A Canadian province recently banned dual agency, or real estate agents representing both sides of a transaction. Could the United States be next?
Representing both sides of a transaction can seem efficient: the agent always knows what’s going on and takes home a larger commission check at the end of the deal.
But that arrangement — known variably as dual agency and double ending — is often suspect. And in part of Canada, it’s officially banned.
The Real Estate Council of British Columbia banned the practice in a rule that took effect last Friday. The ban applies to residential and commercial real estate agents who are no longer permitted to represent both the buyer and the seller; two buyers bidding on the same property; or both a landlord and tenant. The only exceptions are for agents working in rural areas where there are fewer agents available to represent clients.
Although the practice is often frowned upon, and more closely regulated in some parts than others, U.S. real estate regulators haven’t moved to ban it entirely yet. In the United States, dual agency often refers to a transaction involving two agents at the same brokerage, but this decision in Canada addresses transactions that involve the same agent on both sides.
According to the National Association of Realtors, four states prohibit dual agency: Colorado, Florida, Kansas and Wyoming. Wyoming took the most recent steps to prohibit dual agency in 2014 but still allows other kinds of dual representation that don’t involve an agency relationship. Others, including California and Washington, D.C., require specific disclosures from agents to their clients on dual agency transactions beyond those required everywhere.
“NAR has no policy on agency since each state has its own agency laws that determine the duties that real estate professionals owe to their clients and about what disclosures need to be made to buyers and sellers,” NAR spokeswoman Sara Wiskerchen told Inman.
Many agents think that the United States should follow Canada’s lead and ban agents from representing both sides of a transaction.
“It’s like attorney-client. You can’t have an attorney represent the plaintiffs and the defendant neutrally,” said Nathan White, an agent with Link Real Estate Group in Ohio. “It’s great from a money perspective, but why are we allowed to do that?”
“You can’t legitimately support two different people’s interests equally at the same time,” added James Crawford, a broker/owner in Tennessee.
“Dual agency is no agency,” Christine Hopkins, an agent at Advon Real Estate in Virginia, wrote on Facebook.
When the dual agency ban went into effect in British Columbia, regulators said something similar.
“These changes have been designed to reinforce a real estate agent’s duties and obligations to their clients and to ensure that agents are always acting in their client’s best interests,” Michael Noseworthy, British Columbia’s superintendent of real estate, said in a statement to Realtor Magazine. “We want to make sure that the advice consumers receive is solely for their benefit and that consumers have confidence that their agent is undoubtedly on their side.”
If dual agency were banned, many agents say it wouldn’t affect them, since they already avoid dual agency transactions. In dual agency transactions that do come up, agents are required to disclose their involvement with the other side of the deal to their clients. But many agents don’t think that’s enough.
“Do clients really know what any of that stuff means?” White asked. “I don’t think they fully understand it.”
“I’d be pleased to see it banned,” Crawford said.
Editor’s note: This story has been edited to reflect the differences in dual agency between the U.S. and Canada.