It seems that the only news these days concerning real estate is either declining home sales or the fraudulent behavior of one of the participants.  Dual agency is the process by which the same real estate broker represents both the seller and the buyer in the same real estate transaction.  These types of transactions are controversial and have been likened to a lawyer representing both the plaintiff and defendant in the same trial.  In fact, most states have recognized the potential hazards involving dual agency.  Some states, including Florida, prohibit the act of allowing the same broker to represent both the buyer and seller.  Other states have adopted a process (designated dual agency) that requires the broker to assign another agent within the firm to represent the buyer.  However most states, including the state of Virginia where the data supporting this paper were gathered, simply require a disclaimer that mandates that the broker disclose and gain permission from both the buyer and seller.   

 While the debate over dual agency is not likely to be resolved in the near future, recent findings by three researchers (Ray Brastow and Bennie D. Waller of Longwood University and Jon Wiley of Georgia State University) indicate that dual agency may provide benefits in many instances involving real estate transactions, said Ray Brastow of Longwood University. 

 The information advantage enjoyed by the listing agent may reduce transactions costs associated with matching a property with appropriate potential buyers.  “Agents who specialize by listing properties in defined geographic locations or properties with other homogeneous characteristics gain more detailed knowledge about property characteristics and market condition that may create advantages in matching a property with potential buyers” said Ray Brastow of Longwood University.  In addition, the listing agent may be aware of internal clients who are potential buyers.

 “The focus of our study is focused on the determinants of dual agency transactions” said Jon Wiley of Georgia State University. These findings are the result of the examination of a large sample of MLS transaction data as well as the empirical results from a recent homebuyer’s survey.  The survey evidence provides determinants of buyer representation with near matches for many of the factors considered in the transaction data.

 The study was conducted from data comprised of approximately 13,000 observations collected from a south central Virginia multiple listing service (MLS) area over the last decade in conjunction with results from the 2006 National Association of Realtors Homebuyers survey (NAR HBS). 

 “Our findings indicate that dual agencies may be the result of efficiency gains as the result of brokers geographically specialization and/or knowledgeable buyers about the area in which they are buying” said Bennie D. Waller of Longwood University.

 These results provide evidence of hope in a marketplace filled with little to no hope.  This should be very good news for buyers, sellers and real estate professionals alike. 

Members of the media may request a copy of the study’s executive summary directly from Dr. Bennie D. Waller (wallerbd@longwood.edu).  Interview request may be directed to the same.