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As a Dual Agent, are you like a Double Agent? - Dual Agency - Buyers Beware!!

Dual Agency

Dual Agency can sound like a harmless word, right? We are suppose to trust anyone in the real estate and mortgage industries, right? Sounds simple enough when the person representing you says that they have your best interests at hand. But wait, let's dig a little deeper, because not every realtor will explain it correctly to you, hoping that you truly don't understand both sides of the equation.

Let's define Dual Agency. - Is when a real estate agent is representing both the seller and the buyer at the same time in the same transaction.

Since we are on the topic of dual agency, there is also the term designated dual agency. This is where you have two different agents from the same real estate office, in which case, one agent has the seller and the other agent has the buyer.

Now, before we get started, I need to clarify something. I am not a realtor, just a loan officer of 16 1/2 years in the mortgage industry. I wanted to share this topic from an outside perspective, because this just happened to a client of mine who is purchasing a home. Some realtors will agree with me and some will disagree. Looking for any kind of opinion so we all can learn more about this.

honesty, truthy, integrity

When a listing agent agrees to sell your home, one of their spiels is that it's their job is to get you the highest offer and best terms. Sounds great, right?.

When an agent representing you, the buyer, their job is to try to get you the lowest offer and the best terms. They are called a buyers agent.

Now, I am sure many realtors will define these terms in more details. I am just trying to paint an easy picture to comprehend. Question.. how can a realtor, as a dual agent, say that they will get you the best terms, both as a seller and a buyer. Isn't the agents duty to the seller first? Yes it is.

telling the truth - being honest - being upfront

So let's do the simple math here, which I love, since I do mortgages for a living. As a listing agent, my priority is to get the best deal for the seller. As the buyers agent, my duty is to get the best deal for the buyer. hhhhmmmm

Can we honestly say that I can accomplish both at the same time? It's almost like those individuals that claim to be both a realtor and a loan officer. A totally different subject that I will talk about later this week, but in all honesty, how can you say that you can perform both jobs to the best of your ability. In the case of my dual agency example, the ability to get a great deal for both parties. Isn't there are a conflict of interest?

And what about the agent's commission? In many cases, the dual agent will get both the commission set aside for the listing agent and the buyers agent. Food for thought.

Conclusion : I am sure there are many ways to look at this. In regards to my current client, he didn't really take my advice when I found out that he was putting an offer on a house himself without a buyers agent. I explained to him my concerns. The ending result now? Looks like he won't get the best deal. He had his own thoughts prior to my suggestion and he thought it would be cheaper if he did it himself. Not only did the agent counter with a higher offer, but has placed a contingency in the offer stating that if the house doesn't appraise for the purchase price, that he has to come up with the difference. And after doing some research, there is a 6% total commission involved and the house is being purchased for $395,000. You do the simple math. I spoke to this agent and she didn't even offer any of her commission to make this deal work.

Now, for those of you that scream, don't offer up your commissions. I agree to a certain extent. But business is business and I want more referrals. I myself would have offered giving the buyer an additional $3,000 in seller contribution. Tim Moncrief wrote that it's okay for a real estate agent to reduce their commissions. I agree and disagree, but I think his topic has more reality when it comes to an agent that is a double agent, I mean, dual agent. Please read : It's okay for clients to ask for reductions in your commissions. Deal with it.

Lastly.... I know several real estate agents who I respect, who have the sellers, who wouldn't take an offer on a property if the buyer came to them directly. They would refer it out or to their buyers agent. It's because they understand the basic concept that it would be impossible to obtain the best deal for both sides as an agent for both seller and buyer. I have even spoke to many agents about this topic and they all agreed. But there are always two sides to any story, hence why I wanted to write about this.

And keep in mind, in some states, dual agency is prohibited. And some laws regarding dual agency are different from state to state. If not sure about any of this, speak to an attorney or a buyers agent.

UPDATE - 9-8-09 @ 11:45 pm - Larry Riggs stated this... Larry's comment - Question to all dual agents out there.... When do you talk to the buyer about this?

When the buyer first shows interest in the property?

A few days later?

During the buyer's first offer?

Or when terms and price are agreed upon, and when you send them the contract of sale, the agreement of sale.

I bring this up, because an offer has been made and accepted on behalf of my buyer, and the listing agent still hasn't explained dual agency. And in NY, they are very strict on this. I did my research and think the buyer isn't getting the best deal.

My whole point to this blog post? In several states, you have to disclose this to the buyer upfront, even if you are entertaining an offer and know the buyer doesn't have a buyers agent. You don't have to have an agreement of sale for this not to be talked about.

Alan May replies with a very good, detailed comment that sheds some light. - Alan's comment -

Since we are on the subject of listing agents - Please read : Sellers, ignore what your listing agent tells you about FHA loans !!!

Update : as of 8/11/09 around 7 pm

My client called me tonight - I recommended a realtor to be his buyers agent. More things started to get out of hand. The listing agent, who never disclosed dual agency... and the fact the borrower never signed a buyers agreement or any offer, has now been told that he must either use her or someone in her office to represent him as the buyer. I told him that is illegal and not ethical. To get a lawyer and or talk to the broker of record.

Dual agency Laws in these states : (click the state) In a few states — Colorado, Florida, and Kansas — dual agency is prohibited. And these links are updates from realtors. Disclosure : Please speak to an attorney about any of this if not sure.

- Maryland -

- Florida - Florida -

- Oklahoma -

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Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 08/10/2009 10:40 AM

Comments (98)

Dual Agency in the Home Selling Channel

dual agency, dual agents, buyers agent, sellers agent, listing agent, mortgages, fha loans, fha mortgages

Originally posted at: FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware: As a Dual Agent, are you like a Double Agent? - Dual Agency - Buyers Beware!!

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98 Comments on As a Dual Agent, are you like a Double Agent? - Dual Agency - Buyers Beware!!

AUG

Jeff I have to say I have never put myself in the position of a dual agent. I feel my responsibility is to the person I initially began to represent. I have heard the conversations of many of my colleagues and am appalled by some of the things coming out of their mouths. They are very close to an ethics violation. I think it is better to refer the other party on.

I feel dual agency could in theory work out, at least in a "fair" way(as if an agent was perfectly "fair". I can't see super negotiating skills becoming either party's benefit. I feel typically the harmful effects outweigh the benefits.

I recently sold one of my listings.....the buyer did not want to use an agent. He said he liked me and trusted me. I explained that I represented my seller, but he still didn't want to bring anyone else in. I represented him as a transaction broker only.

Jeff....I'm OK with dual agency for about 1% of the realtors out there. I'm not saying that there aren't a lot of great realtors out there, but I think that the lines can and are greyed from time to time when put in a compromising position. I'm surprised with sooooooooooo much going on in the restructure with the federal government getting involved that they haven't already addressed this.

Hi Jeff-

You said: "Now, before we get started, I need to clarify something. I am not a realtor, just a loan officer of 16 1/2 years in the mortgage industry. "

You dont have to qualify my man! After your first 50 closings on purchases, anyone would figure it out! You dont need to say this! EVERYONE knows you are qualifed to make these comments...for that matter, I think someone with NO mortgage experience merely trying to UNDERSTAND the differences has every right to ask these questions too! You are not professing to be an expert, just to have an opinion.

That said: Steve above's comment is interesting, because we are talking about relying on people to have character, ethics, honesty & integrity, and it is very clear to me that is STILL lacking out ther big time! In theory, Steve and others are right, it should be pretty clear. Sadly, it never will be for the very reasons you did this blog. Im not convinced it CAN work!!! Doesnt MATTER how honest or how a person sticks to their ethics! It almost seeems like a dauntless task~!

Victoria's comment above is also very telling! She is a realtor talking about conversations she has had or overheard, and has been APALLED! there you have it, your point is made!

Lastly, your example. A very good one of someone holding to close to the vest! Often times Realtors SHOULD give up some of their commission to either get a deal closed, or to cover closing costs! they dont know! that is their choice! In my mind, isnt $5,000.00 commission at a lower rate, Better than 0$ at a higher rate?? 70% of something, is better than 0% of NOTHING! -

btw- I have also heard from REALTORS quite a few times that often times they prefer no flier boxes at their listings so the consumer will call THEM on their listing. This makes alot of sense to me now after reading this blog because they are trying to get BOTH ends of the deal. However, this also creates problems too especially with 1st time buyers not knowing what they signed, or didnt sign, and certainly not knowing about the "PROFESSIONAL" obligations they have towards a Realtor who has worked their ass off for them...then they sign with someone else. I also know though from a couple of blogs I did, that flier boxes are not allowed in some areas. Im sure that everyone has their own "system".

Wow... I am hoping to get more realtors involved in this one. But it's good to hear from everyone and anyone.

VICTORIA.... . one thing that I will say, I don't ever want to take money out of someones mouth per se. If someone wants to be a dual agent, fine. But I had a bad conversation with this realtor that was selling the house, that my buyer wanted to buy. I don't like to get involved, but I could see that it was not being explained to him. And I asked him, did this realtor ever tell you about dual agency, once you put an offer in on the house. He said.. NO... not now and not prior in their discussions.

As you mmentioned, you have heard many in your office talk about this and how they act, that you are appalled with their actions. That is scary and I know it goes on amongst realtors and loan officers... for many of these agents, the commission check is actually more important than the client. Not saying all, but I can sense it many times, when some complain about a specific issue.... and how they want things to close now.. thanks for your feedback.

STEVE.... . maybe in theory, but in reality? How can I get you, the seller, the best deal... which would be the best price, the highest price... and then turn around and try and get the buyer the best price, which would be the lowest price. I understand the concept, but how do you negotiate this? And I agree with your last statement... "I feel typically the harmful effects outeight the benefits." I agree... thanks

ANN.... . I have no problem with that at all... you explained everything and they still wanted to use you. In my example, the realtor still hasn't explained any of this to him. She knows he knows now, because of the questions. But his biggest fear is that he doesn't want to lose the house. It's been on the market for 10 months, starting at $451,000. He offered $380,000 with 15 k in seller help. She countered with $395,000 and 15 k. And I have talked to her and I am not getting a warm fuzzy feeling at all.... and because of the turn of events. I told him, that he should try with a buyers agent first... that I don't see him losing the house either way, that he could come back with the same offer, without an agent, if he felt he was losing the house.

