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Home buyers and sellers often are harmed when a single agent represents both sides of a deal, a practice called “double dipping,” the Consumer Federation of America is warning in a new report.
In double dipping, the lone agent reaps the entire usual commission of 5 to 6 percent of the sale price shared by representatives of each of the parties together.
A buyer can be harmed because the practice can increase the price.
Of the billions of dollars lost by consumers annually by the one million home sales subjected to double dipping the most is from higher prices paid by buyers, says the report’s author CFA Senior Fellow Stephen Brobeck.
The risks are greatest if the buyer agrees to be only a customer, not a client, of the listing agent, the group warns in the study.
“Listing agents who work with a buyer customer are obligated to advance the interests of the seller,” CFA explains.
A seller can be harmed from double dipping as well, the study cautions.
“If agents are determined to find an unrepresented buyer, they often delay placing the home listing on the local multiple listing service (MLS) then make it difficult for buyer agents to show the property,” the consumer advocacy organization notes.
Conflicts of interest from double-dipping can potentially harm home sellers and buyers materially through agent manipulation of the price of the house, the quality of the house, or the time to sell, CFA cautions.
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“Aggressive double-dipping by agents is associated with the highest risks and costs from agent conflicts,” the study warns.
The group advises to avoid double dipping except on those rare instances when one agent functions as an impartial facilitator (often called a transaction broker) and charges a significantly lower commission.
To protect themselves, CFA says in searching for an agent, sellers and buyers should research whether an agent is a frequent double-dipper by reviewing recent sales on agent profiles found on websites such as Zillow and Realtor.com.
In their searching, sellers especially should make it clear that they want the agent to represent them throughout the sales process, then refuse to accept an agent request to change their role from fiduciary agent to dual agent or transaction broker, CFA urges.
Double dipping is the most common in homes that sold for under $150,000—with double dipping occurring in 16.5 percent of the transactions compared to less than half that rate (8.1 percent) for sales over that figure.
CFA found double dipping was as common in the nation’s largest realtors—Keller Williams, RE/MAX, Coldwell Banker, eXp, Century 21, and Howard Hanna—as it is among the smaller firms.
The findings are based on a CFA examination of over 6,000 home sales in more than a dozen cities, to identify the extent of double-dipping rates by real estate agents.
