Thoughts on Dual Agency

Moving forward …

Question everything.

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  1. Barbara McMurry February 17, 2009 at 15:44

    Congrats on the new company. Just so you know, Montague, Miller & Co. has had the no single agent dual agent policy for years.

  2. Jim Duncan February 17, 2009 at 16:06

    Barbara –

    Thanks so much for stopping by.

    I find this remarkable –

    Montague, Miller and Co, Nest, Century 21 Ray Caddell … I wonder how many other companies have such a similar policy?

    Nest – boutique –
    C21 Ray Caddell – smallish
    Montague & Miller – large (by our market standards) –

    How many other companies locally and state-wide have policies against single agent dual agency? Why won’t the Virginia Association of Realtors at least study the state of Agency?

  3. Jim Duncan February 17, 2009 at 16:15

    Barbara –

    Thank you so much for stopping by. I’m curious – how many more local real estate companies have similar policies?

    Why don’t the others?

    What’s it going to take to get our State Association to at least study Agency?

  4. Andrea February 17, 2009 at 22:10

    I will say that the solution you have adopted, and that Ray, Barbara, et al, are using (recommending designated agency even within brokerage) is what I was taught as the BEST option in real estate class. I remember that when we got to the dual-agency section, we (students) were confused and didn’t see how single-agent-dual-agency could work while maintaining clear lines of representation. That led to the explanation from our teacher of how to handle such matters in an actual transaction. I have thought since then that the solution of recommending another agent/broker to participate in the transaction was the best way to go.
    Good for you!

  5. Jim Duncan February 17, 2009 at 23:29

    Andrea –

    Thanks so much. I’m particularly confused as to why more companies don’t publicly denounce Dual Agency. It seems so basic …

  6. Scott Pershing February 18, 2009 at 08:21

    As a buyer (I am not a real estate agent) I don’t worry about dual agency, I would just write the contract straight to the seller’s agent without using a buyer agent.

    As an active buyer I see little to no value in a buyer agent. Most that I have run across have very little capability beyond showing what is already available in the MLS. When it comes to describing the surrounding areas they generally have little knowledge and disclaim everything. And when it comes to writing up a contract a 7 year old playing MAD LIB with the standard offer contract would probably do a better job.

    The worst job that most buyer agents do is in knowing a fair market price for the property. That is because at the end of the day buyer agents want a higher price for the property to close at so their commission is higher and it sets the precedent for other properties to be selling at a higher price point. They really aren’t going to walk a price down unless they are pushed to do so by the buyer.

    My solution is to just write up an offer direct to the seller’s agent. My question is how do you handle your commission as the seller’s agent? If you typically charge the seller a commission with a percentage for yourself and for the buyer’s agent, since a direct buyer like me won’t be requesting a commission from the listing agent, do you refund the buyer’s agent commission back to the seller or do you keep it all?

  7. Daniel, The Real Estate Zebra February 18, 2009 at 11:13


    You can add Strong Team REALTORS to that list. It was the first thing we decided on when we opened up 3 years ago. The difficulty with consumers is not necessarily in telling them about dual agency, but helping them understand and care about it.

    Personally, I think I am with Greg Swann on this one– the first step is divorcing the commission. If the buyer were paying his agent directly, and the seller were paying his agent directly, then dual-agency becomes much more important to both of them.


    All I can say is that you should probably give Jim, or me, or my wife, Kari a shot as a buyer’s agent. I have no doubt that it would change your opinion.

    Everything I do for my buyers is to help them get the lowest possible price on the home. Think about it– let’s say my buyer’s want to buy a home that is listed at $300,000. Let’s say the buyer broker’s commission on that home is 3%. If the market value of the home, according to comparables, is $275K, then the difference is $25K. The difference in commission, between $300K and $275K is $750. That is gross commission, before the broker split. According to your argument, I should sell my client out for the $750. Ridiculous.

    The pride I take in the profession and doing the best for my clients is priceless. On top of that, if you amortize payments of that $25K over 30 years, it ends up being a heck of a lot more than $750. That is the damage that could be done to my clients.

    Look, I can’t speak for every agent out there, but all I can say is that I take great pride in representing the interests of my clients to the best of my ability. One component of that is, for my seller clients, negotiating the highest possible price; and for my buyer clients, negotiating the lowest possible price. THAT is precisely why single-agent dual-agency must come to an end.

