Single Agent Dual Agency – Do Consumers Care?

Do consumers care about Single Agent Dual Agency?

Maybe.

The Code of Virginia states:

A. A licensee may act as a dual representative only with the written consent of all clients to the transaction. Such written consent and disclosure of the brokerage relationship as required by this article shall be presumed to have been given as against any client who signs a disclosure as provided in this section.

I got into quite a discussion with Ardell in Seattle on Twitter regarding whether consumers care about agency.

My belief is this – if the National Association of Realtors – or better yet, the Virginia Association of Realtors – needs to study the viability of Single Agent Dual Agency. But -

@robhahn Everytime I hear a rumor of my state association looking into Dual Agency, the next thing I hear is that it was squashed

@ARDELLd if NAR really believes that they are representing members then they will look at Dual Agency. Doing nothing sacrifices integrity

Her response is here:

Eradicating Dual Agency is not The NAR’s prerogative (Jim Duncan).
Why? Look at The main rule of real estate according to ARDELL, characteristically in BOLD lettering in this post at paragraph four. Sometimes and often, the buyer’s best way to get the house and/or get lowest overall cost, is by using the listing agent. Not always, but sometimes and often. The State can’t…the NAR can’t…remove that option from the buying public. In reality what a buyer wants is full representation, from the person who knows the most about the house, and at the lowest possible cost which is free (or what they sometimes perceive to be free).
Sometimes and often, the seller’s best way to get a buyer to buy his house and get the highest net return is to cut out one of (or both of) the agents in the process.The State can’t…the NAR can’t…remove that option from the selling public In reality what a seller wants is ready access to all buyers in the marketplace without having to pay two agents, AND they want the buyer agent fee to come back to them vs. it being given to the buyer, if the buyer has no agent. They also don’t want to pay a buyer agent to tell the buyer that the house is overpriced or inadequate. They also want the agent they hire to be free to bring them a buyer direct (dual agency).

But here’s where we differ – I don’t want to take away the option of anyone choosing non-representation.

Realtor Associations are suffering from identity crises – they don’t know if they should be pro-Realtor or pro-Homeowner.

If they’re truly interested in representing either one, they’ll at least study the Agency issue.

My belief remains: The only party who benefits from Single Agent Dual Agency is the Realtor. And even this is a short-term financial gain that sacrifices public perception of an industry already clinging to integrity.

The NAR can’t change state laws, but they can certainly make recommendations to state associations to lobby for changes. It’s about time they do.

Don’t mind me. I’ll be here tilting at windmills.


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About Jim Duncan

A Charlottesville Realtor who tries to stay on the bleeding/cutting/functional edge of technology and real estate trends. I have been selling real estate for the past 10 years, lived in C'Ville for twenty+ and am married to one of few Charlottesville natives left.
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  • http://varbuzz.com @bkmcae Ben Martin, Va Assn of Realtors

    As you know, Lem Marshall, VAR’s Special Counsel, has cautioned against single agent dual agency.

    It has been about 10 years since Virginia’s agency laws underwent a significant re-write. Some believe it is time for another thorough look at all of Virginia’s agency laws. However, any study of agency laws or efforts to change them from VAR will most likely need to come up from either the Public Policy or Risk Management committee. The VAR Board of Directors could also take action on this independently.

    Dual agency is a polarizing debate. It will take a strong commitment to consensus building, trust and compromise from both sides to see change happen.

  • http://www.raincityguide.com ARDELL

    Good morning, Jim.

    1) your quote after @ARDELLd looks like that is something I said, vs. something you said to me. Just making it clear that “if NAR really believes that they are representing members then they will look at Dual Agency. Doing nothing sacrifices integrity” is something YOU said TO me.

    2) As to your statement: “My belief remains: The only party who benefits from Single Agent Dual Agency is the Realtor”, I answer this:

    You are missing the big part: when a buyer and seller request Dual Agency, the commission is often reduced and sometimes the buyer fee is eradicated in it’s entirety. When buyers and sellers request Dual Agency, or that the buyer be unrepresented, they do it for a reduced cost.