In my opinion, he is setting himself up for trouble... and that the agent probably can sense this and has an upper arm in this transaction.. Friday night, around 7 pm, she said she would have to take the offer to her seller, at 380k. She came back 1 hour later and said, 395k. He can live with this... but I still question her because she stated, if it doesn't appraise, he needs to come up with the difference. That to me is a major red flag.

LARRY.... . especially since you are a lawyer also, with a law degree, I would think you would see the grey lines. And I agree, with all of the government interventions, you would think that they would look into this and possibly revise this. At least 3 other states don't allow it... hhhhmmm

DARIN... . I just like to spell things out. Yes, this is my opinion, and I wanted to make that clear. There are too many people that blog, that when you read the blog, it sounds like it is a fact and not an opinion. And that ticks me off. Overall, I would agree that I just don't think you can 100% get the seller and the buyer the best deal by being the agent for both of them on the same transaction. I would love for some realtors that disagree, to explain this to me. thanks for your feedback.

Jeff,

I really believe it depends on the individual state the agent is doing business in. In Maryland agency is pretty clearly spelled out. Dual agency is spelled out but only the broker can be the dual agent. The individual agents keep their agency representation with their clients. That's if two agents are involved. If an agent sells their own listing the buyer must sign off in writing that they know the agent is representing the seller and that they have the right to be represented by another agent.

My last dual agency transaction was in 1992. I don't have the stomach for it.

I have sold my own listings to buyer since, but only if they understand that they are a customer and have NO AGENT. A fact of which I reminded them at the beginning of each conversation. I also recommend that they get an agent to represent them.

Folks like me. What can I say.

Not a problem any more. I'm a single agent brokerage but haven't taken a listing in 3 years when my attorney had an investment property to sell. He trusts me.

I have participated in dual agency 2 times in the last 5 years and hope to never do it again. I want to represent 1 party at a time. It is too much of a burden to me to represent both sides.

Kathy

I've noticed with the REOs that some agents in California are coincindentially bringing in the highest and best offer on their REO listings. I wonder what that says about dual agency?????

No way, No Day. Don't do it, won't do it. Dual Agency should be like the dinosaurs, extinct. You should also take sub agency with it.

Jeff, this is a pet peeve for me.

Dual Agency in Illinois is a little different, as we can do "designated" agency... where we designate another agent (in our office or elsewhere), to represent the buyer, while we maintain a professional relationship with our seller, and both sides are adequately, and vigourosly represented.

So here's my deal: MY BUYER: has hired me to be a strong advocate for him (a bulldog in fact), and help him get the best deal (lowest price and best terms) for the house he chooses to purchase. He wants me to counsel him through the negotiations, the inspection and basically hold his hand through the balance of the deal.

MY SELLER: My seller has hired me to be the same strong advocate for him (a pitbull), help him get the best deal (HIGHest price and best terms, in a reasonable period of time). Aside from marketing his home, he also expects me to counsel him through the negotiations, inspection and basically hold the deal together through closing.

If I'm acting as a dual agent... those two goals are mutually incompatible.

And now, I am no longer able to give any advice that might give an edge to either side. I have to be fair and equitable to both sides. And this isn't as difficult as it sounds... I can be fair and equitable, giving no edge to either side. But (and here's where it get's hinky)... That is NOT what I was hired for!! Both my Buyer and my Seller hired me to be THEIR advocate and behave like a bulldog (or pitbull), and fight for their rights and concerns as though it were my daughter's money!

In essence, as a dual agent, I am now collecting both sides of the commission, and abandoning both of my clients to what I call "Therapeutic Real Estate" wherein I can only answer as though I was a psychologist:

Buyer "What should we offer on this house"
Dual Agent: "I don't know... what do YOU feel you should offer?"

Buyer: "How much should we counter on the negotiations?"
Dual Agent: "I don't know... where do you think we should counter?"

Seller: "The buyer is requesting a $5,000 credit for the foundation crack... do you think that's fair?"
Dual Agent: "I don't know.. how do YOU feel about that?"

You get the idea. I am NOT an advocate of Dual Agency, Transactional Agency, or whatever your particular state calls it, where each side is not separately and virogously represented.

You bring up some very interesting issues, here. It is a grey area. I think the best scenario is for the listing agent to refer out the buyer to a buyer's agent, but that's not always possible. Depends on the area. Probably safest to simply say that in any given transaction, a realtor can only represent one side. Far clearer to the consumer, who is either a seller or a buyer, and that's really the bottom line, isn't it? Perhaps this needs to become another "real estate law", and across the country.

I've practiced in three states and each handles "dual" agency different with different definitions. I don't like it and I stopped doing it years ago because you can't keep something confidential from yourself if you are handling both sides of the transaction.

Jeff: This is an area I avoid. Needless to say there is high motivation for many to go there simply because it provides a much bigger financial reward for one person - the agent. Not sure how it serves the clients.

I knew an agent that got the buyer to buy a house that was $30,000 over value. She ripped the buyer off in order to sell her over priced listing.

What do you advise your clients to do? Or I guess you are advising agents here or asking agents Work with a single agent? Someone who only works with buyers, and works for a company that never takes listingts? List with someone who takes listings and markets them but never, ever shows those properties to clients, and no one in the company works with buyers.

Or work with a Weichert brokerage's agent as your buyer broker and swear off looking at any Weichert brokerages listings (designated agency... Weichert as a brokerage can be interchanged with Keller William, Re/Max, Long and Foster, Real Living, Coldwell Banker, etc.)

I used to love a great agency debate on RealTalk behind close doors.. or kinda closed doors. I won't partake on ActiveRain (well maybe I did a little when a home inspector was ham handedly trying to promote his favorite real estate agent, his super powers and his business model over others... trying to remember what state they were in.

I think it is way too complicated an issue across state lines and way too much chance of in the heat of the moment someone saying something about a business model other than their own which could come back to haunt.

I think you should just do the loan and forget about being a realtor in the transaction. If you are concerned that it won't appraise that's another issue because NOTHING is appraising. Maybe it's just a biased one sided view that you've heard? I've told buyers about this (dual agency) and when asked they say they didn't understand what I meant. That doesn't mean they didn't hear it. Maybe they still thought they could 'get a better deal'?

I'm with Alan on most of this. You can't change hats in the middle of the gun fight.

HI Jeff,

I wish it was not legal to do dual agency. How many agents can really follow the licensing law in this endeavor. You pretty much can pass paperwork back and forth and leave it at that if you want to protect your license.

On another note because I am a very skilled negotiator, exceptional listing agent, and highly qualified professional, if a client asks me to lower my commission I say NO and direct them to discount agents that will. You get what you pay for.

Just like people do not listen about dual agency, they get in their head that all agents are alike. It comes down to what services are they interested in having their agent provide. Discount agents might work for some, but if the discount agent is only putting a sign in the yard, perhaps the client can do that on their own. Then they would not have to pay any commission. Then they might want to hire an attorney to help with a transaction and they can save big. If the goal of the client is to mazimze the potential of perhaps the most important financial endeavors then it might be prudent to seek out a very skilled professional to help them and in the end they discover it was a false economy that they were trying to save.

In Ilinois, they don't consider two different agents in the same office as Dual Agency.

And I don't have a problem with what Jeff Described as designated dual agency. My issue stems from a single agent, representing both sides.

Jeff,

Great post on a subject that needs a lot more discussion.

I have never practiced dual agency. And I think that agents who do are lawsuits waiting to happen. The thought of it gives me the hives. If I show a place to someone who wants to buy it, I explain that my job is to get the most money possible for my client, the seller, and I would feel a whole lot more comfortable referring them to a colleague. I guess I do such a good job of explaining the advantages of working with a buyer broker that I haven't been on both sides of a transaction in a couple of decades - with one exception that was a total disaster!

Designated agency doesn't make me so nervous that I won't do it, because I've always worked in offices where my colleagues totally got the whole confidentiality thing. But even then, I can see where things could get a little dodgy.

Law firms turn down business all the time because the new prospective client might someday have a conflict with an existing client. And I have to say, it's a pretty rare Realtor® who would turn down business for any reason. I've even known agents who represented more than one buyer in the same bidding war!

Now, I know that lawyers don't have the best public image out there, and I'm not holding that profession up as a model for us to emulate. But I do think that some of our issues over public perception stem from the idea that even a lot of us don't quite get the representing a client thing and don't know where to draw the line and pass a buyer onto a colleague.

The restrictions in Texas are so severe that I would not consider dual agency here. I can not give advice to either party.....so what am I? An intermediary. Basically I am worthless to both parties. Because of this, the liability scares me to death. Thus, in 28 years, I have never operated as dual agent. What I do is to refer the buyer to someone else, usually, my rapport is much stronger with a seller. Thus, I will get a referral, and both parties will get representation. But that is here in the lone star state.

If I do get into a situation like that I do provide a discounted rate in the listing. This is not something that they ask for, but that I provide. Could I get away with not doing it? Perhaps, but I will have a hard time changing now with the whole area knowing my program.

Thanks for the reply on my post. That post got a bit too heated....but it was fun....for a bit.

Another thought about dual agency. If you are focusing on the agent side anf the mortgage side, are you doing all that you can be to get better every day at both? How can you stay at the very top of your game every day if your attention is split?

No consumer gets what they've signed up for ! It's clear that in most cases the consumer is picking an agent not necessarily a company! They have made their decision often because of the acquired skill set the agent has displayed/proclaimed. Commitments and transactional promises have been made to secure an EXCLUSIVE relationship !!! The consumer would have to assume that since their REALTOR told them the correct way to market their home was an "Exclusive Right to Sell Listing!"that said agent had formed an excusive alliance/team with the seller ! It's very unlikely that the short sentence or 2 about Dual Agency in the Listing Agreement constitutes"informed consent"! No sooner has all this been created with mutal" I DO's" does their "cheatin heart "agent start courting buyers !If in the agents quest for the old "double bubble" they become a dual agent the Seller will now have to forego advice,counsel,nego strategies,price nego.learned info that could affect(if known,but now restricted)outcome. They wind up with a washed out version of their original agent(for the same original fee!)who now attempts to justify their betrayal by talking about trying to be FAIR to all parties !!! While legal in 42 states, I hope we are in the last days of Dud Agency !!!!!

