The do’s and don’ts of dual agency

By Jon Gorey

Just as you can’t be in two places at once, some would argue that you can’t truly represent two sides of a real estate transaction at the same time. But dual agency — where a single agent represents both sides of a real estate deal — happens all the time.

“I would say probably 20% of my deals are dual agency,” says Connie Antoniou, an agent with Jameson Sotheby’s International Realty in Barrington, Illinois. “Which is kind of unusual — I’m doing more of it now than ever.”

Jenny Ames, an agent with Engel & Völkers in Chicago, estimates that she’s a dual agent in about 10% of her sales. “Sometimes it’s just that I’m working with a buyer, and I might interview for a listing, and it might be a great fit for somebody,” she says. “I know what they’re looking for, so I can get them in early.” Other times, she adds, buyers approach her directly, hoping to gain an advantage by working exclusively with the listing agent.

And yet, in other places, dual agency doesn’t happen at all. Eight states have outright banned the practice, from major markets like Texas, Florida and Maryland, to sparsely populated ones like Wyoming, Alaska and Vermont. Even where it remains legal, some agents prefer not to dabble in dual agency, saying it creates an inherent conflict of interest — or, at the very least, the appearance of one.

Here’s the crux of that conflict: In a dual agency relationship, the agent has a fiduciary duty to both the seller and the buyer — a lawful obligation to act in each client’s best interest. While both parties generally share the common goal of a smooth, fair transaction, they clearly have opposing interests when it comes to the price or other terms of the sale. So a dual agent is, at the very least, limited in their capacity to fully advocate and negotiate for one side or the other.

Many consumers seem perfectly fine with those limitations, though — and some agents say it makes for a more efficient, less stressful transaction for everyone involved. “If I’m able to be a dual agent, it actually goes more smoothly,” Ames says. She doesn’t have to worry about an inexperienced or difficult broker bumbling the sale from the other side. “When I’m on both sides, I can control it better and make sure that nothing’s getting lost in translation.”

Some clients do express doubts over whether she’ll be able to advocate for them effectively, Ames adds, when she explains that she’s also representing the other side (an important step). “But the answer really is yes,” she says. “Our goal is to bring buyers and sellers together, and to have it be a win-win.”

Getting to that point without getting into trouble demands that agents make some important adjustments to their usual work practices, however. Here’s what you need to know about dual agency and other options for single-agent transactions.

Dual agency done right

The National Association of Realtors takes a neutral stance on dual agency. But where it is allowed by state law, the NAR’s Code of Ethics and Standards of Practice offers guidance for conducting a lawful and ethical dual agent transaction. “There are a few provisions, and mainly they focus on disclosure and consent,” says Missouri-based agent and attorney Bruce Aydt, a member and past chair of the NAR’s Professional Standards Committee.

In fact, articles 1-12 and 1-13 state that agents should discuss with clients even the potential for a dual agency situation to arise, well before it ever does. “Before you enter into an agreement with a client, either a listing agreement or a buyer agency agreement, you have to disclose to them any potential for you to act as a dual agent — the circumstances under which that might occur,” Aydt says.

Article 1-5, meanwhile, states that Realtors may represent both the buyer and seller in a transaction “only after full disclosure to and with informed consent of both parties” — a standard that most states hold agents to, as well. “Virtually any place that allows for dual agency is always going to have this idea of full disclosure and informed consent to both parties before you can go into dual agency,” Aydt says.

“The most important thing is to always disclose, disclose, disclose,” Antoniou adds. “Disclose everything you can, to both sides, so they know exactly what you can and cannot do for them legally.”

That doesn’t mean simply handing clients a boilerplate disclosure form to sign. “The idea of informed consent is that the parties know what they are entering into,” Aydt says. So, agents have to make sure their clients fully understand the limitations of dual agency and what they’re agreeing to — something that might demand a discussion or verbal explanation to accompany any state-mandated forms.

“I specifically walk them through the dual agency form,” Antoniou says. “I literally read right to them what I can and cannot do for them.”