    Unfortunately from the agent-centric model, many buyers are getting no representation (single agency for the seller) but are paying for full representation. The problem isn’t the agency law, and no law or rule or study needs to happen to correct that problem. Agents simply have to stop taking a Buyer Agent Fee when there is no Buyer’s Agent. It’s as simple as that. AND the seller should not benefit by having a reduced fee because the buyer is unrepresented. The buyer should get the monetary advantage of the buyer being unrepresented, not the seller.

    At the moment in this Country, we have a majority of States offering Designated Agency. If practiced correctly (which it rarely is) the buyer has the option of using any agent in the State (except the individual who is the listing agent) and be fully represented. Builders do this all the time. Their listing agent doesn’t sit in the Model Homes. Listing (Seller’s) Agents don’t sit their Open Houses. By doing that the buying public is always meeting a Buyer’s Agent at first contact, vs the agent for the seller.

    If you want buyers to meet a buyer’s agent, just put the phone number of a buyer’s agent on the sign instead of yours (if you represent the seller)…simple as that. Dual Agency…POOF! Magic Wand.

    UNLESS the buyer insists on speaking directly with the listing agent, for whatever reason they may have to do that. When that happens I think the agent should hang a big sign around their neck that says “I am the agent for the SELLER” during any discussions with the buyer. Clarity…Transparency…is as simple as a piece of paper, a Sharpie and some string :)

    States that have enacted laws eradicating Dual Agency have, as a result, left BOTH parties or ONE of the parties (usually the buyer) with no representation at the same price as full representation for both parties. That is not a good answer.

    You seem to be wishing for the right to represent one party only…you already have that right. You just need to get buyers to agree to pay the full fee (in the sale price) for getting NO represenation. Don’t “sell” that…cause it ain’t right.

  • http://www.raincityguide.com ARDELL

    Ben,

    Too many have wasted too much in time, money and resources to try to remove Dual Agency. Reality is that buyers approaching the agent for the seller to save the buyer agent fee, and get to the person who knows the most about the house and the seller’s motivations, is on the rise.

    Given there is more information available to buyers, some want to represent themselves, the same way that sellers can be For Sale by Owners. We all have seen “unrepresented sellers” for many, many years. They are people who want to pay less in total commissions. Now we are seeing buyers understanding that since those commissions are included in the sale price, THEY want to be “unrepresented buyers” to experience reduced commissins.

    I’m not saying that’s a smart move on their part…just saying equality is entering the marketplace.

    The sad reality is that many agents don’t represent anyone but themselves, so Dual Agency exists in every transaction…even single agency…when the agent worries about themselves most.

    I believe you already have Designated Agency in VA…that IS the answer. If Jim or any other agent wants ONLY Single Agency, all they have to do is note “the Listing Agent (Agent for the Seller) will not deal with unrepresented buyers. Simple as that. “Go get an agent and have your agent call me.”

    No studies or changes needed.

    California still has old fashioned agency where everyone who works for the same Broker represents the buyer. CA and states like CA, need to adopt Designated Agency. Given the majority of states have adopted Designated Agency, it is already proven to be the answer by majority rule. Agents just need to operate within those boundaries in a more efficient and transparent manner. Practice makes perfect…as they say.

  • http://www.raincityguide.com ARDELL

    Jim said: “Realtor Associations are suffering from identity crises – they don’t know if they should be pro-Realtor or pro-Homeowner.”

    They are a Trade Organization. They represent the people IN the Trade. They should stop pretending otherwise. The states enact laws for the buyers and sellers…the Trade Association enacts fair practices and ethics for agents dealing with other agents. Sliding a few consumer thoughts in…doesn’t make them something they are not, and just confuses the public.

    The DOJ suing NAR (old issue) makes the point that the government enforces laws when a Trade Association oversteps their bounds and borders on breaking any laws that affect businesses and people. NAR was given the privelege of being a “self governing body” only because we all represented sellers and the government deemed the objectives of agents to be always in line with the objectives of sellers. Buyer Agency coming in to play changed that, and there is not likely anything NAR or anyone else can do about that. NAR has tried to put buyer consumers in to the mix with band aid fixes for years. In reality, that means they are trying to be Triple Agents who represent agents, sellers AND buyers…not possible. Failed attempt.

