real estate salesperson or broker is required to fulfill several disclosure requirements before being permitted to transact as a dual agent."
So in NY, it looks like it wouldn't be illegal. I figure, even if the agent feels like their seller may not like it, there's no reason why someone else at their agency can't be my "agent", and then work out a further commission split with the other agent.
Thoughts?
Definitely, in VA, it is also legal, and we require similar disclosures. The part I mentioned was illegal would be if the agent was misrepresenting one side in order to get the deal done (somewhat speculative unless they do something obvious).
Your thought to have another agent in their brokerage represent you is spot on. That is something called a designated agency where the broker "assigns" another agent to represent the buyer. This is a great method as an individual agent is representing each party, so there is less conflict of interest, but because they are in the same brokerage, there is a perceived desire to work together more openly to get the deal to close. One downside is that you may get paired up with a random agent or an inexperienced agent who doesn't have the knowledge to look out for your best interest.
Also, my perspective on this as an agent is a little more by the books, where if I was purchasing out of a state that I was licensed in, then I may use the strategy of Dual Agency and have the possibility of the agent's greed help to secure the deal. As the buyer, I would not have the legal risk; the agent who was taking part in the transaction as the dual agent would have that legal risk.
Most importantly, though, if I felt that I needed the representation at all, I would find my own agent that I could trust. When you spend that kind of cash on anything, I would say it's smart to have a trusted advisor alongside you and not leave that role up to chance.