Alan has it pretty spelled out how it is here... I will do everything I can to stay away from dual agency. I work with associates in my office and send them to them and have as well sent them on as a referral to another agent not in my office. I dont feel I can represent both parties fairly no matter how much they tell me they don't mind. I HAVE done it though in my nine years (rarely) and not only were they explained very clearly what it meant and how it would work but they had to sign off on our agency brochure that they were explained this and understood and at any given time if they were uncomfortable they had to tell me so that someone else could possibly pick it up from there. I have also worked as a listing agent with someone who did not want an agent period and had them sign off as well that they were on their own.

As far as the flyer box comment above - I don't do that to draw buyers in for me..I do it to draw buyers in for the HOUSE and a lot of times that house is not the one for them, so yes I could possibly pick up a buyer for a different property. I do it because I think I know the house the best and I also explain to them upfront that I will not represent them on that listng. Usually they are already working with another agent but want more info firsthand before they call their agent.

LARRY R. ... . thanks for bringing this point up. I added this to the end of my blog and it makes sense. My question to every listing agent, that would become the buyers agent also... aka, a Dual Agent, when in the process do you explain this to the buyer? As mentioned, my buyer still hasn't been explained this process, even after a 2nd offer. That is extremely scary in itself. And with the counteroffer from the realtor, she added a clause, stating if it came in under value, that the buyer is responsible for this. Can't we see the writing on the wall? thanks for your input.

LENN.... . hell, I just got into the mortgage business that year. ;o) Anyhoo... I what I like about you is that you took the stance to explain this to the buyer upfront, right in the beginning. Please read my comment above to Larry Riggs. Overall, you said that you don't have a stomach for this... I respect those that even want to be a dual agent, but do they explain it upfront and clearly? In many cases, I have not found that to be the case. thanks for your input.

ALLEN.... . that's good... but again, I am not saying that dual agency is bad... but I think it's horrible if not mentioned, brought up, by the listing agent from day 1. In my opinion, what is the agent hiding from then?

MELISSA.... . good point. And as I mentioned and a few others, there could be a lot of side topics to talk about, just resulting from the main topic of dual agency, what is right or wrong. But I think this could be a great discussion for buyers to exam and to read about. thanks

MICHAEL.... .well, I can safely say that you are against it... thanks for sharing. Do you have your reasons to why it's not good? thanks

Jeff, It is all about disclosure and discussing and explaining agency relationship with buyers and sellers. Sometimes it's simple sometimes its complicated. For many years it was never discussed in NY state. The agency disclosure law in NYS took effect in Jan. 2007. (I've blogged about it. I'm for transparency)

While the law states that it only has to be discussed and not signed for multiple family dwellings my company makes us have all buyers and sellers sign the disclosure form.

As Lenn mentioned, the scenario you describe is not necessarily a dual agent but a customer buying direct from a sellers agent. As long as it is explained there is nothing wrong with it. The agency relationship can change several times during the course of finding a buyer a home.

Just yesterday a buyer came to my open house. Before they came they contacted me and told me they wanted me to be their agent. They just started looking and wanted to see other properties. I explained to them that if they made an offer on my listing they are my customer and I represent the seller. When I take them to other brokers listings I am a buyers agent and if we go to another Corcoran agent's listing then it is a dual agency. Since Corcoran has the biggest share of Manhattan inventory with over 1,000 agents and multiple offices it is likely I will bring a buyer to another Corcoran agents listing.

Jeff, I'm not surprised the seller countered with price but I am surprised the seller put on a contingency that forces the buyer to pony up cash over and above the appraisal. That was a practice when the market was flying high but I have not heard of in the last two years.

The buyer may still have an out in this contract. I was told in a recent deal that banks will not fund a property where the appraisal is less than the contract amount regardless of what the buyer was willing to contribute.

Perhaps this is just a regional or state practice. If the buyer cannot get a mortgage because the property failed to appraise and the bank will not approve of the buyer making up the short fall, the mortgage contingency should still protect the buyer. The mortgage contingency is based on the sale price. I'm not an expert here either, but this was my understanding.

I'd be interested in what the other folks have to say

My sister and I do not solicit dual agency. We avoid it. We were just thrown into one because we were the buyers agent and the buyer selected a property listed by another agent in our office. That was fun.

We are transaction agents in my area which means if we are the listing agent... and excuse me if I don't word it exactly but we're not supposed to really supposed to disclose to the buyer that the seller would accept less or that the buyer would be willing to pay more during negotiations. I've been on both ends actually recently and the deal went through with no snags what so ever. Both parties understood that in the contract it read that if it didn't appraise it would either be renegotiated at the appraised value or the buyers deposit would be released and the contract canceled...definitely in some cases can become a problem. I'm not too concerned about the commission issue as that's our call.

I'm surprised that there are actually people out there that still are adding the clause where the buyer has to come up with the difference.The least they should do would be to put in a cap of how high...in the past that hurt agents becuase some buyers had to come up with tremendous amounts of cash over the value. I'm even surprised any educated buyer would go for that clause.

Jeff- Here in Florida we work as Transaction brokers and therefore can fairly help each the buyer and the seller to come to terms without the detriment of one to another. It is all about knowing your boundaries and understanding the law as it relates to transcation brokerage. We do NOT have dual agency here in Florida. Transaction Brokerage is great for us and works great for us to have both the buyer and the seller. There is nothing unethical about it here as long as you meet the terms of the transaction notice, which we do. Katerina

Jeff - if it's not "brought up" from day one, then you have suddenly transitioned from simple "dual agent" to "undisclosed dual agent", and that IS bad.

I am with Katerina on this one since I am Florida also.

Here is Pennsylvania, this comes up alot and there are debates a plenty.... My husband & I have almost 100 listings so there are going to be times when we experience Dual Agency...

INFORM, INFORM, INFORM.. is all I can say... You MUST educate your Sellers & Buyers before getting into a pickle!!

It is more difficult then a regular transaction but sometimes you cannot avoid it... Please remember that you ARE a Dual Agent if you even sell one of your office's listings by another agent... In Pa, the Broker has the listing so all agents in that company work for the Seller...

I wish that there was a better way since this one can get complicated sometimes... Again, Please inform all parties as to what is going on and what can happen in these deals... Good Luck!

I STRONGLY recommend my clients get their own realtor.

You cannot serve the best interest of both clients.

I'm not a fan of double ending. Its twice the pay for a thousand times the liability. The last time I did it, it was totally frustrating. I couldn't say the things I really wanted to.

I do not believe in dual agency. Carolina law states a dual agent cannot represnt either party so the dually cannot advise either party. In my opinion that atomatically becomes a problem as the listing agreement states I work for the seller. Both Carolinas require the seller & buyer to sign off on a dual. When writing an agreement I always add in the commission area a 2% reduction should I be required to act as a dual. So usually only 1% over a 1 side is collected. I see agents very pleased to receive both sides but I feel the opposite as neither party received the results one would have.

Jeff

I try very hard not to be a dual agent.

But at the agency that I am in, the Broker says that if I have a buyer for a listing in the office, I am a dual agent, not a buyers agent. I have always had a hard time with this. I don't know the seller, have had no relationship with them other than it is a listing in our office.

I work as best as I can along the tight rope.

Jeff,

In Maryland, dual agency requires that there be two agents. There is one broker, hence the dual agency, but there is an intra-company agent who represents the buyer and another intra-company agent who represents the seller. The laws regarding agency must be disclosed to the customer, or potential client, up front. An agent (meaning someone who is affiliated with a broker or a broker) in Maryland, must represent one or the other, the buyer or the seller, but not both. If an agent has a listing and a potential buyer comes along who says that they do not wish to have an agent, but wants to go through with a deal anyway, then this is allowed. The agent would owe his fiduciary responsibility solely to the seller and not to the buyer, but would have to treat the buyer fairly. In this situation the agent would not be representing the buyer; the buyer would have no agency representation; the buyer would be representing himself.

I had the opportunity once to handle a dual agency transaction but just the thought of dealing with both parties was too much. I don't think the extra commission is worth it. Just work a little harder and find another client to make up the difference.

I handle Dual Agency often and see no conflicts. I treat both ethically and abide by my states laws. If that is done there is no conflict. I can and will represent both seller and buyer with both coming out of it better served than with a majority of the Buyers Agents out there. I of course wont write in dumb contingencies like the one above. That doesn't even sound ethical. Unless of course your buyer just really wants the home that bad.

Well, well. my very first post on active rain was on this topic! It was largely ignored.... and I received such nasty comments by some AR members, I had to delete them for even suggesting anything was wrong with dual agency. I also have been ostracized by many in my profession because I don't think conflicts are adequately disclosed to the consumer... and if disclosed, come way too late in the process.

Both designated and disclosed dual agency are fraught with conflicts of interest. The designated agency model is worse than disclosed dual agency, because the potential conflicts are rarely adequately disclosed, if at all. It really is a buyer beware situation. I NEVER practice designated or disclosed dual agency .. e.g., representing the buyer and seller in the same transaction...

Bill Wendel, an exclusive buyer agent, provided that cartoon some year back when fighting againt designated agency in MA. I think it is priceless.

Glad to see this up for discussion, it's one of my pet peeves too...I have successfully avoided dual agency up to now. I always advise my clients, (buyers or sellers) to consider the potential of a conflict of interest with Realtors representing both parties. Negotiate the highest price and terms for one and the lowest price and terms for the other all in one transaction...How do you do that anyway??

Stupid question but what the heck...

Did the buyer you are talking about accept that counter offer with the terms you described???

Jeff, I'm sure there are a lot of good points in this post - there always are in your posts - but you lost my attention with your defination of dual agenyc because that varies from state to state. FHA regs may be consistent on a federal level, but agency laws are not. I promise not to practice mortgage lending, and...

Jeff- I do partake in dual agency but am not happy about it. I do not think there should be dual agency allowed.

In Texas we must disclose to the customer/buyer at the first substantive dialogue exactly WHO we represent. I have never done both sides, and am not sure I would want to. Interesting conversations in the comments.

