Clarifying my stance against Dual Agency

I have long argued against Dual Agency, and need to slightly redefine/clarify my opposition – My beef is with Single Agent Dual Agency where the same agent represents both sides of a transaction. In principle and practice, Dual Agency, also known as Designated Agency, when practiced by agents in the same firm should be legal and ethical.

From the Virginia code:

“Designated agent” or “designated representative” means a licensee who has been assigned by a principal or supervising broker to represent a client when a different client is also represented by such principal or broker in the same transaction.

“Dual agent” or “dual representative” means a licensee who has a brokerage relationship with both seller and buyer, or both landlord and tenant, in the same real estate transaction.

Clarifying opposition should make arguing for Single Agent Dual Agency more palatable to some.

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11 Comments

  1. Kelley Koehler December 10, 2007 at 12:39

    I appreciate the clarification! In a market like mine, where my brokerage has a 30-40% market share (depending on the year) I can’t avoid a flavor of Dual Agency. I don’t want to personally represent both parties in a transaction, but legally, I become what we call a limited dual agent in my state when another agent from my brokerage is on the other side. Although we do call it the same thing if the same person is on both sides.

    Reply
  2. Jim Duncan December 10, 2007 at 14:54

    Kelley –

    Thanks so much for stopping by and commenting. That reasoning is exactly why I felt the need to clarify. I was in a meeting last week and was making my case, and felt that this clarification would strengthen my opposition, and the general opposition to Dual Agency.

    Reply
  3. Julie Emery December 10, 2007 at 17:10

    It’s clear that Designated Agency is a necessity in most markets. I can see the possibility for abuse here as well, but in most cases where I’ve seen it, it appears to be benign. As always though, a thorough disclosure of all possible issues is the way to go!

    Reply
  4. Danilo Bogdanovic December 12, 2007 at 21:24

    Designated Representation is fine. Both agents may be from the same brokerage firm, but each agent represents their client (either buyer or seller) solely and in their best interests 100%.

    Dual Agency, where the same agent “represents” both the buyer and seller should be banned. It’s like having the same attorney “represent” both the plaintiff and the defendant.

    In Dual Agency, technically, the agent does not represent either party and is only a facilitator of the transaction. What good does that do for either party or for real estate in general?

    Reply
  5. Rick December 31, 2007 at 02:20

    To avoid any conflict of interest, the parties involved must be notified of the arrangement. If they are comfortable with it and have no objections, then it should be ok to go ahead. However, if they are not comfortable with this arrangement, then it should be avoided.

    Reply
  6. Joe Vita February 2, 2008 at 16:44

    Dual agency practiced by one agent is always a conflict of interest for the agent even if legal dislcosure is made.

    In a designated agent situation, the principal broker is by law acting as a dual agent and is in a conflict of interest position even if legal disclosure is made.

    Virginia law requires disclosure of dual agency but our Code of Ethics requires “informed dislcosure”. Though this phrase is not defined it does appear to place a further obligation on an agent to make some type of explanation of the consequences to seller or buyer accepting dual agency. It doesn’t go far enough in my opinion.

    Unfortunately, the laws in our state regarding dual agency (including designated agency) do not require an agent to specifically disclose to either seller or buyer the number of ways in which his “representation” of them will change once dual agency is invoked by him or his broker.

    Specific examples should be given such as “I can no longer advise you on value or offering price”. They won’t be hearing information such as “I can no longer inform you about the wild and loud parties that go on every weekend at the house next door”.

    When signing most listing agreements sellers agree in advance to go along with the a potential dual agency without this vital information. The agent is already free on the seller side to work as a dual agent as long as his buyer client agrees.

    I wonder how many well informed sellers or buyers would agree to go along with it when offered if they knew that “their agent” could no longer be their advocate but would merely be providing ministerial services?

    I wonder how many times the request to agree to dual agency is presented to a seller as the agent is holding an offer in hand.

    I wonder how many times the act of bringing in a second agent to “represent” one side in a designated agency situation is accomplished at the last minute with little knowledge of the new client by the new agent and without actually being familiar with the property or showing it to him.

    Our Code of Ethics requires Realtors to ALWAYS place the best interests of our clients ahead of our own. It could, in my opinion, do a better job of helping us accomplish this as could our state regulations.

    And last but not least, most good lawyers would never let themselves get involved in a similar situation with two clients.
    What does that tell you?

    Reply
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