“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 . 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 priceâ€. 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 doorâ€.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.
Browsing Category dual agency
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.
Another reason blog “leads” are better
The differences between leads generated from blogs and “leads” purchased through one of the various blood-sucking non-value-adding referral companies are many. Some of the most crucial differences are that blog clients:1) Are typically further along in the process of hiring an agent (whether buyer’s or seller’s representation)2) Have vetted me, at least a little bit, by reading what I have written over the past 34 months, which makes the process more efficient for both of us.3) Frequently are more aware of the current market and some of the factors impacting the market.4) They’re not “leads” per se, they’re typically conversations about whether we might work well together.4) I would never have gotten this question from a blind internet lead:(b) We’d obviously prefer to avoid dual agency if at all possible. If an appropriate listing comes up through your C21 office, though, what safeguards are in place to protect both sides?I love that this question is asked up front! Fortunately, I have an opinion on dual agency – get rid of it.All in all, the hours spent reading and writing every day are worth it for my own knowledge and ability to represent my clients.
A call for an end Cooperative Compensation
As a profession, we need to rid ourselves of Cooperative Compensation and the practice of the listing broker paying the Buyer’s Agent.Cooperation between Brokers need not go away…. That is always a fun conversation with first-time homebuyers as well as more-savvy ones.Buyer: So, how do you get paid?Buyer’s Agent: Well, the Seller pays me.B: What?BA: Well, not really, you are paying for the house, and you are getting the mortgage, but the Seller has agreed to compensate my company for my services.B: What do you mean?BA: It’s complicated.B: Well, am I bringing the check to closing?BA: Yes.B: Then how and why is the Seller paying you?BA: Because that’s the way it’s always been, and the laws have not changed sufficiently to allow for buyers to finance their representations’ commissions into the mortgage, Realtors have not adapted to the new realities and they are stuck in the mindset from when all agents represented the Sellers.B: But why is the Seller paying you?It’s easier for the Buyer’s Agent to just take whatever the Seller is offering – there is no negotiation with the Buyer about the Realtor’s compensation, so much so that often times the answer to the “How much is your fee” question is “It’s free to you – the Seller pays me!”I went around and around with some of my clients for several hours one time, agreeing with them the entire time how convoluted, antiquated and archaic the Buyer’s Agent’s compensation arrangement is, but there was nothing we could do to change it…. If Realtors want to equate themselves with other professionals, we need to be paid that way, heck we could lead the charge towards transparency in fees.Attorneys are paid by their clients, except when they lose, and do we really want to equate ourselves with that side of the legal profession?… The time may be right, and beneficial to everybody – consumers, Realtors, regulators – to change how we do business to a more transparent, ethical and professional way of working and compensating.Maybe we can rid ourselves of Dual Agency while we’re at it.
Dual Agency, selling advice and how to avoid getting sued
My call to action is still in the works.Often times as agents representing the seller, we receive calls or emails on our listings from potential buyers who are not working with an agent and who want to see our listing, or perhaps even write an offer…. So don’t do it.Greg notes some of the ways to avoid potential lawsuits when selling your home:Your Realtor should help prepare you properly to make sure you are not exposed to risk of lawsuit, but here are a few things to keep in mind.Finally, Daniel writes a very succinct post about pricing one’s home and what to do with that first offer (hint: you may do well to take it) Normally I don’t quote such lengthy parts of posts, but Daniel gave permission and it is very worthwhile:You are selling your house…. You aren’t thrilled with the idea of having to take $10,000 less than your asking price, so what do you do?Remember, more is better sooner…. I know what you are going to say, “but the house is getting showings, and someone could come and make an offer for full price in a week.”
Dual Agency under fire in Virginia?
From the head of the Commonwealth of Virginia’s Real Estate Board, Schaefer Oglesby:We are still seeing numerous cases involving dangerous practice of dual agency…. (italics and bolding mine)The newsletter is here (PDF)…. That’s a succinct summation of dual agency.If the head of the Real Estate Board finds dual agency dangerous, why do so many Realtors do it?… Dual agency should be a last resort, a reluctant decision reached only after full disclosure and explanation to all involved parties.Much more on Dual Agency here.
The value of transparent blogging
That’s fine, but be aware of the potential problems.Is Dual Agency good?… In a conversation the other day with another Realtor, we were discussing the soon-to-be-released Buyer-Broker form (to replace this one), which I sign with all of my buyer-clients.* He was wondering whether we should put a disclaimer in that says that we may not know about all of the properties that are out there, either by the limited-service firms, unrepresented sellers, etc., in light of the current wording in the Agreement that states:Broker shall use professional real estate knowledge and skills to represent Buyer in a diligent and effective manner and to locate property which is available for purchase and suitable to Buyer…. I’ve written a story about that, stating that there are so many different sites to search, frankly I need my buyers’ help in locating the property sometimes. I’ll say it again, my value is in representing my clients, not necessarily searching various websites.My constant references may seem annoying at times, but the fact is that I write almost every day, which puts me in a positionNo man has a good enough memory to be a successful liar.~Abraham LincolnClient is anyone that you or your firm has a formal agreement to work with.