Friday, February 4, 2011

First Time Homebuyer’s Real Estate Word for Today is Dual Agent

In a past episode of Cash Cab, an Emmy award winning television game show, a taxi full of contestants with stumped by the acronym, FSBO. This is a term often used in the real estate world to describe a person selling their home by owner (For Sale By Owner). As a REALTOR® I was a bit surprised but then I started to remember of all the times a glazed look came over a buyer’s eyes when I mentioned escrow or earnest money. These terms are also easily be confused with other real estate and mortgage terms like down payment or cash to close. Buyer confusion is totally understandable because homebuyers are not buying a house everyday.

This is only one of many terms that could possibly confuse a First Time Homebuyer so I thought a glossary of real estate terms might be helpful. For the past several weeks I am presented terms often used by REALTORS® in a series of posts for the first time homebuyer with explanations. This way you can skip buying that big “how to buy a house” book or attending that
First Time Homebuyer Class and have a quick resource at your fingertips. I am continuing the series with Today’s Real Estate Term:

Dual Agent When the same broker represents both the buyer and the seller in a transaction it is Dual Agency. The term dual agent sounds a bit sinister, after all in a good spy movie a dual agent is sharing secrets and usually to the detriment of both countries and organizations involved. However in real estate there is no espionage involved. All agents must explain agency to clients before substantial real estate discussions take place.

All real estate agents work for a broker which an organization that holds their license. In a smaller company, the broker may also sell real estate and work as an agent. In fact, her/she may be the only agent in the brokerage. The important thing to understand is that every agent working for a specific broker in essence represents every buyer and seller when a contract for representation is signed. This means no agent in the brokerage can do anything to break the fiduciary duties of loyalty or confidentiality (or any other fiduciary duty).

So when an agent at a specific brokerage writes up a contract for his/her buyer for a colleague’s listing the office, that agent is no longer a buyer’s agent. It becomes a dual agency. A buyer needs to understand that he should sign a contract for representation BEFORE seeing any homes or writing up any offer. At the point of the contract, the buyer can agree to dual agency or request exclusive buyer agency. If the buyer agrees to potential dual agencies, they may choose to visit homes listed by their agent's broker. Whenever they do, their buyer's agent automatically becomes a dual agent and cannot discuss offer any strategy that would compromise the seller (and vice versa).

Copyright 2011