And what can’t she do? Some typical agent duties — such as offering advice on price — may be off-limits, since you risk violating confidentiality rules. “You can’t disclose to either side the confidential information of the other side,” Aydt says. “A dual agent can’t tell a buyer what the seller’s lowest price is, nor can they tell a seller what the buyer’s highest price is. They can’t discuss the motivations of the parties; they can’t discuss the negotiating position of the party or negotiating strategy of the other party.”

Agents can still counsel their clients based on publicly available information. “If it’s a public record, or anything that the buyer or seller tells us that we can share with the other side — I prefer that to be always in writing, of course — then we can share that,” Antoniou says. “But besides that, we cannot suggest, obviously, an offer price to make, nothing like that. And that’s where it gets tricky — sometimes these people are really leaning on you, they want you to tell them what to do. And the second you fall into that trap, you’ve crossed the line, and now you could get into trouble.”

Alternatives to dual agency

In some states where dual agency is illegal, a single agent can still handle both sides of a real estate sale, but only as a transaction agent or intermediary — a facilitator who doesn’t represent either party. Some states also permit a close relative of dual agency, called designated agency or assigned agency. That’s where, instead of trying to faithfully represent both sides of a sale, the agent refers one party to work with another agent within the same brokerage.

This is common in Texas, where dual agency isn’t permitted but acting as an intermediary is, says Richard Miranda, chair of the Houston Association of Realtors. “To act as an intermediary, the broker must obtain the written agreement of each party in the transaction,” Miranda says. But to further limit the potential for a conflict of interest, “what most brokers will do in Texas is they will assign an agent who will serve the interests of the buyer, and then another agent will act in the best interests of the seller. That way, even though the broker is an intermediary, there are two different parties in the same brokerage working on behalf of the interests of either party.”

The potential for favoritism or the sharing of confidential information still exists; the lead broker could pressure a less experienced agent into pressing forward with the sale, for example, even if their buyer wants to back out. But because each agent must be lawfully loyal to just one client, it does add an extra layer of protection.

“One party cannot divulge particular confidential information to the other party, even though those two agents may be working for the same broker,” Miranda says. “They’re obligated to watch out for the interests of the party that they’re representing, and they owe them a duty of confidence, confidentiality and fiduciary.”

Even where dual agency is allowed, some prefer the designated agency model. Hudson Santana, an agent with Keller Williams in the Boston and Miami metro areas, is no fan of dual agency, because he says it’s difficult for an agent to remain impartial. “I never work as a dual agent,” Santana says. “I introduce that buyer to an actual agent, somebody that’s going to represent them… and I just continue to be a fiduciary to the seller.”

As a team leader who believes his colleagues are among the best in the business, Santana typically refers buyers to someone from his own team. “Now, does that create a conflict? I don’t believe so, because that person is liable by law to represent that consumer,” he says. “We’re no longer team members — you work for that consumer, and I work for this consumer, and they don’t have access to the information that’s important to my client, and I don’t have access to the information that’s important to their client. I take that very seriously.”

But in another common scenario, buyers will contact Santana (as the listing agent) directly, hoping to score a discounted commission or an inside track on a property. Sometimes, even after a full explanation of what they’re giving up by declining representation, they’ll still insist on forgoing a buyer’s agent. Rather than act as a hands-off facilitator or transaction agent — loyal to no one but the sale itself (which is, shockingly, the presumed default for agents in Florida) — Santana prefers to continue representing the seller. “We’ll have them sign a disclosure showing that I am the seller’s agent, which means you are not being represented by anybody, and I’m still representing the seller,” he says.

“You could still help them do the paperwork — you need me to type up the offer? Tell me the terms that you want, I’m happy to type it up for you, happy to explain to you the steps,” he says. “But I’m making it very clear that I don’t represent you, my fiduciary duty is just to the seller. And as long as you’re OK with that, I’m happy to help you accomplish the transaction — but I’m not representing you.”