    Jim, don’t wish for buyers to be unrepresented, as that seems to be the answer you seek. It took 85 years for buyers to START getting SOME representation. Don’t wish for Dual Agency to go away, if your answer = Sellers ARE represented and buyers are not. That is asking for us to go back 15 to 20 years to “the old way”. Not a good answer.

    Jim, Don’t be a party to anything that diminishes the forward motion of Buyer Agency in your State, or in the Country. We are at 85 years of Seller Agency to only 15 years toward integrating Buyer Agency. A weak market is the time to move Buyer Agency forward…not backward.

    P.S. I am an agent who represents both buyers and sellers. I am a buyer agency advocate because of an imbalance, not because I exclusively represent one or the other. Just rooting for the underdog to promote equality.

  • http://www.realcentralva.com Jim Duncan

    . Agents simply have to stop taking a Buyer Agent Fee when there is no Buyer’s Agent. It’s as simple as that. AND the seller should not benefit by having a reduced fee because the buyer is unrepresented. The buyer should get the monetary advantage of the buyer being unrepresented, not the seller.

    Agree. We need to divorce the commissions and have each party pay his or her own representation. If they choose to be unrepresented, so be it.

    I believe you already have Designated Agency in VA…that IS the answer. If Jim or any other agent wants ONLY Single Agency, all they have to do is note “the Listing Agent (Agent for the Seller) will not deal with unrepresented buyers. Simple as that. “Go get an agent and have your agent call me.”

    I already write in my listing agreements that I will not do single agent dual agency. But … my job as the listing agent to sell the house. If a buyer approaches me, I am clear that I do not and will not represent them, but if they so choose, I will write the contract to facilitate the sale and represent my seller.

    I don’t seek a return to subagency, but to a place where the listing agent will not “represent” both sides. I’ve long advocated for strong buyers’ agency, and firmly believe that an agent for both parties is an agent for neither.

    More later …

  • http://www.theagenttrainer.com Matthew Rathbun

    Dual Agency is simply wrong…. At the most basic root it breaches the trust that should be expected of a practitioner for no good reason. Ask any client, facing a potential for dual agency this question:

    “By law I am required to reduce the normal level of service you should be afforded, to enter into a relationship that is primarily beneficial for me, the agent. You have the right to have your own exclusive agent, which will provide you will the full level of service outlined in the the law and the COE. Do you still want to work with me, as I pretend to be fair to two opposing parties, looking for two completely different ultimate goals?”

    You’re going to be hard pressed to find any respectable instructor or attorney to tell you Dual Agency is good.

    The Pre-amble to the Realtor COE stresses the need for exclusive Agency, the chief Legal Counsel for VAR, the previous Chair of the Real Estate Board, Realtor Magazine, Commonwealth Magazine, Real Estate Buyer Agency counsel, etc… have all given written warnings against it’s practice.

    The people who are for it, base that decision on money and no other. Unfortunately they also typically control the money and therein lies the issue. Until such time as Brokers and Lobbyist side with the consumer; we will have Dual Agency.

    To Ardell’s statement: “The DOJ suing NAR (old issue) makes the point that the government enforces laws when a Trade Association oversteps their bounds and borders on breaking any laws that affect businesses and people.” I am not in love with the fact that authority can intervene when someone is bordering a perceived legal violation. Presumptive guilt has never been the precursor to true justice.

    Designated is one answer, but Non-Client (which is a legal form of Agency in Virginia) is better. If the client really doesn’t need their own representation, than get them to sign an agreement that they represent only themselves. Dual Agency is merely the presumption of representation, without any real representation. Non-Client is the absence of expectation.

    In Virginia you have to provide basically seven levels of representation (54.1-2131 and 54.1.-2132). You can pretty much scratch five of those seven if you desire to be a Dual Agent. I think that speaks volumes.

    Personally, I think it is far more likely in the future that we will all be Selling Agents, and the Sellers will represent themselves. Marketing a home online is too easy and too free – you don’t even have to be good at it, just look at any local MLS. The Listing Agents have not done as good a job as they should being able to articulate their value.