Just like I'm a one woman man, I'm a one client agent. Let me list your house or let me be your buyer's agent - one or the other, period.

Michael

Jeff: Thanks for posting on this. It shows your breadth of knowledge by commenting on something outside of your realm. I'm newer to the business and it sounds like dual agency isn't allowed in every state. I've never run across this and could see a potential problem although a great agent would get the deal closed which, if you think about it, is all that matters. After all, business is business as you stated above. Take care.

I am not a fan of dual agency, we have taken the profit motive out of the equation and do not charge a dual commission. I explain the pros and cons to both parties in excruciating detail, and between that and putting it in writing and also talking, one-by-one about all the fiduciary duties, it's enough to scare most buyers and sellers.

Jeff, you sure picked a good topic, but one that does vary from state to state. I have been a dual agent on a few transactions. One the buyer was a realtor in another state, second, buyer was a builder who always goes to the listing agent. I was upfront, I had to have papers signed by both parties, and I walked a very fine line. I think there was one or 2 more instances, however my brain is cooked in this heat and I can't remember.

Do I like them? Nope, do I explain it to all parties? Yes. When I take a listing I explain it, when I get a buyer I explain it, painfully slowly and clearly.

My preference, although still considered dual agency is to have my broker take over with which ever side I feel she could handle the best. After the negotiations are done and the inspections are done and resolved, I take everything back over again.

It is a tough process, and I hope that I am in the 1% mentioned above. I am not a fool, I do not risk my license, but I do get the job done. And FYI, I did get the best deal for all concerned, and believe me, both deals were fraught with issues which I handled with the highest regard to both clients. But I would have sooner set my hair on fire....

And as a side note, I handled the dual agency transactions better than a few where I have only been on one side of the deal, in reference to the other agent.... I'm just sayin...

Very timely blog. for those of you who didn't see my original post "Dual Agency and the Hogs Who Love It", Jeff's observations are very astute. Something is very wrong when buyers today still want to work with the listing agent because they think they will get a better deal if they do. We say that buyers are educated and that's why 86% of them find their home on the internet. Somehow, they aren't focusing (or finding) the right information when they surf the web. If I've said it once, I've said it 100 times - - "the listing agent is NOT your friend" if you are a buyer. Sellers would probably be better off with selling their home as a FSBO if they don't have exclusive seller representation or consent to their listing agent to be a dual agent.

OK, I'm off my soap box now.

I just wanted to thank everyone for their comments. I will try to reply to everyone throughout the evening and tomorrow. thanks

ALAN.... . bingo... thanks for that in-depth comment. I even linked it into the bottom of my blog so people can get a quicker idea of what I was thinking also. Overall, I agree, how can you say that one side will get the same treatment as the other side. Sure, you might be ethical and have integrity, but I loved your pit-bull/bulldog analysis. That is part of my whole point to dual agents, on how you can say that you would be able to help both sides and in negotiations. The only possible way in my opinion is to explain the process to them in details, and just do your best job. Thanks for this feedback and for your input. I think it was right on and so do a few others.

SEA to SKY Premier Properties, aka LI ..... . I think it's an extremely Grey area.... and yes, I think there should be a real estate law that would be the same nationally, and not just state-by-state. That might offend some realtors... but it's the same example that I use, a big pet peeve of mine, when I see realtors that are loan officers also... or vise versa. How can you honestly say that you will get them the best deal on both sides.??? You might think you can, but besides that, how can you stay on top of all the changes for both real estate and mortgages? You can't, but some will argue with me. And I have my proof to those that have argued, yet they can't give me good answers when I question them about mortgages and pricing. Because they usually don't know, because there is so much to keep up with. As mentioned, I will be writing about this soon. thanks

CAROL.... . I totally agree, about how one can keep something from the other, when trying to sell the house and now help the buyer. Hence why I wrote about this... and because I rarely ever see this talked about or written about, especially amongst realtors. thanks

KATHLEEN.... . yes, the reward for many is huge. Another reason why I think your better agents stay away from this or refer a buyers agent or their own buyers agent... even if it's kept in-house, at least someone else is representing the borrower. thanks

RUSS.... . I am sure this has happened more than once. I have had some scary conversations with a few realtors that were also that buyers loan officer. And heard from the other agent, what that realtor was doing and trying to get away with. I have stated this a few times, that you need another party involved that can look objectively. thanks

MAUREEN.... . I appreciate your input... First off, if I am off base on your comment, I apologize.... but I never said that people should only work with companies that do just listings... or for a realtor to only work with listings or just with buyers. This is a topic about a realtor that would work for both the seller and the buyer at the same time, on the same transaction. And in my honest opinion, even if you arfe ethical and have integrity, I don't see how you can get both people on the same transaction, the best deal... the best deal for both parties at the same time on the same property. Please read Alan May's comment, comment # 12. I think his comment is spot on and is how I feel about this topic.

And I also don't have a huge problem with a listing agent showing a buyer their own property. I do have a huge problem with realtors that show most of their properties and or their broker's properties, yet shy away from other properties that aren't associated with their real estate company... which means that they are trying to keep everything in-house. And yes, I have seen this and could have proven it. Sometimes it is just that obvious.

Overall, yes, this is a complicated issue and I know that each state is different. I even made reference to this. But what I am talking about is the general basics. I never once said that I am an attorney or a realtor, that I am right or know it all. I said that this is my opinion, that I am a loan officer, that I have a great example of a borrower going through this now... and lastly, I did make mention to speaking with a lawyer or realtor on this subject matter.

My goals on this topic? Awareness... education... and discussion. We can't shy away from certain topics in life, just because they might be difficult or delicate or.... complicated. As long as I disclose certain things, I don't feel liable at all. I am not like one of those realtors that must get involved in the mortgage side of things. This is a 3rd party observation. And if you read some of the comments from many realtors, several state that they rarely see this talked about. One mentioned that she as a realtor did talk about this, but got mostly negative comments. I am merely pointing out an issue that I have seen been abused and needed to be talked about. Just as realtors that point out and or write about loan officers that never give a good faith estimate to the borrower. Bravo, because that is a huge pet peeve of mine... and the more of us out there talking about this, it can educate the borrowers much quicker than if we just swept it under the wrong.

On another note... you did bring up some good issues, but if you noticed, I didn't talk about them... or tell people what to do or not to do... realtors and or consumers. This was a basic issue of..."can you truly expect to get the best deal, if your realtor is handling both you and the seller"... that part in my opinion, laws or now, I thought was simple and easy to understand. Thanks for your feedback.

PS... Maureen, I was not singling you out, by writing a comment just to you... it was out of respect, since it turned out to be a much longer response. thanks

Jeff-

I cringed when I read your title--thought you would get torn to bits. Some on AR take their business models very personally. I'm glad to see you emerged largely unscathed.

1) Agents who take the listing have ALREADY set a contract in place for commissions to be paid by the seller. If Joe HomeBuyer thinks they can work out a better deal with the listing agent, they are -- essentially -- interferring with a contract, i.e., the listing agreement. ANY listing agent working out a "deal" with Joe HomeBuyer based on them re-negotiating their commissions to get Joe HomeBuyer a deal is violating a TON of ethics. And, if I were the seller and found out about it, I'd take BOTH my listing agent AND Joe HomeBuyer to task!

2) Oregon has three -- ONLY three -- designations. They are: Sellers Agent, Buyers Agent or Disclosed Limited Agent. Why ANYONE would want a "LIMITED" agent is beyond me. They are LIMITED in what they can -- more like CAN NOT -- do. Disclosed is when all parties agree to ONE agent working on the transaction. In Oregon an agent in the position of a "Disclosed "LIMITED" Agent" is in hot water if they don't, actually, "disclose." Then it's UNDISCLOSED, and could cost them their license. We have an Agency Disclosure that must be provided to people upon "first substantive discourse" of real estate. OAR 863-015-215(4) . . . the majority of agents in my state do NOT provide this at all, let alone "first substanitive discourse."

3) Real Estate Agency is a legal concept. It is governed by statutes, and rulings. Any agent who has both "buyer and seller" in the same transaction can NOT, by legal standards "REPRESENT" anyone. They would have a 'conflict of interest' taking one's position over the other. Would you use the SAME attorney for your divorce? How can negotiation work with ONE real estate agent? They can't, you say? EXACTLY! No one can "represent" BOTH sides of a transaction fairly without an INHERENT (built in) conflict of interest.

4) The listing BELONGS to the BROKERAGE! NOT the listing agent! If XYZ123 Realty has a listing, ALL agents of that brokerage are representing the seller -- NOT just the listing agent. When a buyer works with a "buyer's agent" of XYZ123 Realty, and the buyer is taken to a LISTING placed on the market by XYZ123 Realty -- they are engaging in dual agency, limited (un)disclosed agency. (#4 is depicted by the illustration you used for your post).

Good blog! Thank you!

I been doing Dual agencies for a long time and I never had any problem. It all depends in your home state. Yes you can keep personal secrets from the seller or the buyer that is your duty. Do all your disclosures, that is the most important part.

When negotiating an offer you always go back to the actual property value and not to the selling price to educate your buyer and sellers; you must provide them with good information and tools.

I do believe that when you bond to your buyers or sellers, you can match the product and make a decision if a dual agency could work for you. I always gage their personality and if they are not one that I can get along with I would not represent neither one.

Lupe Medina/Realtor

RE/MAX Metro Realty www.homesbyarea.com

I see nothing wrong with Dual Agency if it's handled professionally. I've done it many times and it's worked out nicely.

Patricia Aulson/portsmouth nh real estate

One danger in generalizing is that's it's so....general.

In Tennessee the default position for all real estate licensees is called "facilitator" which is a non agency position.

It takes a separate, written agreement between a licensee and a consumer to create an agency relationship and you can only be one person's agent at a time, i.e. buyers or sellers, never both.

Having said that, if a buyer calls on one of my listings I'm going to do my best to sell it to him. That's what the seller hired me to do and frankly that's what I do.

I always explain to the buyers that they will have no agent but that I am required by both law and the Realtor's Code of Ethics to treat all parties honestly and if they feel the need to have their own agent they are welcome to get one.