When buyers or sellers willingly decline agent representation, agents must still be truthful and fair with them, Miranda says — but they don’t owe them more than that. “My job is to be honest and fair,” Miranda says. “I have a duty to the customer — who is not a client — to be fair and honest and truthful with that customer. But I do not owe that customer fiduciary duty.”

Dueling offers and dual agency

Ames also encounters homebuyers who go straight to her as a seller’s agent, in hopes of saving on commissions in a dual agency deal. But even if that’s something an agent would entertain in normal circumstances — and many don’t, or legally can’t — it’s certainly not happening in a multiple-offer scenario. “Any kind of commission negotiation, in my opinion, is off the table 100% in a multiple-offer situation,” Ames says. “Otherwise, you run into a scenario that’s really messy.”

Imagine, Ames explains, representing a buyer who loses out on a home during a multiple-offer situation. “And then you saw it closed later for a lower price, with the listing agent as the buyer’s broker — you’d feel like something unethical happened,” she says. “That’s the seller’s choice, and maybe the seller liked the terms better or something else, but it opens you up for scrutiny.”

“It’s difficult enough to be representing the buyer and the seller, but then when you have another agent bringing in their own offer, now you really mix it up,” Antoniou says. At that point, she calls in her managing broker as an impartial party so that she doesn’t see any of the other offers.

“I have him represent the seller, and then I obviously represent my buyer, and then the other Realtor represents their buyer, and we just send the contracts to my managing broker,” she says. “He’s able to kind of step in and present the offers to the seller and advise the seller on what to do.”

Antoniou sits on the Professional Standards Board for the state of Illinois, hearing and judging cases where sellers feel wronged by an agent, for example. Some complaints do arise from mishandled dual agency relationships, she says, and punishments can vary depending on the severity of the infraction and whether it was a repeat offense. “Sometimes they’ll just get a letter put in their file down at the state… saying that they were disciplined on such and such a date, and that stays in the file for a couple of years,” she says. “If they do it again, there’s going to be a fine… there are procedures, all the way up to losing your license.”

The simplest way to maintain a good reputation and stay on the right side of the law, Ames says, is to trust your gut and consider how you’d want your own family members to be treated in a real estate transaction. “Your gut is going to tell you whether you’re doing the right thing,” she says. “And if you have even the tiniest little question about a decision or comment or recommendation, you should be careful and not go in that direction — follow your gut.”

Opinions are not defamatory, but facts are: How to fight back against a bad online review

Buying a home is one of the most significant financial decisions a person will ever make, and if something goes wrong during the process, those involved — like their real estate agents — can suffer the consequences, as there is not much to stop someone from venting online. Dealing with these events quickly and effectively can be make-or-break situations for many agents, whose entire livelihoods are often based on their reputations.

“It’s really, really critical, because once you get a negative review, it tends to multiply, so you need to deal with it right away,” Houston-based defamation attorney and real estate broker Paul Sternberg said. “It is critical for an agent to be aware of that, because residential real estate is an emotional transaction. This is the biggest investment most people will make … and when people get emotional, they write things that they later might regret.”

Rachel Roop Harpe, a Realtor with Atlanta Fine Homes Sotheby’s International Realty, agrees, and she speaks from experience.

“I’ve been through this where one negative review, while false, brought my ranking down significantly to where even flagging it personally resulted in it remaining,” she said. “The frustrating aspect is that if a negative review is received, even if false allegations, it is extremely difficult to have it removed.”

Sternberg, who wrote the book, “The Guide to Internet Defamation and Website Removal,” in 2019, has several go-to steps for addressing situations like these.

First of all, an agent needs to understand the problem. Why is the person leaving the negative review? Gaining an understanding of a person’s motivation is the first step an agent should take.

“Opinions are not defamatory, but facts are,” he said.

Second, an agent should find the person and ask them to remove the negative opinion. Despite the commonly held belief, when it comes down to it, the internet is not particularly anonymous, so finding out who to contact — privately at first — is not a problem in most cases.

Nick Warren, founder and CEO of Berkshire Hathaway HomeServices Warren Residential in Boston, concurred.