  • http://www.theagenttrainer.com Matthew Rathbun

    Jim,

    One other point. It’s true that NAR does not make Virginia laws, but historically each substantive change in the COE has resulted in a change of the statute for Virginia within a 2 year period.

    Additionally, Virginia has this “Reasonable Care and Due Diligence” issue. If the practitioners are predominately Realtors, than they would presumable establish the level of “reasonable care”.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    Jim says: “We need to divorce the commissions and have each party pay his or her own representation. ”

    There is no “we” there is only YOU. You can do that right now…simply refuse to be paid a buyer agent fee if you do not represent the buyer. Done! Each party already DOES pay their own agent…the commission is part of the buyer’s mortgage …the buyer agent fee is financed as part of the purchase price. No changed needed, as buyers always finance their buyer agent fee OR they can decide to pay if vs. financing it, the same as MIP on an FHA loan.

    “but if they so choose, I will write the contract to facilitate the sale and represent my seller. ”

    Slight change there. Offer them the buyer agent fee to buy a buyer’s agent who WILL represent them OR pay you that fee to NOT represent them. If you explain it that way then they will understand that they are paying for representation…whether they get it or not.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “I don’t seek a return to subagency”

    Jim, sub agency = no representation for the buyer and only representation for the seller. That IS sub-agency. Collecting a buyer agent fee and only representing the seller IS sub-agency. Both = buyer is SOL. Same difference.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “Dual Agency is simply wrong…”

    Matthew…and yet not any MORE wrong than no representation at all for the buyer, so no agency for the buyer is not the fallback position. Each are equally wrong at best.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “Non-Client (which is a legal form of Agency in Virginia) is better…”

    Non client is fine as long as the Buyer Agent Fee included in the price is given to the buyer (not the seller) in exchange for no representation, and the buyer elects to take the money instead of being represented.

    Most agents take the money (buyer agent fee) and offer no agency in return. Not a fair “trade”.

  • http://www.theagenttrainer.com Matthew Rathbun

    Ardell,

    I would advocate Non-Client with Ministerial Acts, as opposed to Dual Agency; but I agree that no representation at all is not a valid option. If there are absolutely no other agents to refer to, than get a lawyer.

  • http://www.theagenttrainer.com Matthew Rathbun

    Virginia does not allow the fee to be given to the Buyer. It’s the same as paying an unlicensed person a commission. Even a reduction of Sales price could be a violation.

    The commission was offered and negotiated with the Listing Broker who is sharing it with the Selling Agent. The point of non-client is to ensure the Buyer is aware that they get notta, unless it pleases the Seller and propels their desire to sell the home.

    It’s a slippery slope…

    • http://www.roywheeler.com michael guthrie

      Matthew,
      I may be wrong but my understanding is that as long as the rebate of commission is paid to a principle in the deal (buyer or seller), it is legal. What you can’t do is compensate someone who is not licensed and is not a principle in the transaction.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    Matthew,

    Sometimes a listing agent is superfluous and sometimes a buyer agent is superfluous. The determining factor is the level of skill of the client. Sometimes the seller can do it himself…somethimes the buyer can do it himself…sometimes both can. Those who can’t or don’t want to…hire an agent. One is not more superfluous than the other…it is all consumer choice driven.

    What Jim wants is for he and the seller to decide that the buyer can’t have representation (and for them to acquiesce)…and for the seller or the agent for the seller to reap the monetary benefit of the buyer being unrepresented. That is more wrong than Dual Agency. Paying for “less” via Dual Agency is bad, as you said. Paying for nothing is worse.

  • http://www.realcentralva.com Jim Duncan

    What Jim wants is for he and the seller to decide that the buyer can’t have representation (and for them to acquiesce)…and for the seller or the agent for the seller to reap the monetary benefit of the buyer being unrepresented.

    No, no, no no.

    I want for the buyers to have buyer agency and the sellers to have sellers’ agency. If the buyer wants representation, perfect. If they want to be unrepresented, fine.

    Designated Agency is fine by me as well.

    Please don’t misrepresent what I want – with this post, I’m wondering whether the consumer cares.