  8. Scott Pershing February 18, 2009 at 14:19


    Thank you for your response, but that doesn’t answer my question. If you are the seller agent and a direct offer comes to you without a buyer agent what do you do in regards to your commission? Do you refund it back to the seller, or take it all?

    I don’t doubt that you take a great amount of pride in your profession, but my argument is that as an educated buyer that is on top of the market I don’t need an agent to negotiate for me or tell me what the comps are. Thanks to the Internet a wealth of information is already available. Having a go between just to arrange showings, copy-and-paste into a standard offer contract, and tell me that they tried their hardest to get me the best deal isn’t real value for me.

    However, I believe there are many buyers out there that are not savvy, don’t understand how to even calculate their monthly mortgage payment, and would be clueless on how to make an offer. Those people need an agent, and in the long run they pay for that privilege.

    In regards to your $300K example, I commend you on your client focus but I find that going direct has better value for all parties. I can always directly propose the same $275K to the seller, but in my case the seller would have an incentive ranging between $8,250 and $9,000 (Depending on whether we closed at $275K or $300K) of the buyer’s agent commission that they don’t need to pay.

    Benefit to the seller is that by eliminating the Buyer Agent commission they can end up at the same net profit at a lower price point. Assuming 1% closing costs and 6% in seller and buyer commissions a full price $300K offer is equivalent to a $290,625 offer with only a 3% seller commission and 1% closing cost. Both yield $279K to the seller.

    The benefit to the buyer is obvious in the fact that a lower selling price would mean a lower loan payment. At 4.945% interest rate that amounts to$18K savings over the life of the loan.

    The reality is that the buyer always pays for the commissions, regardless of the fact that the seller actually pays the commissions. That is because if the net amount to the seller does not pass the seller’s acceptance price point the seller will not accept the offer.

    So back to my question, what would you do with the buyer agent commission if you had a direct offer come to you? Based on what you have said so far about your dedication to your client and separating the buyer and seller commissions, I would assume that you would refund that back to the seller.

    Am I right?

  9. Jim Duncan February 18, 2009 at 14:54

    This is a great conversation; I am showing property all day but look forward to jumping in this evening.

  10. Daniel, The Real Estate Zebra February 18, 2009 at 15:07


    Thanks for the great discussion!

    You are correct, I would (and in fact, have) give the money due to the buyer’s broker back to the seller in the example you give. In actuality, it wouldn’t be rebating insomuch as I just wouldn’t take it in the first place. We have done this before, because unrepresented buyers might be rare, but they are by no means unheard of.

    I don’t disagree with you that buyers going directly to sellers has a monetary benefit for the seller. That much is obvious. I just take issue with your argument that the reason buyer’s agency isn’t necessary is because the agents won’t act in the best interest of their clients.

    You, quite obviously, a very savy guy, and quite capable of finding a home and managing your own transaction. As you pointed out, not every buyer fits into that category. For them, there are plenty of good buyer’s agents out there who are willing to help and worth every penny of it.

    On a related note, you brought up the fact that the buyer actually ends up paying the commission for both sides, even if it is distributed by the seller. This is true, but because of the arcane system we currently have for real estate transactions, buyers just don’t get this. Heck, I specifically have this conversation with buyers and even though they might understand it, they really don’t care. For them, it is all rolled into the mortgage.

    I think that if we could at least get the accounting to the point where the buyer was shown as paying the commission to his agent, and the seller to his, it would make everyone think about it a little more. It would also allow buyers to negotiate the compensation with their agent separately, thereby eliminating the benefit that a seller receives from unrepresented buyers.

    If the seller knew going into the whole thing that they would have to pay their agent X, as opposed to X+X (for the buyer’s broker), it wouldn’t matter one bit who did or didn’t represent the buyer. There are some states that forbid rebates to the buyer, which is absurd, but true. If everyone just negotiated their own compensation with their client, it would simplify a lot of the process and also limit some of the conflicts created by the current compensation model.

  11. Scott Pershing February 18, 2009 at 15:32

    Hi Daniel,

    Thanks for the reply. I really appreciate your style and I like your approach.

    Through this discussion I found your website and I really enjoyed your presentation on the state of Real Estate Search:

    Excellent post, and exactly what I run through when I build my comps for properties to purchase.

