Redfin: Sellers lose in dual agency
Homes sell at a greater discount from their listing price when the same agent represents both the buyer and seller as a “dual agent,” according to an analysis of 230,000 home sales in 22 markets around the country by technology-based real estate brokerage Redfin.
In the markets analyzed by Redfin, homes sold at an average of 95.6 percent of the list price when both buyer and seller were represented by a dual agent. That compares with a sale-to-list ratio of 97.2 percent for homes in which the buyer and seller had their own agents.
For a $300,000 house, that 1.6 percent difference would cost a seller $4,800, Redfin CEO Glenn Kelman said inÂ reportingÂ the results on the company’s blog.
One agent represented both the buyer and seller in 24 percent of the transactions analyzed by Redfin. The prevalence of dual agency varied enormously across the 22 markets in nine states analyzed — from a low of 5.2 percent in Travis County, Texas, to a high of 59.2 percent in Baltimore County, Md.
Statistics provided to Inman News by multiple listing services in several major markets suggest that over time, brokers and agents have been double-ending fewer deals in the aftermath of the housing boom — perhaps because of the legal liabilities associated with the practice (see “Dual agency and ‘double-dipping’ still risky business“).
Kelman acknowledged that sellers who agree to be represented by a dual agent may be able to negotiate a lower commission. But he argued that even if sellers are able to negotiate a good price, they will need their agent to continue to represent them beyond initial negotiations.
“If your agent also has a relationship with the buyer, and a stake in your working with that buyer over others, it becomes harder for the agent to function as an impartial guide to the deal best for you,” Kelman said. “It may be harder for you to feel like someone’s really watching out for you and you alone.”
The analysis showed that while banks selling real estate owned (REO) properties were less likely to be represented by dual agents, they were just as likely to get less than their asking prices as consumers when they allowed it to happen, Kelman said.
Redfin, which primarily represents buyers, does not allow dual agency or other forms of double-ending, Kelman said.