    I have yet to hear anyone other than a Realtor state that dual agency is in the best interests of the consumer, and I have heard multiple consumers state that they were taken advantage of in a dual agency relationship.

    • http://www.roywheeler.com michael guthrie

      Dual Agency is misused all the time. From what I remember, dual agency was passed for one reason and one reason only; that reason being you have a buyer who has signed an exclusive right to represent agreement and you then take a listing which is perfect for the buyer who you already represent. As long as the buyer and seller understand and agree in writing, you move forward with what is certainly and awkward situation. Another example is you have a listing and the seller who are now your buyers decide to purchase another one of your listings. This too is where Dual Agency is warranted.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    It’s not a slippery slope, Matthew. It’s very simple…reduce the sale price by that amount OR have the seller pay that amount toward the buyer’s closing costs and reduce the total commission by the amount the buyer forfeits via no representation (or reduced representation, ministirial duties only). The buyer should get the benefit of reduced representation and there are two perfectly legal ways to effect the fair and balanced tradeoff.

    Matthew said: “The point of non-client is to ensure the Buyer is aware that they get notta, unless it pleases the Seller and propels their desire to sell the home.”

    Can you say that to a room full of buyers without being slammed with a bunch of rotten tomatoes? PU-LEEZ! Talk about “old school”. Understand that is a “leftover” from the time when only sellers mattered…no longer the case and hasn’t been for 15 years or so.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    Jim,

    Most times when a buyer agrees to NO Agency…it’s the same as when they agree to Dual Agency…they just want the house. It is up to the agents to not try to talk them into either for any reason.

    If you tell a buyer they are paying the same for NO representation as they would to go get representation…would they choose paying the same price for nothing? It’s all in how we “sell” it.

    The only reason Dual Agency is perceived to be worse than full for seller and none for buyer…is because sellers are favored in the age old mindset. One is bad for both the buyer and the seller. One is better for the seller and worse for the buyer. You lean towards the latter because you percieve that the seller is paying the buyer agent fee. If you understood that the buyer is financing the buyer agent fee whether he gets representation or not…you wouldn’t be in favor of the buyer getting nothing for his money.

  • http://www.theagenttrainer.com Matthew Rathbun

    You keep referring to 15 years or so. It was modified in 1997.

    It’s not at all “old school”. The difference between Dual Agency and Non-client is that in Dual Agency the client expects something they cannot have; in Non-client there’s no expectation thus lowering the liability of the practitioner. The only right answer is referring the buyer to another capable agent and not doing Dual Agency.

    You cannot say Dual Agency is ok and also promote one’s self as pro-consumer. They do not exist in the same world.

    Paying off a buyer to take a crappy level of representation is not “ok”.

    I am going to refrain from any further comments here. I’m watching your twitter updates and realizing that we’re stalemate. I think you’re dealing on a plane of perception, and I’m trying to deal on a level of what I can support with regulations.

    There is a reason why I am sought after to consult with people from Brokers to attorneys on the matter of agency…. Moreso, you cannot debate Agency issues, without being fluent in that State’s (Commonwealth’s) laws.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “You keep referring to 15 years or so. It was modified in 1997.”

    I don’t know what “it” is that you are referring to, but Buyer Agency entered various areas at different times starting in 1989 or so. The word “fair” was removed from the COE before 1997 in recognition of buyer agency, so I’m sure it happened before 1997 nationally.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “The only right answer is referring the buyer to another capable agent and not doing Dual Agency.”

    Matthew, that is absolutely a fair response IF the buyer and seller both agree to and enforce that. It also protects the seller better, so the seller can say he will not sell his house to a buyer who is not separately represented. That is the seller’s right. OR your Board can tell all sellers that they cannot be IN the mls unless they agree to the policy that all buyers “must” have separate representation.

    Lots of answers, none of which are the buyer paying the same price for nothing or limited service.

    To the buyer you can say “the seller has agreed to pay X for your representation, and your not having representation is not an option” as long as the seller agrees that you can send those buyers away.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “You cannot say Dual Agency is ok and also promote one’s self as pro-consumer. They do not exist in the same world.”