  12. Pavel February 18, 2009 at 16:18

    I love reading this kind of back and forth discussion. What about the loan officers? Or Title Insurance folks? Or the real estate attorneys who are part owners of Title Insurance companies? The government? So many parties are getting paid when Seller A wants to sell to Purchaser B. How many purchasers out there realize that they can “shop” for title insurance quotes… and instead of the first quote of “$1,100” end-up paying “$650” on the same exact coverage after a few phone calls.

  13. Daniel, The Real Estate Zebra February 19, 2009 at 12:16


    Thank you for the kind words. I always enjoy lively discussion, especially when it is done in a respectful manner.

    I’m glad you liked the post on real estate search. The company that I was referring to in the post, OnBoard Informatics, has this really cool search tool called “Navigator” that makes available tons of interesting information that folks might find relevant in their real estate search. I am one of the agents testing it for them.

    If you get a chance, I would appreciate it if you could run in through its paces and give me some feedback:

    I know that the folks at OnBoard would greatly appreciate any feedback from consumers. You can email me at Daniel[at]

    Didn’t want to highjack the comment thread there, so I will close by saying– divorce the commissions, then eliminate single-agent dual-agency!

  14. Jim Duncan February 19, 2009 at 12:54

    Scott and Daniel –

    Thanks for the insightful comments. I regret being so late to the conversation, but Daniel has pretty much said everything I have been thinking.

    Divorcing the commissions is a challenge that must be mounted by consumers and forward-thinking Realtors, and must be done hand-in-hand with eliminating Dual Agency.

    Scott –

    Does the hourly fee structure speak to what you’re proposing? It appears that you don’t need the “chauffeur” and “identifying” components of a Realtor’s offerings, but may benefit from comps and context.

    To the “selling out the client for $750” – I called Daniel and asked him to get out of my head, as that is the exact number and example I was going to use.

    To that point, here is my example – I regard each buyer client with whom I work as at least three transactions*

    1 – When I sell them a house
    2 – When I sell it for them when they move/trade up or down
    3 – When they refer friend or family to me.

    Anything I may gain from not negotiating the best price/deal (it’s not always about price) is not worth my clients’ doubting my loyalty or dedication to them … and that’s yet another reason I don’t believe single agent dual agency is good for the consumer or the profession.

    * I don’t think of people as “transactions” but as people, but for the purpose of this comment …

  15. Rob Hahn March 6, 2009 at 13:49

    Few things.

    First, Jim — congratulations to you, and much luck to your endeavors.

    Second, Jim — has anyone ever told you that you kinda look and sound in that video like Maximus Decimus Meridius? Just sayin’

    Third, Scott’s direct question has been answered by Daniel, but I do want to point out that it strikes me as the height of folly for any buyer to trust representation by someone who isn’t on my payroll. Would you trust a lawyer getting paid by the guy you’re suing? So why would anyone trust an agent getting compensated by the seller?

    Exceptional people like Daniel may care little about his financial incentives (or have bigger picture incentives in mind) in representing a guy who isn’t paying him, but I don’t think that’s particularly wise.

    If I’m ever in the market again to buy a house, I would seek to retain a paid buyer’s agent on an hourly basis or on a project basis (“$5,000 for the transaction”), and figure out a way to have the 3% buyer’s commission be paid to me. (For example, if the flat rate is less than 3%, my agent refunds me the over; if it’s less, then I pay up to full directly.)

    Would this work?

    I agree to pay $6,000 total to my buyer rep. $2,000 up front, $2,000 when we go into contract, and $2,000 at closing. From me.

    The 3% buyer’s agent commission comes to $4,000. I’ve already paid $4,000 and owe another $2,000 to my agent. My agent keeps $2K of the $4K, and refunds me $2K. Or…

    The commission comes to $1,500. I’ve already paid $4K, and owe $2K to my agent. I write a check for $500 to my agent.

    Would either of those work for buyer agents?


  16. Daniel, The Real Estate Zebra March 6, 2009 at 14:49


    (in fairness, many attorneys are paid in exactly the way you describe– by the person/business they are suing. They work on contingency with their client. The difference is that their compensation is negotiated with their client, and not determined by the party being sued)

    I dream about buyer agency arrangements like that. They are just that, however, dreams. Most clients don’t have the cash to commit. They want the agent to assume all the transactional risk.

    The other impediment to the type of arrangement you describe is that rebating of commission is illegal in some states. As stupid as that sounds, it is true.

    The thing that I want more than anything in real estate agency is for the buyer to pay the buyer’s agent’s commission, and the seller to pay the seller’s agent’s commissions.

