PETALUMA CALIFORNIA - PETALUMA Homes and Real Estate For Sale

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In California it is legal in real estate transactions for one agent to represent both principals, provided that both give their informed consent to the dual agency. 'Agent' is defined as the brokerage entity, not necessarily the individual with whom the client communicates. So a large company with hundreds of sales associates is a dual agent when any of its associates bring parties together as buyer and seller. Since the trend of the last two decades has been fewer and larger brokerage companies, the prospects for creating dual agency have increased.

Our attorney friends have long told us that, legal or not, it's a crazy proposition ' the idea that one agent can represent two principals. They point to the strict definition of a fiduciary relationship, a duty of undivided loyalty to one's principal. How can one agent possibly have such loyalty to two clients whose goals may be in opposition? Brokers like to counter that, unlike legal contests, our sale transactions are not really adversarial, that we are merely "facilitators" helping the parties to forge their agreements.

It is true that most of my colleagues are skilled counselors and do a good job of negotiating without combative nonsense. Most have seen how the agent who plays 'white knight' can do more harm than good to his client's cause, and these days most have adopted a 'win-win' approach.

It also helps, in my opinion, that in the overwhelming majority of dual-agency transactions, the buyer and seller are each represented by a different associate.

When a broker brings a potential litigation problem to his attorney, the eyes go first to lines that tell him who represented whom. If the company was a dual agent, the attorney squirms in his chair. But if the same associate represented both buyer and seller, he looks like his head is about to explode. Unfortunately, no matter how diligently the associate tackles the role of representing both parties, there is always a danger that someone will perceive a conflict of interest, a lack of fairness, or a breach of fiduciary duty.

Consider the associate whose seller client is a friend of many years and whose buyer client is the guy who just happened to drop by the open house this afternoon. If all does not turn out well for the buyer, might he suspect that his agent had a greater loyalty to the seller? Suppose one party in a transaction is reasonable, even generous, and the other is difficult and demanding. How does one individual appear to serve both with the same degree of care? And remember that an individual acting as a dual agent is in a position to hear confidences of both parties. Confidential information, while not considered material facts that must be disclosed, may be helpful to one of the parties in a negotiation. How does the associate decide who gets to know what?

A few of us in the business have concluded that 'double-ending,' the practice of personally representing both principals, is not worth its inherent risks. We are still a minority, but we think it makes better sense for a different individual to serve each party.