    Pro-consumer means we give them (both the buyer and seller) the dignity they deserve, by giving them a say in what happens to them. We don’t choose “nada” FOR them, for the same price, and tell them (buyers) it’s none of their business.

    The arrogance of the discussion is that we choose for them and they have no say in the matter.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “Paying off a buyer to take a crappy level of representation is not “ok”.

    Taking their money and giving them nothing in exchange is worse.

  • http://www.RainCityGuide.com/author/ARDELL ARDELL

    “I’m trying to deal on a level of what I can support with regulations.”

    I’m dealing from a national perspective and suggest you help your individual area change regulations that need changing. If you were in the industry before buyer agency, you would know which regulations needed changing when buyer agency started…and were not.

    Saying a buyer MUST have representation…or pay for it even if they do not, is like telling all sellers they MUST have an agent. Arrogant. Not you personally…any regulation that enforces that position.

  • downtownenvy

    Jim,
    I can give you the personal perspective of a buyer AND seller who used a dual agent. When we purchased our first home, we asked a very good friend who had been a local realtor for 30+ years to represent us as we searched. She suggested that we drive around the area (Winchester, VA) to get to know different neighborhoods and to get an idea of what was available. In the process of looking we found a great end unit townhouse two miles from my husband’s job.

    The sign in front of it said For Sale by Owner, so we took the number down and called to see if it was still available, the owner said yes, and asked if we wanted to take a look that evening. We knew our agent had told us not to view any properties without her, so we called to see if she could join us. When she learned the address she told us that she had just signed with the couple the day before because they were tired of trying to sell on their own. As first time buyers, we were like baby ducks that had imprinted on the wrong mother. We did NOT want to give up our agent, and frankly the sellers had known our friend for a long time as well, and felt they could trust her to be fair with them too. Short story long- she represented all of us. Since we were much less savvy than were are now it didn’t seem like a problem. We even haggled a $7000 lower price after two back and forth offers, so it seemed like we did well. The home was well within our budget to start with (by choice, with only one income at the time) so we still felt thrilled with our luck.

    Do I still feel that way? Yes. Looking back over all the paperwork, I still think that we were represented pretty fairly. Would I do it again? Nope, nada, no way. Not since I now know the breakdown of how commissions work in real estate. You can’t really represent me fairly if the seller who ultimately sets the price is paying you as well. That is the bottom line from a consumer, and I have to disclose, a client of Jim Duncan. That is one of the reasons that we chose you, and why we continue to consider you our agent. And OUR agent only when we do FINALLY buy a home. Hope this helps. Sorry to ramble, but I am pretty passionate about this particular topic.

    BTW, we also used her a year later when we sold the house. Our buyer had a totally different agent this time;). Ahhh to be young and foolish.

  • http://www.realcentralva.com Jim Duncan

    downtownenvy – thank you. You rock.

    Your example provides, in my opinion, the clearest example yet about how attitudes regarding agency have changed in the past several years.

    You say it best –

    You can’t really represent me fairly if the seller who ultimately sets the price is paying you as well.

  • http://www.raincityguide.com ARDELL

    Jim,

    What happens if you happen to list the house that DownTownEnvy eventually wants to buy? Will he ditch you…or do as he did before when that happened?

    Even if you aren’t the listing agent, isn’t the fee for helping/representing him still paid by the seller? If you deem it is paid by the buyer and do not take the seller’s offering of compensation, how do you do that?

  • downtownenvy

    Ardell,
    I can answer that one for you. I would speak with Jim and get his advice on a referral because I don’t believe that he would want to be in that situation any more than I do. Also, I would seek his opinion because that is why I use an agent when I purchase now. I want that expertise and professionalism. Jim would be the agent we would use to then later sell our property if necessary,or to help us find a move up home later. To Jim, losing me as a client over dual agency is not worth giving up his personal ethics. This may be a choice that other agents will need to get used to making as well. You either have integrity, or you don’t. I feel confident that Jim does have that kind of integrity.

