How a Dual Agent Affects Sale Prices – WSJ

How a Dual Agent Affects Sale Prices Having an agent represent both buyer and seller can either raise or reduce the final selling price, depending on the timing of the transaction Evan Rosenfeld was a dual agent for a West End Avenue home in Manhattan. GORAN RUKAVINA/TOWN RESIDENTIALBy SANETTE TANAKAJan. 23, 2014 9:02 p.m. ETpro badgeWould you trust a dual agent?Dual agency occurs when the same brokerage firm—and sometimes the same real-estate agent—represents both the buyer and the seller in the same transaction. Dual agency can increase or reduce a house’s sale price, depending on the timing, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va., who studied dual agency in home sales.Dual-agency sales that occur in the first 30 days of the listing contract sell for roughly an 18% premium because agents may be able to more efficiently match the property with the right buyer if they search within their own network, Prof. Waller says.ENLARGEOver time, that information advantage diminishes as other agents learn more about the seller and property, says Raymond Brastow, professor of economics at Longwood University, who co-wrote the study. By the end of the listing contract, the agent’s priority is getting the property sold before the contract expires. Dual-agency sales during the last 30 days of the listing contract sell for roughly a 6% discount, or $9,300 less. Overall, a dual-agency representation reduces sale prices by about 1.7%, according to the study.Real-estate agents have a lot to gain from dual agency. The seller typically pays 5% to 6% of the sale price as commission, which is split between the buyer’s agent and seller’s agent. Thus, agents have an incentive to represent both sides of the transaction and earn the entire commission, Prof. Waller says.

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