    I can’t, for the life of me, figure out why this can’t happen. I have been given the reason that it would destroy the MLS because the MLS exists for broker cooperation, the core of which is the offer of compensation from broker to broker. That is a lame excuse.

    There are too many smart people in the world for the commission structure to remain the way that it is.

  17. Jim Duncan March 6, 2009 at 15:10

    Rob –

    Thanks for stopping by and for the kind words. To be brief to your question – yes. Absolutely I would work for something like you outlined above, or a hybrid of any of the above. One I have done recently is hourly fee up to contract, and then x percent from contract to close, paid by the buyer and not the seller.

    Our world needs help and change.

    … I do want to point out that it strikes me as the height of folly for any buyer to trust representation by someone who isn’t on my payroll. Would you trust a lawyer getting paid by the guy you’re suing? So why would anyone trust an agent getting compensated by the seller?

    No sh*t. Buyers are starting to get this, sellers are starting to get this, even a handful of Realtors – but what I’ve found is that the status quo is so remarkably strong and entrenched it’s going to take a generation or three, or God help us, an act of Congress, to fix this.

    Daniel – on the “destroying the MLS” red herring – yep, I’ve heard it too. But here’s a question I put forth on that NAR MLS Group I was on (and got put into the final report, I think) – why not have an MLS based on cooperation, but not necessarily compensation?

    1 – Divorce Commissions
    2 – Eliminate single agent dual agency
    3 – Live happily ever after.

  18. Rob Hahn March 6, 2009 at 15:29

    Zebra –

    It isn’t shocking that some states have stupid laws. Most laws are. Stupid, that is.

    I suppose you can create workarounds in a gray/black economy kind of way.

    “Hey, so I can’t refund you this $4,500 because it’s against the damn law. But why don’t you come see me a couple of months after you’ve moved in, and uh… do some home improvement work that might cost… oh, let’s say… $4,500?”

    And FWIW, man… if you can’t afford to pay a professional some dollars to do a $300K transaction… maybe you shouldn’t be in the market? Renting isn’t evil.

    Jim –

    You know what might be fun: publish a “starbuck’s style” price list. 🙂

    Buyer’s Rep – $4,500 (Tall), $6,000 (Grande), $7,500 (Venti)

    etc. 🙂


  19. Scott Pershing March 6, 2009 at 17:11


    Who do you think makes up the stupid laws? The Realtor Association has a very strong lobbying group to do this. Why? Because the objective of the lobbying group is to protect the system and the commission frame work as is.

    I am not an attorney, but I do believe that rebating commissions is NOT against the law in Virginia. I have seen a company called that does just that in Northern Virginia. They give back 1% of the purchase price in commissions back to the buyer.

    In some states I have seen Sellers only getting charged 1% by the listing agent with a 3% towards the buyer agent.

    You can contract anyway you see fit. The Buyer Agent is always going to get paid out their proceeds from your purchase. An example I have seen used is as follows:

    “Buyer’s agent shall credit Buyer 20% of 3% of the sales price at recordation through escrow for Buyer’s closing costs.”

    I am sure your attorney could write one up that addresses how you would like to proceed. Harder part is to get an agent to break the status quo and give you your money back! 🙂

  20. Rob Hahn March 6, 2009 at 18:04

    Scott –

    Since you don’t use buyer agents, it’s probably a pure hypo here but…

    Would you pay a buyer’s agent separately, up-front (at least partially, to compensate for his time), if you then knew that any proceeds from the sale went back to you (or to the seller to reduce the price, which is the same thing)?

    The key is to make sure that your agent is financially tied to you, rather than to the seller.


  21. Scott Pershing March 6, 2009 at 18:53


    I would pay finder fees for leading me to a property that wasn’t publicly on the market and I closed the deal due to the intro.

    I personally don’t need an agent to tell me what price to offer, fill out a purchase order, or to handle a negotiation for me.

    But on the flip side, I don’t waste a buyer agent’s time either. I don’t ask them to drive me around, tell me about the local area, or arrange viewings for me. I do all of this myself.

    That’s why when I make an offer, I make it clear that in my purchase order that I will not be requesting half of the listing agents commission (normally reserved for the Buyers Agent) and I would expect that they would be providing that back to the seller.

