Single Agent Dual Agency – Do Consumers Care?

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.

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.

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.

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.

“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.

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.

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.

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.

“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.

“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.

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.

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?

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.

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.

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.