To date no one has found the need to do that and all those transactions have worked out fine.

Jeff,

I have published about 40 blog articles about this topic.

99% of the time I'm completely opposed to it. At least, that's what I tell other people.

The exceptions, largely seem to be the sale of businesses. I have a number of buyers and sellers and at least every second deal I'm on both sides.

Actually, I'm not on both sides, I'm just on my own side. Both parties are treated legally as customers rather than clients. Also, both parties must agree to bring their lawyers into the deal to approve the agreement. No approval, no deal.

The commission is higher in this role, not lower. I look at the time, and if it's a small deal, the percentage is 15%.

Brian

LYN.... . I understand where you are coming from, because I usually dislike when a realtor writes about mortgages in detail, and usually give misinformation. But I truly think in my case, I was not being a realtor. I was giving my professional insight on an important issue, when I heard more details. I classify this as education without stating that I am a realtor and or that they have to listen to me. I told him that he should speak to a buyers agent and or a lawyer. As I stated in my blog, she never mentioned dual agency, even when he made his first offer. I know that violates some code of ethics and NY law.

Imagine this... if a realtor stepped in and said to their buyer... "hey, the loan officer didn't give you a good faith estimate upfront... and you said you have been asking one for two days now?" "maybe you should call someone else."... Hey, I am totally on board with that and that is also one of my pet peeves. I write about that often. It's when a realtor says..."gee, their rate is too high, speak to my guy, he'll do better." I have had that happen to me on a few occasions and I actually kept the buyers both times... the loan officers service stunk and in some occasions, left out some important issues. I am all about educating the borrower, even if they went some where else.

Here is my concern with your comment... I wasn't being a realtor and you assumed I was concerned about the property appraising. I was afraid he wasn't getting the best representation based on my conversation with my borrower from Thursday to Sunday... and because I spoke to the agent on Friday night. My borrower requested a 3 way call, because her counter offer came back by adding the 15 k seller help onto the purchase price, when that was not his offer at all. And she twisted the words all around and even said,... "well, this is how we are doing it on another property". I said that no lender would allow it to happen in the agreement of sale, that she had it worded incorrectly. That was also a read flag... and another one when she came back and in writing, stated that if the house didn't appraise, that he was responsible for the difference. Even though this was an FHA mortgage and that he would be protected, to me it was another red flag.

Changing hats in a middle of a gun fight? Sorry, but in my opinion, yes they can. It would be just like a borrower that was going with a lender and then things went south. They ended up seeking a new loan officer,... and there were good reasons to why. Well, I actually have taken three new deals from other lenders in the last 2 months. The buyers found me online, all 3 of them and trusted me. 1 of them had to close in less than 2 weeks and I made that happen. Another one had to close in 3 weeks and the other, I had a whole month. So I disagree with that part of Alan's statement. This is someones life that we are talking about. And if I can give my honest insight, without sounding like I know it all, but my advice, for them to at least speak to someone else... I have no problem with that. Are you telling me if you saw a client of yours get a 9% rate on their good faith estimate, that you wouldn't say anything? Just curious? Yes, every loan is different, but if they weren't given a reason or explanation to as why it was so high... instead of the..."just because" answer... ??? Again, just curious. Trust me, I do believe in the old add-age of... leave the lending up to the loan officers and leave the real estate up to the realtors... but if I was going to explain what took place for the 4 days, this blog would have been about 3,000 words...

Lastly, yes, I agree, maybe they didn't hear dual agency.... I know not all clients hear what they want or just miss things. I am with you on that one. But when she came back in writing with a counter offer and it was not mentioned at all, about dual agency, nothing in writing.... a major red flag. He showed me the paper work... it talked about her being the listing agent and that's it... and she still hasn't explained everything.

Overall, I am all about educating and that's what I wanted to do here, in this blog. I think I left enough disclosures in this blog, that this was based on my opinion, who I am, and that you should speak to an attorney or buyers agent. I wanted to give an example of what was happening to a buyer of mine and to make others aware of this... and that's all.

PS... Lyn, I can't find where Alan said... "you can't change hats in a middle of a gun fight." Overall, thanks for your input.

MARY.... . I truly understand about the "not lowering of your commission"... and I will usually agree with this. But this in my opinion is a different circumstance, not your normal situation. It's an agent that is getting both sides, on a large purchase price, and trying to make both deals work. I am sorry, but I usually explain it all and try to bring both sides together. And that is all I was pointing out. I think realtors should stand pat on their commissions... but I also felt that by doing this on this particular deal, it could lead to more referrals,. when you are already bringing in over $20,000 in total commissions. Just my view point.

Example.. I got a deal once, that was a $500,000 puchase. I could have made $17,000 on the deal, because of what that loan was paying back. I ended up giving a $5,000 lender credit... that was one of the reasons on how I made that deal work and out of 8 other lenders, one of the mean reasons why I got that deal. besides for the fact that I was one of only two that explained the whole program that they wanted, in it's entirity.

On another note, I agree, discount agents do operate differently. But we could be here forever on the "commissions" stance. I knew if I put that in there, that one person would dwell on this. And as much as I appreciate your comment, that's all it seems to be about. Just wondering if you missed my whole point about dual agency and what was happening to my client in the example that I gave. Just curious.. I ahve to assume as much you assumed about my blog... fair enough?

ALAN.... . thanks for more clarification and for adding to the conversation...

PATRICIA.... . hence why I also decided to write about this, because I rarely ever see a realtor write about this and or talk about it also. And you bring up some good points in your comment. Especially about the public image about lawyers, so thanks for adding that paragraph in there.

Overall, I am not saying that every realtor handles dual agency wrong or in a bad manor. But in this case, I could see the writing on the wall. Besides, I agree that you could get both sides a fair or good deal, but I think Alan May sums it up best in his comment. - Alan May's comment #12 - To sum it up, he said.. "how can you be a bulldog for both sides at the same time, negotiating at your best, to get the best possible deal and or terms for your seller and buyer, at the same time. I have not been given a clear answer from those that have said they will do dual agency and that they can be fair to both clients.Okay, let's define fair and best....

fair ... to me would mean, average, reasonable.. etc, etc.

best.... better than good, the best of the best...

at least better than fair, right? Just my opinion and insight on this issue. Thanks for stopping by and for the compliment.

Jeff: This is a great topic as AGENCY seems to be something that many Realtors have the most trouble to understand. Now in Tennessee & Kentucky we use Designated Agency. Even if the two Realtors are in the same company. The Listing Agent is Designated Agent for the seller and the Buyers Agent is the Designated Agent for the buyer. With this, both the buyers and seller each have their own Designated Agency.

Now in the case where I have a listing and a buyer calls me to view the property. I tell them up front that I represent the seller and can't represent them. However I can still write the offer for them if the agree to sign the Agency Agreement stating that I represent the seller. In this case, I DO NOT advise the buyer when writing the offer. I'm basically an order taker letting the buyer tell me what they want to offer. Now I also offer to refer them to another Realtor in the office to represent them if they so choose.

Our company does not allow DUAL AGENCY and I would not want to do this even if it were to be allowed. All it would take is for the buyer or seller to think you did more for one than the other and you open yourself up for a potential problems. Having the buyer sign that you represent the buyer prevents implied agency which would toss you into undisclosed dual agency.. A BIG NO NO

Jeff, this is a most interesting post! I currently have 2 pending transactions on my own listings which I wrote up myself. No, I don't do dual agency I represent the seller. I have two other transactions I closed earlier this year where I did the same thing. I don't believe you can serve two masters so I do not represent the buyer in any way.

I have not had any issues with the buyers, and the transactions have been very smooth. Dealing with all parties with honesty and integrity is the foundation of my business, and that translates well to the buyers who trust me to sell them my listings. I enjoy selling my own listings and look forward to doing it often.

As a short sale specialist, negotiating with lenders on a daily basis I have come to the opinion that agents in general are deal makers rather than negotiators. Short sale lenders negotiate! They do it over months in a manner designed from the outset to wear down the opponent and get the best deal they can get. Presenting an offer and going back and forth over a couple of days isn't really high level negotiation.

BTW I love your indignation over the agent not offering up their commission to make the deal work. Really... the deal was going to work or not with or without the commission concession. That's like me saying to my buyer "OMG the loan officer took a yield spread premium and didn't even credit it ALL to the buyers closing costs!!!" or "How can they get paid a loan origination fee to originate the loan, using other peoples money, and then take hidden profit for jacking up the rate on their customers!!" or "I thought they said they were getting me the best rate and then they jacked it up to get another commission from the lender for up-selling me on the interest".

If the seller hires you to sell their house, SELL THEIR HOUSE!

The only time I ever performed dual agency I did not take a commission from either side. This is how seriously I take agency.

Jeff - Congrats on the feature. I agree that a buyer and seller should have their own representation. When you are negotiating a deal, at some point the agent will have to pick a side. When there are two people involved, they come to an agreement overall which is best for both parties. Sometimes the buyer gets a great deal, sometimes the seller gets the great deal.. in the end, all are happy. I'm not sure that can really happen when an agent reps both sides. Excellent conversation post. Looks like a lot of feedback.

and p.s. maybe you should just create new posts for your comments... sometimes you can be pretty wordy (kidding... well, sort of) :-)

AUG

TIM.... . so, you are saying that if you are a dual agent in Texas, that you can't give advice to either side? If so, ouch and rut row... In regards to giving up some of the commission? I don't believe realtors should at all, but that is when they have either the seller or the buyer. I do have a very good idea of what goes into real estate. But having both sides on a $395,000 transaction? I just think differently and that is just me... Overall, thanks for your input. But in regards to your blog, I never got a chance to leave a comment because you disabled comments. Just a fyi... thanks

NICHOLAS.... . is that a general statement or are you making reference to myself, because I am a loan officer that got a little into the real estate side of the transaction? Just curious... But I am 110% against those that are both a realtor and a loan officer, that practice both, so I agree with your overall statement. But wasn't sure if you were implying it to me. Please read my comment to Lyn Simms, this should give you a better idea of why I wrote this and why I got involved, if you could gather that from this post. My comment to Lyn Sims.

