If you are in the hunt for a house, or likewise selling your own, the topic of dual agency will (or should) come up for discussion with your agent. Most people give consent for their agent to act as a dual agent if the opportunity arises, but do you really know what that consent means?
Under New Jersey law a disclosed dual agent works for both the Buyer and Seller. To work as a dual agent, a brokerage firm must first obtain the informed written consent of their client. It is not necessary that the agent representing both Buyer and Seller be the same person, rather dual agency runs to the brokerage firm. This means if your agent is with one of the handful of large brokerage firms in the area, it is more likely that your transaction will be one in which dual agency applies.
The agent affiliated with a brokerage working as a disclosed dual agent must carefully explain to each party that, in addition to working as their agent, the brokerage firm will also work as the agent for the other party. The agent must also explain what effect working as a disclosed dual agent will have on the fiduciary duties their brokerage firm owes to both the Buyer and Seller.
Dual agency gets tricky in a transaction when the agent is aware of confidential information that would benefit one party and negatively impact the other. A brokerage firm must have the express written permission prior to disclosing confidential information of one client, to the other.
Examples of confidential information includes the highest price a Buyer can afford to pay and the lowest price a Seller will accept. It also includes either party’s motivation to buy or sell. Remember, a brokerage firm acting as a disclosed dual agent will not be able to place one party’s interests ahead of those of the other party and cannot advise or counsel either party on how to gain an advantage at the expense of the other party because of such confidential information.
So why should you care? Well, it’s not likely you’ll be able to avoid a dual agency relationship, and you should not necessarily try to do so. If your agent is a dual agent, it means perhaps it was internal advertising that brought a Buyer to you for your home; but, it does mean you should strongly consider being represented by an attorney in a dual agency transaction. It is the only way to ensure you have an advocate protecting your interests up to and at the time of settlement.
Questions? Feel free to give us a call.