Agent Representing Both Seller And Buyer (Dual Agency)
Sunday, August 17, 2008
Like most real estate brokers, I enjoy working with both the buyer and the seller and I usually make more money as a dual agent! The communication is easy, usually the transaction has relatively few problems regarding the closing and as a fair and honest person I find it quite simple to accept my fiduciary duty of the utmost care, integrity, honesty and loyalty in the dealings with either the Seller and the Buyer.
The point of this following true story is not about if we should have dual agency, but a reminder to agents to be very careful!!!
I was asked by a past client to list his business property which consisted of commercial building and his business which was a well known tavern. The price seemed a little high, but the seller was willing to pay a 10% commission and the seller was quite motivated. After a week or so, I was contacted by an interested buying prospect who wanted me to write an all cash, full price offer with a 30 day closing date. I explained to the buyer that I thought the closing would take much longer than 30 days due to the necessary steps involved with licensing approvals and etc., but the buyer insisted that I write the offer and present it to the seller. The seller immediately accepted the offer and started making future plans, knowing the funds were not verified yet and also knowing about the many approval steps involved prior to closing. Also, against my advice, the seller gave the buyer possession to operate the bar business.
Approximately six months later, after almost daily telephone calls, meetings and extension agreements they decided to close. Buyer states that the funds are not available, but he is willing to close. Seller agrees to carry back financing secured by first deed of trust and wants me to carry a second deed of trust for my commission. Both trust deeds are all due in six months after the close of escrow. If I do not agree to the trust deed, then both buyer and seller feel that the agent (me) did not carry out my obligation to them as a dual agent.
Approximately six more months later, the seller decides to foreclose and finally does get his money, but I am still not paid my commission. I did eventually collect on my note by taking another property in trade and a little cash.