MICHAEL.... . I agree with your last statement, but a tad confused of what you were trying to say in the beginning. This post had nothing to do with picking the listing agent... this was a borrower who loved the house, who didn't have a realtor to help on the buying side of things, yet the listing agent never disclosed or talked about dual agency. But again, I do agree with your last statement... thanks for your input.

Jeff,

Since this deal is in NY, there is a way to protect the buyer from the appraisal contingency. I hope it's not too late but in NY all offers, counters, negotiations and accepted offers mean nothing until a contract is signed.

In most states a written offer is a contract. In NY neither party has any legal obligation to the other party until the contract is signed. Only lawyers can write contracts in downstate NY. Lawyers are required for both buyer and seller. The seller's attorney sends the contract to the buyer's attorney. The buyer's attorney performs "due diligence" before the buyer signs the contract. There is a window between an accepted offer and a signed contract.

Since you are the mortgage broker, you can help protect the buyer. Order the appraisal before the buyer signs the contract. If it doesn't appraise and the buyer doesn't want to make up the difference they don't have to sign the contract. I have had appraisals done many times before the contract is signed to protect a buyer from NO financing contingencies.

PS. The new HVCC guidelines that went into effect May 1st are causing appraisals to come in very low.

Jeff,

On Sunday, I had folks come to my Open House, return later and say they needed to buy. Bingo, dual agent - immediately disclosed and got signed approval! Like Laura (#40), I know - and respect - the constraints, as do both the seller & buyer.

I had started to all parties (including everyone at the Open House & agents who showed the home) that area homes sell for an average of 95% of the list price at time of contract - and that the seller was aware of the 95% average. Seller had already dismissed a lowball.

Furthermore, Sunday night another offer came in on the same property. I let that buyer's agent know of the offer on which I was dual - and that there was a likelihood of a 3rd offer from another brokerage. I also let her know that "my" offer was significantly higher and that I'd be presenting ALL offers to the seller Monday evening. Called that agent Monday afternoon to see if her buyer decided to do a "best & final," which he didn't.

For the seller, I did a spreadsheet comparing all components of the 2 offers - deposits & their % to the offer price, mortgage type, total cash, closing dates, miscellaneous requests. Facts - I laid out facts for the seller, who countered at a fair number to which the buyer readily agreed.

Both sides will have attorney representation - standard in my area; the lawyers will iron out any home inspection negotiations because of my duality.

No conflict!

Oklahoma eliminated the law of agency which is common law, with statue law. We do not have dual agency anymore. If i list a property and a unattached buyer wants to buy it, I have to stay with the seller, in fact we don't have fiduciary duty, Oklahoma law is even stronger. If the buyer wanted to still buy I am a single party broker for the seller, and a transactionbroker for the buyer who is advised of my role, and who is invited to seek another realtor if they want representation. This is a better system.

Jeff this is a great post. This is one of the reasons I have a couple of partners. When we get inquiries on my listings, I let my buyers agents work with the buyers while I continue to represent the sellers. Thanks.

VALERIE.... . comment # 25 .. I would not have as much of a problem with dual agency, if it was explained not only correctly, but from the get go. In my example, it's a clear example of this not happening. Sure, we can say buyers are liars. But I even spoke to this realtor and I read the counter-offer. In regards to the flyer comment, what number is that one? Did I miss this one? thanks

MITCHEL.... . comment # 27.. See, you have a handle on this and seem to explain it very well and in detail. And even go as far to say, "even if you don't buy this house, if you buy another that I have listed... etc, etc"... this tells me that you explain it in detail. And sure, this kind of transaction could be simple or could be complicated. My biggest pet peeve with this kind of transaction is if it's not explained at all, let alone correctly. My 2nd pet peeve... how can one honestly say that they will get the best deal for both sides on the same transaction? Or did I lose my common sense. Yes, some have mentioned fair. I can see realtors being fair, but best? Don't think so... you opinion? thanks for your feedback.

BONNIE.... . comment # 28 .. Well, I am not surprised, because I see both realtors and loan officers that do care about the almighty pay check than anything else. Might sound harsh, but it's the truth. In regards to the house under appraising.. the good thing here is that he is doing a FHA mortgage and there are 2 forms that clearly talk about this and that he would not be obligated to buy the house. But just the fact that the realtor put this clause in the offer, was a major red flag to me and showed me her true intentions. Now, I am just assuming, but I think my assumption would be correct. thanks

NEAL... comment # 29 .. a few things... First off, thanks for clarifying to us how Florida works. I kind of know this since 20% of my business is done in Florida. Secondly, I can see why you didn't have any problems when you were a part of a deal like this. You mentioned that you explained it to both sides. As I stated, this wasn't explained to my client at all and still not as they have negotiated.

As far as realtors still putting this kind of clause in the contract. I see it from time to time. I think it's a way to show the seller that they will do anything to get them full price, no matter what. When you and I know that this will hardly ever stand up, especially if

you do a FHA mortgage. And yes, this buyer did pick this up and said no way. Hence why he did an inspection yesterday and we are doing an appraisal in the next few days. thanks for your input and feedback.

Homeowner/home seller/home buyer. I have worn all these hats. I do not have a problem using or working with a dual agent. Conflict resolution is done by a mediator, union contract disputes, divorce settlements, etc. A dual Agent is in a perch to under stand both sides of the purchase and negioate it through to a conclusion espically in a difficult market. I'm not going to buy unless I do my own research and most buyers today have completed immense research online before reviewing the home. As a seller I know how much I'm willing to bend. I go into the market with a bottom line acceptable offer price that a buyers agent would never hear but a dual agent would know. They also know which or who is a qualified buyer these tidbits can push a deal through that wouldn't with a buyers agent.

I try and avoid what is locally called "Multiple Representation" - but work in a board with fewer members than many average sized brokerages, so it's not always easy. Particularly as giving away the buyer's end of the sale isn't merely a matter of giving up the commission, but also any future listings with that client.

Also, when someone calls to see a property I have listed, I am going to show it. Usually this is an opportunity to start working with someone to find another property, but if I've shown the house to them what does it say if I'm not prepared to sell it to them? Nevertheless, there are huge problems with dual agency. First thing I offer in listing appointments is a discount - providing there are no competing offers, if I bring the buyer. Why? Because my level of service has been compromised - I can educate, but I can't negotiate when it comes to price. And I explain this to the buyer as well - I can't discuss price at all, unless the seller or buyer has given me permission to do so in writing.

As for my fiduciary responsibilities - I am contracted to represent the best interests of my buyers and sellers. That does not always translate into the highest or lowest price. If a property might go months without an offer (because we're a small board and certain homes require certain buyers who aren't always active in such a small pool of buyers) then an somewhat low offer that gets a seller out from under the home's carrying costs fast might make more sense than simply waiting for a few thousand more. If waiting is going to cost you more than you are likely to gain - assuming you gain anything, then it's a bad option. My job is to aid i negotiating in good faith. I educate both parties on other sales and property values, outline what is good and bad about various clauses and conditions, suggest where it may be best to meet in the middle and where something simply isn't favourable for a client to accept.

Essentially I become the arbitrator to the process as much as the representative.

The problems with dual agency stem from two areas, laziness and greed. Handled properly there shouldn't be any more difficulty than there could be in a "normal" transaction with two Realtors from different offices involved. And, in reality, you can have similar issues in those circumstances as well - there are those who work for the client, and those who work for the sale. A person working for the sale could be inclined to pressure their buyer to raise their offer in order to get the deal done - regardless of how they personally feel about the property's true market value.

So the biggest issue any buyer, or seller for that matter, has to consider is who they are working with - and is it someone they feel they can intrinsically trust. Trustworthy Realtors will take care of everyones' best interests just as well as if there were two Realtors involved - those who cannot be trusted will potentially create similar issues regardless of multiple representation or otherwise. So there's the issue for your client to face much moreso than multiple representation itself.

You know for years we,ve gotten away with murder here because most agents keep their clients in the dark as far as what agent services/abilities a consumer receives for their X %. Some of you are still missing the point as you mention seeing no conflicts or everyone seemed happy ! The inescapable point is AS A DUAL AGENT YOU NOW HAVE OBLIGATIONS TO BOTH PARTIES, but are NO ONE'S ADVOCATE !!! There in lies the primary difference-Just what is an advocate(check out Webster) and what does that look like in the daily transactional functions/supposed duties??!!! I have ment very few (if any )first time buyers who didn't benefit from some area of advice/suggestion I made that did effect THE SELLER'sNET PROCEEDS ! That would not have been possible as a DUD agent ! As a consumer yourself, outside of real estate, you don't notice a vendor not being able to deliver to YOU all that they have CONTRACTALLY agreed to ?! How can this not be a HUGE conflict ?

a lot of buyers go to the listing agent for the inside track on the home they want. In effect it is a closet pocket listing.

As has been mentioned, dual agency is allowed in IL. I've practiced it a couple of times but I am very detailed in my explanation to both parties before and during a dual agency transaction. I didn't feel very comfortable in the last dual agency deal I was involved in about 3 years ago (the contract went smooth but the inspection was another thing).

However, if I referred away every buyer that wants to view my listings then my sellers wouldn't think I was doing my job. They seem to want to see their listing agent bringing buyers through.

They want their property sold. If I can bring them a contract they can accept and can bring about a meeting of the minds with buyer and seller, then both parties can be happy in a dual agency situation. Again, full disclosure must be made and all of the necessary forms need to be signed by all parties.

Do I like it? Not really. Do I give up some of my commission? If I do, it's to the seller. Bottom line, showing my own listings makes my sellers happy and proves that the marketing I offer works in their minds.

But we all know that it is rare that a buyer will purchase that particular listing. That's why with all of the buyer showings on my own listings I've only had to practice dual agency a couple of times over the many years I've been in the biz.

In fact, I have a listing right now and these sellers were potential buyers for another listing I had. They didn't purchase my listing, but they liked me enough to give me their listing.

In MA it's required that we notify our clients of both the POSSIBILITY of dual/designated agency and then when and if it happens, we need to notify them again and have them sign-off on their agreement to the situation.

Personally, I don't see how it can work. If presented with the situation, just as Victoria first stated, I would then withdraw from one side of the deal and stick with the side I was originally working with.

