Rhode Island is full of enticing real estate properties. While searching for an ideal property to purchase, you may encounter a realtor who proposes to partner with you while maintaining dual agency.
Dual agency is not a widely known concept to most people. Even if you have bought and sold a few properties over the years, there is a good chance you have never worked with a dual agent before.
Is working with a dual agent a good idea? Can you expect them to look after your best interests? By continuing with the rest of this article, learn the answers to those important questions and other relevant topics.
What Is a Dual Agent?
The term “dual agent” already gives a good hint regarding how these realtors differ from your typical real estate agents. A dual agent is someone who works for the buyer and seller involved in a single transaction.
Dual agents rarely manage real estate transactions. Most of the time, the buyer will hire a real estate agent to negotiate the transaction from their end. The seller will also enlist the help of a selling agent to get the best offer possible on their property.
The possibility that you will work with a dual agent is not zero, but it is not especially likely either.
What Is a Designated Agent?
Notably, another practice similar to dual agency involves more than one realtor.
In some cases, multiple agents from a single real estate agency may handle a buyer and seller transaction. This type of transaction may occur when a real estate agency assigns a realtor to facilitate the sale of a property even though the buyer has already made contact with an agent from that same company. The agency may justify that decision by saying that the realtor they assigned is best equipped to manage the transaction.
Situations like that also commonly pop up if a single real estate firm manages several properties in a certain neighborhood.
Technically, those transactions are handled by professionals considered designated agents instead of dual agents.
Can You Work with a Dual Agent in Rhode Island?
Before we discuss dual agents in real estate any further, let’s first address an important question. Are dual agents even allowed to handle real estate transactions?
It is not difficult to see why the practice may be frowned upon. Having the realtor work from both sides of a transaction could lead to a conflict of interest. Regulatory agencies would presumably want to protect people from that.
That does not mean that all double agents are taking advantage of their clients, but it is a possibility that you cannot dismiss them out of hand.
So, can you work with a dual agent if you want to buy or sell a home? The answer to that question depends on where you live.
Per this article from Nerd Wallet, dual agency is currently illegal in Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming.
The aforementioned states ban the practice of a single real estate agent handling both the buying and selling of a specific property simultaneously.
As you can see, Rhode Island is not among the states that outlaws the practice of dual agency. Therefore, if you are okay with hiring a dual agent, you are free to do so.
Designated agency is allowed in more states. Only the states of Maryland and Texas consider a designated agency arrangement to be similar to a dual agency. The agents you are working with cannot come from the same brokerage if you are buying or selling a home in those states.
What Rules Must Dual Agents Follow in Rhode Island?
Rhode Island allows dual agents to manage real estate transactions, but they do not have free rein to do whatever they want. There are rules that realtors must follow if they want to steer clear of any legal troubles.
According to Rhode Island law, a dual facilitator (the legal term for a dual agent in the state) must exercise neutrality while managing the conflicting interests involved in a single transaction.
Dual facilitators also owe certain duties to the parties involved. Let’s go over the dual agent’s legal obligations below.
Home Buyers and Sellers Must Consent to Work with a Dual Agent
Once you decide to hire a real estate agent to help you purchase or sell a property, the realtor will hand you a form to disclose the nature of your relationship. The form will indicate if you are working with a buying or a selling agent. A transaction facilitator may also give you a form if you need their services to complete a transaction.
A dual agent will need to give you a different form. The dual agent must use the Dual Facilitator consent form to obtain the consent of the parties involved before they get to work.
If your real estate agent used the default form to conceal their working as a dual facilitator, they are in big trouble.
Dual Agents Must Protect the Information of the Involved Parties
While going through the process of buying or selling a home, you will inevitably share information with your realtor. Doing that is typically not an issue, but you may be more apprehensive if you are dealing with a dual agent.
The good news is that dual agents in Rhode Island are obligated to protect the information you share with them. Agents are only allowed to disclose your information in specific scenarios. You do not need to worry about them compromising your information, even if you work with a dual facilitator.
Dual Agents Must Continue Protecting the Buyer’s Interests Even after the Seller Opts Out
After learning that a dual agent will manage the transaction, the seller involved may decide that they do not want to proceed. In that case, the agent no longer has obligations to either the seller or the buyer. However, the agent must continue protecting the best interests of the buyer.