    With the bubble situation and the economy, I don’t think that I am the only client out there who realizes that buying a home is far more important than flinging a couple of thousand dollars at a property, crossing my fingers, and hoping for the best. There has to be a way to make provisions that will better protect the buyer, the seller, and the agents. We just have to be committed to finding it, and working for it. Real estate is hopefully no longer a hobby for some agents and clients, and I think that the move towards transparency is what everyone needs to help revitalize markets everywhere, and level the playing field a bit more. I’m just one buyer, and there are other opinions out there, but this one is mine.

  • http://www.raincityguide.com ARDELL

    Thank you, Downtown Envy.

    I have had this situation and have asked the seller not to list the house until I could get my client (who I suspect has an interest) over to see it. If my client (the buyer as in your case) likes it, then I refuse to represent the seller.

    So it can be done either way if the listing comes along while I am representing the buyer client. I can refuse the listing instead of cancelling my arrangement with the buyer.

    Often the buyer likes having “first and exclusive crack” at the house, and so the buyer and seller choose for the seller to be a For Sale By Owner/unrepresented seller, and we proceed in that manner. It then becomes the seller’s option to hire a different agent to represent him or just sell it to my client.

    Does that sound Kosher to you? It is unlikely that I would go to a listing appointment and not know if the house is of potential interest to one of my current buyer clients.

  • http://www.theagenttrainer.com Matthew Rathbun

    Micheal, you’re right. You can credit the principal in the transaction, so long as it’s on the HUD-1. I was incorrect. I’ve been trying to put my finger on the case law, and can’t find it. The factors have to be very specific and in conjunction with approval from the lender.

    Essentially you can’t offer financial incentive to disadvantage the client. I just can’t find the case that I was referencing in where this became an issue.

  • http://www.raincityguide.com ARDELL

    Michael said: “From what I remember, dual agency was passed for one reason and one reason only; that reason being you have a buyer who has signed an exclusive right to represent agreement and you then take a listing which is perfect for the buyer who you already represent.”

    That is not the case, Michael. Dual Agency came before Designated Agency. Dual Agency came, in the same split second, as Buyer Agency.

    At that time everyone who worked for the same broker became a Dual Agent if they had a buyer for any of their Office Listings. If that Broker was the broker for the whole County of offices, then all of those agents became Dual Agents if they had a buyer. That made it impossible for any agent in any of the offices to sell an office listing without Dual Agency coming into play.

    Many areas, the whole state of CA (I believe) still operate this way.

    Designated Agency became the answer to Dual Agency as it limited the issue to only one person…the specific listing agent…allowing other agents in the same office to represent the buyer. Some states (like Florida) outlawed Dual Agency and replaced it with Transaction Brokerage, so anytime a house was sold by another agent under the same broker, neither party could be represented. Not recommended. Oklahoma outlawed agency for anyone buying or selling a house :)

    So Dual Agency, as you see it practiced in your state with Designated Agency in play, is at it’s most limited form without eradicating agency altogether.

    Most sellers don’t like the idea that the company they hire and all of their agents cannot sell the house. That is why Dual Agency exists and can’t be eradicated by NAR…yet. There are still too many states, and some of the largest, who don’t have a satisfactory alternate route such as Designated Agency.

    How many sellers would hire a company if they could not sell any of the listings of their own company unless the buyer agreed to no representation? That is why Dual Agency came to be.

    As a side note, when Dual Agency first came to be, we envisioned ALL real estate offices would have to choose to be Buyer Agents ONLY or Seller Agents ONLY and each agent would have to choose and be housed in separate buildings. One Broker could have two offices, one with only buyer agents in it and the other with only seller agents in it.

    Housed in two separate offices so that the buyer agents wouldn’t hear the bad news of a seller, or see other offers coming in on a listing in the fax machine so they could beat it. A seller’s agent likewise couldn’t accidentally overhear the conversation between a buyer and a buyer’s agent making an offer on their listing in the conference room in the same building.

    That is why EBA and NAEBA were formed back then. “Exclusive Buyer Agents” and “National Association of Exclusive Buyer Agents”. But the seller side never stepped into place…

    Hopefully this history is enlightening and not boring. There are bigger issues than Dual Agency…much bigger. Three buyer clients of one agent both wanting the same house is largely more conflicting that one buyer and one seller wanting to transact on one house. To a large extent, Dual Agency being the BIGGEST issue with regard to agency is a myth perpetrated by the EBAs (originally). My having 3 buyers clients who have the same criteria is a conflict I eleminate…and most agents do not…and in my opinion is a much bigger conflict for my buyer clients than…just about anything else.