“If an agent does receive a negative review, my suggestion is to immediately reach out to the person who wrote it to see if there is a way to remedy the situation,” he said. “People sometimes write the review in the heat of the moment and will often adjust or take down a review if they get a chance to talk through it with the agent. …In many cases, the person who wrote the review may have thought you were someone else and mistakenly posted it on your profile. Connecting with them can usually fix this.”

A cease-and-desist letter threatening a lawsuit can also be surprisingly effective, Sternberg said, but he cautioned that an agent needs to weigh the benefits and the risks of a confrontation before engaging and know exactly what he or she plans to do if they proceed.

“You need to look at it and decide whether it’s a fact or an opinion, whether you want to go after them or you don’t, because if you go after them, they may post more negative things,” he said. “Do you call the person up and ask them to take it down? Do you offer them a discount on their next purchase or sale? What do you do in order to alleviate the situation?”

If those steps do not work, Sternberg recommends something akin to crowd-sourcing. Ask loyal customers to write honest but positive reviews. The truth is the strongest weapon, he said, as people can smell dishonesty, which should always be avoided.

“Personally, I believe the best solution to this is consistency,” Roop Harpe said. “If you’re continuously asking clients for testimonials, the truth usually shines through. If you have 20-plus positives and one negative, the general consumer, hopefully, is able to decipher what is factual.”

Finally, Sternberg said, always publicly respond to negative reviews, but cool down for a day or two before doing so, and have others review the response before posting it. Tell the poster you are sorry they had a poor experience but that your other feedback has been positive.

“If it’s bad, and it’s a subjective opinion, and not defamation stated as fact, then say something along the lines of, ‘Thank you for the feedback. While I always strive to exceed expectations, there are times when mistakes happen. I hope that we can work together in the future so I can demonstrate my commitment to my clients and to continuous improvement,’” Kristen Prinz of the Prinz Law firm in Chicago said.

Sternberg agreed, noting that there is no need to be defensive, and definitely avoid antagonizing the reviewer.

“Just be honest,” he said. “Something like, ‘I’m so sorry you seem to have had a poor experience, but we have consistent A-grades for cleanliness in our restaurant.’”

In today’s market, most buyers and sellers begin their real estate process through browsing online before ever contacting an agent, which heightens the impact negative reviews can have.

After responding to the review, consider offering the person a discount or a follow-up appointment to discuss the issue further, Sternberg said.

He noted that due to federal laws, there is little legal recourse in asking an online platform to remove the review.

“There is not much you can do to get it down from the platform,” he said.

Still, Prinz said, it could be worth a try.

“If the statements are false and defamatory, report the review to the platform and notify them of the ways in which the review is false and misleading,” she said. “If you are not a repeat complainer, they will likely take your concern seriously and may even remove the negative review.”

Google categorizes real estate as a “your money or your life” industry, meaning it treats the content with high importance, since it affects people’s finances and well-being, said Christophe Tayon, marketing director with Erase Technologies LLC, a Miami firm that specializes in helping people remove defamatory online content.

A negative review can affect a Realtor’s or a real estate company’s ability to be found in search engine results, Tayon added. As a result, Realtors should be proactive in curating reviews that mention money issues and especially reviews with the words “scam” or “fraud.”

Tayon agreed that it is worth asking an online platform to remove negative reviews.

“The faster you act, the better chance you have at successfully removing the review,” he said.

He added that it is easier to have a review removed if it violates the website’s guidelines, and some platforms will remove a review without notifying the author.

Tayon also recommended responding to positive reviews, as well as negative ones.

“If anything, they’ll know you’re responsive and that you care about your reputation,” he said. “There’s a growing expectation for brands to be conversational, not just transactional. Great brands get rewarded for it.”

In the end, the best approach is to fight fire with water. Engage with the person, but do not attack, Sternberg said.

“An agent or broker’s reputation is obviously the most important thing,” he said. “It’s becoming more and more of an issue because everybody now has the capability of writing their own opinions online. I think people really need to be aware of how devastating a bad reputation on the internet is.”