The agent must continue being truthful to the buyer involved. They also cannot share the buyer’s information unless the buyer consents to that.
When Are You Most Likely to Encounter a Dual Agent?
Cases where double agents handle real estate transactions are more common if a buyer selects their desired property from the available listings in a particular area. Since the buyer is contacting an agent about their listing, there is a good chance that the realtor in question also represents the property owner.
To make the transaction smoother, the agent may offer to mediate the negotiations between the interested buyer and the seller. The buyer and seller may also be more amenable to working with a dual agent to get the deal done faster.
Situations where the buying agent happens to have a listing that meets the specific criteria provided by a buyer are considerably rarer.
How Is Commission Handled if You are Working with a Dual Agent?
In a typical real estate transaction, separate agents represent the buyers and sellers. When they finalize a deal, the two agents will both take home a commission. Each agent is entitled to receive a 2.5 to 3% commission from the transaction.
Things work differently if only one agent manages the transaction from start to finish. This time around, the property seller will only pay one agent.
Still, the commission does not go down even if only one agent receives pay. The seller is still obligated to pay a 5 to 6% commission to the dual agent who facilitated the sale. They are in line to make double what they normally do if they can push the sale through.
Dual facilitators have an obvious incentive to pursue a deal to completion. Always be mindful of that when you are contemplating how to purchase a particular property.
What Are the Advantages of Partnering with a Dual Agent?
At this point, you may still be struggling to determine if forging a partnership with a dual agent makes sense for you. That is fine because this can be a difficult decision to make.
To help make things easier, we have compiled the pros and cons of working with a dual agent. We will start by detailing the advantages of that working relationship.
Home Sellers May Be Able to Save Some Money
We noted in the previous section that home sellers still pay a 5 or 6% commission even if they are working with a dual agent. The seller is not getting a discount if you are looking only at the commission rate. The transaction layout may look different if you dig a little deeper.
Since additional administrative fees also need to be paid in real estate deals, the seller may pay more than the commission to finalize the sale. On top of that, they may pay those additional fees multiple times because two realtors are involved.
Working with a dual agent means the home seller will only have to pay those additional fees once. They should save money thanks to that.
Transactions Can Be Completed Faster
Delaying your move into your new Rhode Island home can be frustrating. In many cases, which becomes necessary because one party involved in the transaction is difficult to reach.
An issue like that would not pop up if you are coordinating with a dual agent. There is no excuse for either side to delay since only one agent is in charge of the whole transaction. You can complete transactions faster with a dual facilitator overseeing the deal.
If you are intentionally avoiding dual agents, you may need to pass on some of the gorgeous Rhode Island homes available in your preferred neighborhood. Missing out on those homes is probably not something you want to do, but there may be no way around that if you are unwilling to work with a dual agent.
What Are the Disadvantages of Partnering with a Dual Agent?
Now that we are done highlighting the pros of partnering with a dual agent, we can now focus on the cons of that arrangement. Those disadvantages are detailed below.
A Dual Agent May Not Be Fair to the Buyer
They base the dual agent’s commission on the property’s final sale price. As a result, they become incentivized to snag the highest price possible for the home. They lack the same incentive to get the buyer a good deal.
The lack of incentive for the dual agent to land the best price for the buyer does not necessarily mean that they will mediate the deal in bad faith. Nevertheless, all buyers need to consider that possibility.
Dual Agents Cannot Offer Advice to Either Side
A dual facilitator does not function in the same capacity as a typical real estate agent partly because they cannot advise their clients on all matters relevant to a transaction. Any advice they give about the price of a property can create a conflict of interest, so they cannot get involved.
Essentially, the dual agent becomes more of a mediator instead of an advocate. If this is the first time you are buying or selling a home, you may need someone who can actively guide you through the process.
Your Realtor Will Have Less Time to Tend to Your Transaction
Realtors often manage multiple properties. Unfortunately, doing so takes up a lot of their time.
A dual agent will handle several properties while also working on both sides of the deal you are trying to complete. As a result, they may not help you work through the deal as much as you would like, which can be a real problem.
Is working with a dual agent a good move on your part? It is tough to definitively say one way or another because so many factors are in play.
If you are simply looking to partner with a reputable real estate agent, we at the RI Home Store can help you out. Contact us today and allow us to assist with your real estate dealings.