    • http://www.roywheeler.com michael guthrie

      “As a side note, when dual agency came into being, we envisioned”
      Ardell,
      I don’t know where you practice but I was involved in Northern Virginia when buyer agency came into being and helped Coldwell Banker come up with its buyer broker policy because they didn’t have one. The thought of everyone having to choose whether they were a buyer agent or seller agent entered into our discussion. You are correct that Virginia created Designated Agency after the initial legislation to help keep folks away from what they then call Disclosed Dual Agency

  • Downtownenvy

    Ardell. Thank you. I have found this exchange between all of you very educational and encouraging. You have all made great points and seem very knowledgeable and passionate about your topic, and it is comforting as a buyer to know that there are realtors out there who take their work so seriously. I wish that more buyers and sellers would scour their local area for real estate blogs. A lot of them can really give you an education about buying and selling the proper way. I check Jim’s blog nearly every day, and I am never disappointed.

  • http://www.raincityguide.com ARDELL

    Downtownenvy,

    Thank YOU! It is rare that we are able to have these exchanges, AND have someone outside of our industry willing to care.

    I admit that I limit the number of these discussions, as I have been fighting the good fight of Buyer Agency issues for way too many years. Too often gets annoying to my readers, so I am grateful to Jim for letting me soapbox it on his blog…just this once. :)

  • http://www.raincityguide.com ARDELL

    Michael, do you remember what year that was?

    I started with CB in NJ in 1990 – sub-agency.

    Bucks County PA 1991-1996 sub-agency then buyer agency came into play arround 1992 0r 1993. You are correct that CB had “no policy” for Buyer Agency…no one did. The original policy lasted for about 30 days and then shifted away from true Buyer Agency pretty quickly, as it has in all states.

    Florida 1996 to 1998. I was practicing in Florida (who already had Buyer Agency by 1996) when they eradicated Dual Agency in favor of Transaction Brokerage. Disaster from day one!

    Sacramento area Full Dual Agency State 1998 to 2000

    L.A. 2000 to 2004 same as Sacramento – Full Dual Agency meaning all agents with the same broke represent the seller, but nobody really “gets” that.

    Seattle 2004 to present – Designated Agency with buyer represenation as the agent default position except for “the” listing agent – a single person.

    I dare say I have practiced every form of Agency that has ever existed, including no agency, and happened to be at the right place at crucial times to see the events as they played out.

    To this day, last I checked, NYC has no mls and no buyer agency…NYC!

    Far from over…in many ways just beginning.

    • http://www.roywheeler.com michael guthrie

      91-93 you must have been with the schlott organization in Bucks County. Correct?

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  • http://www.raincityguide.com ARDELL

    Michael,

    No, never worked for Schlott. Don’t want to bore Jim’s readers with CB history, the short of it is Frank Mancuso -(Coldwell Banker Hearthside) and Joe Fluehr (CB Poquessing) had the Bucks County Offices. CB Schlott never had an office in Bucks County.

    Frank sold to Schlott a few years before CB bought Schlott (Fred I think). When CB bought out Schlott in 1991 they headquarted in Saddle River NJ and sold off the Mr. Schlott Bucks County office(s ) back to Frank.

  • http://www.urbanlifeblog.com Gene Urban

    I agree with your conclusions. We do not participate in dual agency in our real estate practice. It is almost impossible to handle the transaction and not violate agency and ethics. Too fine a line for even the best agent in most cases.

    An interesting story out of Las Vegas. When my brother was practicing real estate there, a group of attorneys came up with an idea. The had access to the MLS and would look for closed lisitngs where the agent represented both parties. The would call the Seller and ask if he/she thought they got the best deal possible, were well represented and such. If the answer was yes, they’d call the Buyer and tell them that the Seller thought they got a great deal and pass-on what the Seller had said. In many cases the buyer would agree to bring charges against the agent for agency and representation violations. The cases were generally settled out of court and they nearly always won a judgement.

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