No matter how ethical the broker/agent may be, there's always the temptation of enhancing either side of the offer to benefit you monetarily. I think there's a reason why some states have outlawed this type of representation and, don't get mad, but I think it should become a standard across the country. Just MHO!

-Tim

Dual Agent

Designated Agent

Transaction Broker

Most consumers (and a lot of Realtors for that matter) have no idea what these terms mean, or the diminished level of consumer representation/protection associated with each role. This is precisely why NAEBA* (National Association of Exclusive Buyer Agents) has asked for a federal disclosure: NAEBA Calls on Congress for National Agency Disclosure

Realtors will never be considered professionals until the abuse of consumer trust is put to an end.

*Exclusive Buyer Agent (EBAs) work solely for buyers, avoiding the conflicts of interest inherent in the traditional seller-oriented purchase transactions. This unique relationship of committed trust and care assures buyers the best possible home buying experience.Good Representation Could Have Prevented the Foreclosure Crisis

Dual agency is always a very hot topic for agents and other industry related professions. I do not practice dual agency but I do write up my own listings on a regular basis. When I receive a call from an interested buyer on one of my properties I show that buyer the home. More often than not the buyers are looking for property at a time when their agent is unavailable. I am happy to show the property because it gives me, the sellers agent, a chance to show the property, qualify the buyer, get direct feedback and potentially facilitate the sale of the home.

If the buyer is interested and starts asking questions indicating they may want to make an offer I explain at that time that I do not represent both parties in a transaction and will be representing the seller. They are free to have another agent or attorney represent them or I can refer them to another agent.

So far none have elected that option. They are fine making the offer and proceeding with the sale. I do not induce them by offering to lower the commission or making a deal. Commissions are not a part of the discussion because they have nothing to do with the sale or the buyers qualifications. Negotiating commissions as a part of a sale diverts attention from more important issues like inspections, title, buyers ability to close, disclosures and other more significant topics.

I appears the dual agency is most important to agents. Explain agency, let the buyer choose how they want to proceed, and sell the house representing your seller. It's not that complicated.

Ken Crotts, Broker

Windermere Real Estate

Certified Short Sale Specialist

Dual Agency has to be disclosed and there are forms everyone signs in Arizona. It does not happen much of the time - at least not for us -- but on the rare occasion , when it happens, if disclosures are all made and there is agreement it works.

I agree with you on the dual agency issue because I have always believed in real estate one person cannot represent two separate people fairly.

However, you are dead wrong about representing them as a realtor and securing the financing for them. There is absolutely no conflict of interest present here. I transitioned into real estate from loan originating because as I was pre-approving buyers, THEY asked ME where to find the house. Once I became a realtor, clients again ASKED ME to do their loans. If you are not keeping up with the industry than you are doing your client a disservice, but if you are on top of each industry, there is no conflict of interest. I built up a referral network BECAUSE I could do both.

I will admit that I have quit doing mortgages because I could not keep up with the daily program changes, and I felt like someone else could represent them better. However this is a different issue than an apparent conflict of interest doing both jobs.

Hi Jeff, You started this post by disclosing that you are not a Realtor. In a position of helping people get financing there are many opportunities to tilt the table to the advantage of the person " representing " the buyer. So to with any transaction. My point is simply this: Disclose up front ( as you did ! ) to both parties that you will be in the middle and that you are prohibited from creating any unfairness in helping both parties reach an agreement. Disclose up front and offer to have either party represented by another agent. Ideally, a dual agent is trying to get both sides to see the value of the property - not to have either side pay too much or too little !

KATERINA - comment # 30 - ..... . first off, I know this about Florida. Secondly, from seeing how you and Nestor handle your clients, I can see why you wouldn't have any issues with either side of things. You both explain things very well. Overall, ethical or not, what stirs my boiling pot are those realtors that don't explain it until after the fact. There is a code of ethics violation and in many states, this is illegal to a certain extent. Thanks for your feedback.

ALAN.... - comment # 31 - ..... . bingo... hence why I wrote about this, because it was never brought up for 4 days, even when they started to negotiate. As of today, 8/11/09, my buyer has obtained a realtor that I found for him in Long Island... thanks for your continued comments and feedback.

JEFF P. ... - comment #32 - ... . sounds good and thanks for stopping by.

JAMES & AMY... - comment #33 - ... . I agree 110% on both, the fact that you can't always avoid these types of transactions... and that you need to INFORM and EDUCATE... thanks for the feedback about PA.

TOM B. ... . - comment #34 - .... . I agree... you can be fair, but I just don't believe that you can get both sides the best deal at the same time. thanks

Dual agency can work, and does work. All parties are treated fairly and honestly, that's what we Realtors do. It's the seller and buyer who decide on the price and terms of the contract, not the agent. The agent is there to assist and relay messges, and keep things on friendly terms. There is no reason why one agent cannot represent both parties and come to a happy ending. All parties are aware of the situation from the beginning and they agree to it in writing. It can be very simple actually.

How about the local Southern CA Inland Empire, Husband & Wife REO listing team.I have submitted many good offers in to their listings , but when you check the closed sales from these two, 9 out of 10 have HER as the listing agent, & HIM as the selling agent. Smells fishy to me, especially since I know that my clients have put in an offer that was just as good if not better than the one they accepted. Makes me wonder if my offer ever made it to the bank in the first place.Just my 2 cents.

Dual agency should not be allowed. There are so many reasons why it absolutely should not be allowed. Let's start with not being able to fairly represent both sides. Now combine that with putting people into a situation where they can make double the money in commission. I have had situations where a buyer, represented by someone else, was considering my listing and one of the other agents. I was emailing info about my property to the buyer agent for her to tell her people, because it was a reduction in property taxes that just got approved. When they came back for a second visit I happened to be at the house when they showed up and mentioned the lowered property taxes to the buyers in front of their agent. Amazingly, they had no idea what I was talking about. I asked the agent, didn't you get my email? Her response after mumbling something was uh no I don't remember. She was trying to push these people into one of her listings in the area, instead of the one they really wanted, which happened to be mine. Also, you have to take into consideration certain real estate companies and the commission structure they have in place. They will only make a decent paycheck if their clients buy one of their listings, not someone else's. Dual agency is one of the many problems with the real estate industry. But with all the talk from the governing bodies of real estate about wanting to make sure everything is legal, they don't seem to be putting the policies in place to make sure that happens.

ROB..... . - comment 35 - ... . you just made part of my argument, that you can't say everything that you want. So my question would be, "whose best interest does one have then?" thanks

JOHN... . - comment 36 - ... . I think you look at it in a good perspective. One thing to make clear though, I am not saying that agents have to give up commission, but if it can make a deal work and help the buyer, without taking anything extra away from the seller, why not... especially if there is more than 15 k in commissions. Does it then just become greed? Does one realize, that if you show both the seller and buyer this, bringing it to their attention, that you could get more referrals from this, which leads to more money?

JAYNE.... . - comment 37 - ... . that's all that I would ask for, work the best that you can. My main argument to this all ... is can one honestly say that they can get the 'best deal' for both sides on the same transaction. thanks

RON.... . - comment 38 - ... . that was my whole problem with my scenario... it was never disclosed up front.. and it has gotten worse now.. I just added this part to my blog at the bottom. Please read this part... it's sad and in my opinion, a disgrace to all realtors out there. thanks for your feedback about MD.

ALMA ... - comment 39 - ... . well, I do believe that it can be worth it... but it comes down to the fact, can you honestly get the best deal for both sides. ???? thanks

LAURA... . - comment 40 - ... . in your comment, I have no problem with that, that you handle it ethically. But I do see conflicts and that is if a realtor tells me to my face, that they honestly believe that they can get both sides the best deal on the same transaction. I think we then would be splitting definitions... meaning, sure, I believe you could get both a fair deal, but not best deals. What are your thoughts on that? And my main reason for writing this was because she did not disclose dual agency and did add that stupid clause about the value of the property not appraising. thanks for your input.

UPDATE : as of 8/11/09 around 7 pm

AUG

JOAN...- comment 41 - ... . I agree with everything that you have stated. Not sure why you got more nasty comments back then... maybe because there were more realtors back then that were less professional and just didn't understand all of this? Just as I come across loan officers that think keeping all the yield spread is okay, even if it means that they are making 15 k on the deal. There are so many ways to look at this.

In regards to the cartoon... I think it is priceless also. I would have given the person credit, but I found it on the internet with no rights, no signature, or anything else to let you know who the artist was. thanks

DENISE... - comment 42 - ... . I agree with you 110%, hence why I decided to write about this, even though I am a loan officer. I think some people confuse the words fair and best.... and yes, I just don't see how you can honestly say that you can get both sides the best deal on the same transaction.. lol Fair, yes... best, no.

KRIS.... - comment 43 - ... . no... not yet. I just wrote an update that took place around 7 pm tonight. He actually took my advice and had a home inspection done. No contracts have been signed as of yet. And now she is forcing his hand to either deal with her or her office, but told him he can't talk to anyone else. Well, I am not a realtor, but in reality, he never signed a buyers agreement, any contract, etc, etc.. What do you say about that? thanks

MARGARET.... - comment 44 - .. . I know laws are different from state to state. And yes, I get upset when a realtor talks about mortgages, rates, and good faith estimates, acting like they know it all. But if you read my blog again, I stated that I am a loan officer, and that my main point of this was that the agent failed to disclose any of this upfront. I attribute this blog as an awareness blog, educating buyers to just beware... and that's it. I think I gave every disclosure regarding all of this. I think I did no wrong... and if you read the comments, many are with me on this. But I do thank you for the compliment in the beginning and for your feedback.

PS.. I do not think I am practicing real estate here. This was a third party view to make sure my client was represented correctly. I advised him to talk to a lawyer and another realtor.... and that was it... do you think this realtor is in the right? Please be honest, in regards to what I wrote about the scenario. thanks

KEVIN.....- comment 45 - .... . taking part of it is not my biggest problem... it's those that don't disclose properly or educate. Just as those same loan officers that don't do a good faith estimate properly or educate the borrower on the process. thanks

KIM....- comment 46 - .... . bingo and this is the same in NY... and this was not done the first time, second time, or even the third time. And now she is trying to force his hand by telling him that he must deal with her or someone in her office, but no one else... and he didn't sign any buyers agreement or any offer. She is dead wrong and there is major liability now.

