Chips and salsa, pretzels and cheese, and real-estate brokers. What do all these things have in common? Double dipping. Double-dipping is when a broker represents both the buyer and the seller in a transaction in the real estate industry. This act has been practiced for many years and has some advantages and more not-so-pleasant disadvantages.
Advantages of Double Dipping
Let's start with the advantages of being represented by a double-dipping agent.
Same agent represents both the buyers and the sellers, there is more potential for more efficient communication between the two parties. One of the most common complaints we hear from both agents and sellers is that the other party's agent takes too long to reply. Sometimes it is because their client isn't responding, but it is usually because the agent is too busy with other transactions.
There is potential for more transparency in the negotiation process. While we will also touch on this as a negative, this can increase the closing speed and satisfaction if done ethically. When both parties can effectively convey their contingencies and various other aspects of settling on a house, an experienced agent can effectively maneuver the transaction for the benefit of both parties. The downside to less back-and-forth negotiation is less negotiation. When one agent represents both sides, there is no second agent to step in and negotiate a better deal for either side. There is no check on the sole realtor's power.
As a buyer in a seller's market, it cannot be easy to win on an offer. While this can be unethical, when a buyer is working with the seller's agent, the agent has more financial incentive to close with the buyer since they will likely be earning double the commission. Overall, the potential advantage in a transaction where the agent is both the seller and buyer agent is a faster, more efficient transaction process.
While a quick transaction may sound like a great deal, it does have many negatives, so let's look at the other side of double-dipping. Throughout the entire real estate industry, one thing tends to stay constant. Realtors act in self-interest. When a realtor represents both the buyer and the seller, all the cards are in their hand. A fiduciary is a term used to describe someone who has an exclusive obligation to someone or something. In real estate, a fiduciary is an agent that represents only the buyer OR the seller. So, when an agent represents both parties, they are no longer fiduciary and have less time to spend with either party. Without the fiduciary responsibility, the agent will now negotiate with themselves, and the quality of service the buyer and seller would get goes down. In addition, this means the agent will do less negotiation, while the same double-dipping agent will get double the commission.
Agents make the argument that double the work deserves double the commission. However, is representing both parties double the work?
Disadvantages of Double Dipping
While double dipping agents gain advantages through this practice, its also has a fair share of disadvantage that can harm not only the transaction but the client as well. Here are disadvantages of double dipping in real estate transactions.
The claim that representing both parties is double the work is not valid. In most cases, it is equal to representing just one party; in some cases, it is LESS work. You may be asking, "how is dealing with an extra party less work than dealing with one?" When a realtor deals with another realtor, many challenges arise. There are delays in communication, multiple counteroffers, an ever-changing timeline, to name a few. The benefit of being the sole realtor in a transaction is that you have direct contact with both parties. There are no wait times when negotiating contingencies, and all the info and various transaction processes are in your hands. So, the argument that double the work deserves double the pay is not valid, simply because the realtor doesn't do double the work.
Another reason double-dipping can harm clients, particularly buyers, is the conflict of interest. There is a high chance that a buyer agent is also representing a few sellers. In most cases, the buyer agents will show their listings first and encourage the buyers to submit an offer on those houses to get double the commission. This can hurt buyers who would miss out on finding a better home because the agent decided which homes they see. If a client gets caught up with an agent that steers them towards their listings, it is wise to use an app like Zillow and ask the agent to show those houses instead.
Double-dipping may raise the price of the overall home sale for buyers. The agent has an incentive to sell the home for as much as possible to get more commission. When there is no competition among agents, they are free to manipulate both sides to have a more favorable outcome for themselves.
After discussing the pros and cons of double-dipping, it is essential to decide what is best for your needs. Do you need a fast transaction? Are you afraid of overpaying for your home? These are questions everyone should be asking when they decide to do business with a double-dipping agent.
If you are looking for an option that is cost-effective and as quick as a double-dipping agent, Everhome is the realty firm for you. Our flat rate plus full service will expedite the process while giving you all the bargaining tools that come with a full commission realtor.