Sellers and Buyers in Chicago The Pros and Cons of Dual Agency

Home sellers and buyers usually work with distinct agents, although this isn't always the case. Approximately 10% to 20% of the time, they both employ the same agent. The term "dual agency" refers to a situation in which both a buyer and a seller have the same agent. There are certain benefits to dual agency, but there are also some drawbacks. Whether you're a buyer or a seller, you need to understand both to make the greatest agent choice. To assist you, we've compiled a list of the benefits and drawbacks of dual agency for Chicago buyers and sellers.

Overview of Dual Agency

Most people are familiar with single agency, which occurs when one agent represents only one side in a real estate transaction. Typically, one company's agent represents the buyer, while another company's agent represents the seller. The key advantage is that the agent can operate in the best interests of her client without any conflict of interest.

Dual agency, on the other hand, “When a single real estate agent represents both the buyer and the seller in a real estate transaction, this is known as a dual representation. It can also happen when an agent represents both the landlord and the tenant, or when both parties in a purchase and sell or renting transaction are represented by the same real estate company.”

When it comes to the exact mechanism of how dual agency works, here’s what we find. “When someone hires a real estate agent, they have the option of working with a dual agent if they understand the benefits and drawbacks of doing so. Any client who agrees to dual agency is required to sign an official disclosure from the state department of real estate.”

Dual agency is outlawed in some states and strongly restricted in others due to the disadvantages. Contact a Sell My House Fast Chicagoland agent at (312) 869-2289 for additional information about dual agency.

Dual Agency Pros

There are some notable pros of dual agency for Chicago buyers and sellers. Chief among these are . . .

FASTER COMMUNICATION AND TRANSACTION SPEED

“When one agent represents both sides of a real estate transaction, price discussions and getting answers to questions can go more quickly. It's still possible that the agency will not receive a quick answer from their buyer or seller. However, because there aren't two agents, there is one less individual that could cause a delay.”

In addition, with only one agent involved and handling all the details, the whole transaction is speeded up. “The use of a single agent to distribute documentation between the buyer and seller speeds up the process and increases the likelihood of a rapid closing. Of course, this is contingent on both parties agreeing on pricing and conditions.”

POTENTIAL SAVINGS

The seller, who generally pays the agents' commissions, stands to save money with dual agency. For assuming both agent duties, a dual agent will generally earn roughly double the commission. Because the commission will already be higher, the agent may be willing to take a reduced commission.

This may also result in savings for the buyer as well. If the dual agent reduces her commission, the seller may accept a lower price owing to the reduced commission.

MORE PROPERTY KNOWLEDGE

You can typically acquire more information on a property when one agent handles both sides of the transaction since the agent knows more about it. "Using the seller's or landlord's agent could mean obtaining access to more information about the home from the buyer's or tenant's perspective."

Dual Agency Cons

And now we come to cons of dual agency . . . .

POTENTIAL CONFLICT OF INTEREST

This is perhaps the most significant disadvantage of dual agency, and the reason why it is illegal in several states. When one agent serves in both capacities, the agent may be motivated to prioritise personal gain over the best interests of her customers. "It's difficult for an agent to stay unbiased when representing both the buyer and the seller due to human nature and financial motivations."

INCREASED CLIENT RESPONSIBILITY

Another disadvantage of dual agency is that the agent's clients may have to watch out for themselves. Even if a dual agent is perfectly ethical, she will be unable to "represent the best interests of two parties with different [and typically competing] aims."

“As a result, a dual agent acting ethically is limited to facilitating the transaction. The buyer, for example, will have to determine the price they want to give and whether or not to counteroffer without the assistance of their agent.”

DIFFICULTY WITH NEGOTIATIONS

When an agent represents both parties in a real estate transaction, that agent will have difficulty advocating successfully for either one of them.

"If a dual agent proposes that a buyer make a purchase offer below list price," for example, the agent is working against the seller's best interests. Similarly, if that dual agent advises the seller not to accept an offer below the list price, they are acting against the best interests of the buyer."

When to Consider Dual Agency

So when should Chicago buyers and sellers consider going the dual agency route?

Some industry insiders say they should never consider it. “They ask whether a dual agent, who represents both the buyer and the seller, can actually be neutral when mediating a transaction. This is due to the fact that the buyer will want to sell their house for the greatest feasible price, while the seller will want to get the best deal possible. ” Others argue that the risk isn't as significant as it appears, and that dual agency can benefit both buyers and sellers "by speeding up communications and assisting in the transaction's completion."”

It all comes down to your specific position and demands, as well as the agent's and agency's quality and trustworthiness. If you're a Chicago buyer or seller, call us at (312) 869-2289 right now to make the best decision.