MICHAEL... - comment 47 - .... . hey, you could be a 2 woman man and a 2 client property... but it depends on if you let the other parties involved know about this. Just as in dating... if you are dating others, it's only fair to let them all know this... but I also hear that many don't talk about this, that they don't disclose this. thanks

PAUL .... - comment 48 - .... . thanks for stopping by and for the kinds words. I have dealt with this several times, and I just had to finally write about it. thanks

CHRIS... - comment 49 - .... . it sounds like you take a good approach to this and disclose to all parties involved... thanks for sharing this.

ANDREA.. - comment # 50 - ... . yes, I know dual agency is different from state to state. I disclosed that in my blog. When it comes to subjects like this one, I make sure I properly disclose and educate. And yes, these can go smoothly. My main point was that this realtor didn't disclose anything. It's good to see that you are thorough about this. But one important question. You made this statement... "And FYI, I did get the best deal for all concerned, and believe me, both deals were fraught with issues which I handled with the highest regard to both clients."

I have gotten to know you over the last 6 months or so.... I am sure you did your best. But can you honestly say that you got the 'best' deal for both sides? How can that be so, when you are trying to get the seller the best deal. Could you have gotten them an extra $5,000, but wanted to see the buyers treated fairly also? That's my whole point about this... getting someone a fair deal is okay, there is nothing wrong with that. But getting both sides the best deal? It would be like a divorce attorney getting the best deal for both sides... in my opinion, it just can't be done. But as I mentioned, I know people like yourself, that would do your best. Thanks for sharing..

MARTIN... - comment # 51 - ... . when I get a moment, I will go back and read your blog. First off, I don't think there is anything wrong with the buyer wanting to deal with the listing agent to try and work a better deal out. This can happen, but it comes down to who you are dealing with. Now, on the flip side of things... why take that risk though. Just get a buyers agent, this way you are not second guessing yourself. Overall, we do agree that we don't see it possible, that you could expect the best deal when someone is representing both the seller and buyer at the same time. thanks

IAN ... - comment # 52 - ... . lol... I expected more also. Some people just don't like to ruffle feathers.. or be upfront... or just speak their mind. I do... I have no problem with a healthy debate. It's one way to get issues out there and sometimes you can learn from the other side, as long as you have an open mind. thanks for stopping by.

CARLA .. - comment #53 - ... . Thanks for stopping by... you made this statement...

"Agents who take the listing have ALREADY set a contract in place for commissions to be paid by the seller. If Joe HomeBuyer thinks they can work out a better deal with the listing agent, they are -- essentially -- interferring with a contract, i.e., the listing agreement. ANY listing agent working out a "deal" with Joe HomeBuyer based on them re-negotiating their commissions to get Joe HomeBuyer a deal is violating a TON of ethics. And, if I were the seller and found out about it, I'd take BOTH my listing agent AND Joe HomeBuyer to task!"

I am going to disagree with this... yes, there is a commission in place. But you as a realtor can reduce your commission and give it back as a credit, if you wanted to... that you saw fit in doing this. As long as the seller still walks away with what is in the contract, how is this violating any ethics? I am not trying to fight here... but do you have this in writing? Just curious...

In regards to number 3... how can you say that you aren't allowed to represent both the seller and buyer, that it's illegal to do so.??? It's illegal in some states, not all states. So aren't you just throwing out there your opinion, in what you believe? Again, it is legal in many states, yet you say it's illegal. What proof do you have of this? I do agree though that it can be a conflict of interest. And thanks for your feedback, for your input, and for the compliment.

Jeff, this blog has gotten alot of attention both for and against. No matter how you slice it, if the agent is slimy and unethical, they willl always find a way to cheat the system; however, not all agents are like that. I have sold many, many of my listings over the past few years, that is what the seller hires me to do. I am not party to the contract, I simply co ordinate the transaction. Buyer wants to pay X, seller wants Y, I convey to that to each party and let them make their decision. The seller sells the home for the amount that the buyer agrees to pay. In no way is that wrong as long as the buyer and seller agree and the agent facilitates the transaction. As far as getting paid on both sides, I also see no problem with that. My sellers hire me to sell their home and expect me to bring buyers to them.

On a side note, last year I made the decision to build a team and now I only work with sellers and have buyer specialists work with the buyers, not because I don't like getting both sides, because it allowed me to work more listings and still be able to service the buyers.

I know that you are not saying that all agents are crooked because that is not the case, don't let a few rotten apples spoil the bushell

As a long time trainer/teacher/educator of the Accredited Buyer Agent course and serving as an expert witness in a number of dual agency cases, I can speak (and have written) about dual agency a lot. Let's start with the understanding that the word AGENT means REPRESENTATIVE, and what that means is the an agent represents the interests of their client, as has been explained well in several comments. An agent owes 6 fiduciary duties to their client, be it seller or buyer, and they are 1. Obedience, 2. Loyalty, 3. Disclosure, 4. Confidentiality, 5. Accounting, and 6. Reasonable Care and Diliigence. For the purposes of this commentary I will limit my explanation to the 3 fiduciary duties LIMITED by dual agency. First, LOYALTY. Loyalty means 3 things: allegiance, advice, and advocacy. If I represent a buyer as illustrated above, I owe that buyer client (or seller client) my allegiance, all the best advice I can give him/her to advance their objectives, and a strong advocacy for them to get what they need. Secondly, DISCLOSURE. I must disclose to my client all information that would give them an edge over their competition in achieving his/her goal. Why the customer (non-client) is buying/selling, for example, could benefit my client. If I know it, I disclose it, just as I would disclose any known defects about the property. Thirdly, CONFIDENTIALITY. I must keep confidential anything I learn from my client to keep their interests protected from their opponent who may use that knowledge to further their objectives. You'll have noticed that I didn't say anything about obedience, accounting, or reasonable care and diligence. Why? Because in dual agency they are not limited. I still have to be obedient to the clients wishes, account for all moniees tendered, and be competent in the service I give to buyer and seller clients. With that being said, a professional licensed agent, after explaining the above to their clients, making sure that they understand that they are giving up loyalty and disclosure of the other client's confidential information, can, should, and must receive INFORMED CONSENT by the client to operate as a dual agent. Once that consent has been received the ethical and professional licensee can operate as a disclosed dual agent without harming either client. The client knows that they have given up advice and advocacy and disclosure and are willing to do that for an assortment of reasons. Where Designated Agency is available in some states, that is the preferred way to practice dual agency.

Jeff, thanks for your reply. I'm curious to hear all of this turns out. I also hope that your client is able to purchase the home that he so clearly wants on terms he is comfortable with.

AUG

Jeff, regarding your "update" #89.

Once your client began the purchasing process (and actually before that)... they became embroiled in something we Realtors call "procuring cause"... which has more to do with "who gets paid the buyer's side commission" than anything to do with your client.

procuring cause is probably just as controversial as dual agency... but basically it addresses "who showed the house" to the client, and how they followed-up with the client... an unbroken chain of events leading to the purchase. Interestingly enough one of the ways to "break that chain" is for the buyer to fire their agent.

Since the firing took place, well into the purchasing process... that muddies the waters severely, and the agency's attempt to switch you to another agent within their office seems a fair and compromising (in a good way) solution. I can understand why your client (and you) would want to the agent that you've chosen... but you can understand why the agency is trying to maintain something good out of this fiasco.

Perhaps, a good solution might be for your "chosen" agent, to contact the agency and agree to share the commission with them, in some fashion... (maybe a showing fee, a referral fee, or a flat percentage of the buyer's side commission)... that way the agency would be satisfied (assumedly), and your client would get to use the agent of his choice.

All of this should be "behind the scenes machinations" that should not involve your buyer... the buyer should be allowed to use whomever he wants... he needs to feel some confidence in his chosen representative.

LUPE.. - comment # 56 - .... . it depends on your home state's laws and rules. And yes, if disclosed properly and discussed about, there should be no problems. And not saying that you said this, but to say that you can get the best deal for both parties on the same transaction, I don't believe that is possible. Fair, yes, best, no... thanks for your input.

PATRICIA.. - comment # 57 - .... . yes, if it's handled properly. In my example, I believe that it wasn't and as of right now, still isn't. thanks

JIM.. - comment # 58 - .... . I find that to date, the buyers don't need to find another agent, because in my opinion, you explained it to them... you disclosed it, and did this upfront. To me, that sounds honest and I have spoken to you and have read some of your blogs. I would trust you also. Thanks for the input.

BRIAN... - comment # 59 - .... . bringing lawyers into the mix can be a good thing. But I am extremely confused... your commissions are doubled to 15%? Seller is paying 15%? Sorry, but that to me is extremely high, no matter how upfront you are. 6% in most cases would be very reasonable in my opinion.

ROLLAND... - comment # 62 .... . as you stated, you disclose and educate the buyer... that is all that I am asking... and handing the buyer over to someone in your company, I don't have a problem with. It's those realtors that steer their buyers to their listings and or to their companies listings. Sure, it's okay to sell a listing of yours... but not to purposely look for other sales just because it's not your listing? I then have a problem with this. Thanks for your feedback.

AUG

Jeff, I did not read a single comment, so forgive me if this has already been said in some fashion.

Dual agency has been brought up on Active Rain from time to time. The problem with talking about dual agency in a general sense is that...well...you CAN'T talk about it in a general sense.

Dual agency is tied to state RE laws and all states have different laws/guidelines/rules for dual agency. Some allow it, some don't. Others have different options, like a transaction broker, that tends to "replace" the dual agency situation.

Further, dual agency is classified different depending on the state. In some, dual agency applies to the AGENT in question only. In states where this is the case, NOT be a dual agency becomes an easier task.

Others however, the brokerage owns the listing and EVERY agent in that office is the "listing agent." So, if Bob gets a listing and Mary has a buyer that wants it, and they work for the same agency, they have to become dual agents (or designated agents) for the deal to work, OR the buyer has to go to another agency. If you happen to work in an office that has 30 or more agents, this would be more common than not.

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Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans

Cherry Hill, NJ

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