    All that being said, I do like your model that you crafted should a person want to use a Buyer’s Agent. The only problem I can foresee is that how do you prevent an unscrupulous Buyer Agent from collecting deposits from a variety of Buyers and then really representing you versus other buyers. In addition you have to worry about if the dream house you wanted was sold to one of the other Buyers for this Buyer Agent how do you deal with the hurt feelings because you already compensated this person to find that house.

    My question to you is if you already know what you can and cannot afford to pay; you know what house will and will not make you happy; and you can find all the houses on; why do you need an agent to help you find a house?

  22. Mark March 6, 2009 at 20:39

    Agreed, most buyers can do the looking themselves. Even the lockbox is a means of controlling access (although I can’t think of a better way to let strangers in your house, other than using the seller’s agent). I know when I sold I would not have let a stranger in my house without a realtor. But I’m sure there’s an easy fix. I bet most sellers’ agents nowadays would be willing to meet you there.

    Back to looking yourself: In six months Jim took me through maybe ten houses. I didn’t sweat the commissions, though, because the seller paid it (I know, everyone pays it…but I didn’t feel it). I still feel I got my 3% worth with Jim’s negotiating skills.

    When it comes time to sell, I will be more discriminating on the fee structure. I sold my house in NOVa on a fee-for service contract. The listing agent broke down what he did and charged either his rate or his assistant’s rate, the same way lawyers and tradesmen do. It worked out to 1.9% of the sale price. I paid $1k up front, $1k after the second month it was listed, and the balance when it sold (4 months after listing in my case).

    I still had to pay the 3% to the buyer’s agent. Maybe buyers will be paying their own agents by then?

    I chose my listing agent based on his excellent blog, by the way, and he linked me up with my next buyer’s agent, another blogger.

    There will always be a place for the traditional 3%- think of out-of-town buyers who have one weekend to find a house and don’t know the area, or non-tech savvy people who don’t have the time or interest in searching themselves. I know your time is valuable that you spend searching MyCAAR, and moving twice costs time, stress, and money as well (I rented here for six months before buying). the thing I liked about Merv, by seller’s agent, was that he offered every option.

    Info on the fee structure he’s pioneering is here, although Merv himself is retired:

    BTW, a colleague I referred to Jim paid Jim per hour to write a contract for a house he found and was ready to buy.

  23. Pavel March 9, 2009 at 16:36

    Just saw a sale in MLS where the same agent was a listing agent and selling agent (from Montague, Miller & Co.), direct contradiction to Barbara’s quote from earlier: “Congrats on the new company. Just so you know, Montague, Miller & Co. has had the no single agent dual agent policy for years.” Can this be explained? The sale was in Keswick Forest. I know sometimes a buyer is unrepresented and to build up “volume” the listing agent marks him/herself as the selling agent too… if that’s the case the selling agent in MLS should be “no-agent” which is an option. Which one is it in this case?

  24. Keith Davis March 9, 2009 at 20:27

    You are correct that the MLS offers agents the option of putting in transactions in which an agent represents one side and the other is unrepresented. In such cases the agent “should” enter nonMLSAgent in the appropriate field (either listing agent for an unrepresented seller or as selling agent when a unrepresented buyer approaches a listing agent).
    That said, most agents I have spoken to about this think that this is for when an agent outside of the MLS helps in the transaction. The correct usage for that situation is ReciprocalAgent. I believe you have brought up an area in which we, as members of the CAAR Tech Committee, should be fighting for better education.
    My assumption is that when an agent from a firm with a policy banning single-agent-dual-agency shows both sides in the MLS, it is an error in usage rather than an exception to policy. But definitely something we should be enforcing more stringently at the board level.

  25. Pavel March 9, 2009 at 21:12

    Keith, don’t you think it should be labeled as “non-agent” or “no agent” which I think is an option? nonMLSAgent is exactly that – a licensed agent who is not a member of our MLS. You are right that an explanation of what is the proper labeling should go out to members for the sake of accuracy of data.

  26. Barbara McMurry March 10, 2009 at 10:07

    Hi Pavel,
    In this case M&M is guilty of poor and slow reporting. MLS staff put in this as a correction of a sale that took place in “05 I think. The buyer was unrepresented so M&M only represented the seller.

  27. Keith Davis March 10, 2009 at 11:42

    I checked this morning with Greg Slater, who in turn had to check with Dave Phillips at CAAR, as to the correct usage of nonMLSAgent and the way to input a unrepresented buyer or seller. Dave indicated that he had to “check” to find out the correct method. I would say this is a case where education and clarification is definitely needed.

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