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Why I Don't Practice Dual Agency

I have a personal policy of never representing both sides of the same transaction. I do not practice dual agency.

Definition: (per Pennsylvania Association of Realtors' Glossary of Real Estate Terms)
Dual Agency: A business relationship where the licensee, with written agreement from both parties, works for both the seller and the buyer in the same transaction. Dual agency will limit some of the duties owed to both parties. Dual agents cannot take any action that is adverse or detrimental to either the buyer or the seller in the transaction. For more details, see the explanation given in the Consumer Notice.

Many realtors ask me why I chose this policy, thereby limiting my income to only one side of the equation.

Here's why:
My job, as I see it, is to represent the interests of the person I am working for throughout all phases of the transaction, especially the negotiation phase. When an agent represents both sides, he has access to confidential information on both sides of the negotiation, and cannot, in my opinion, do a proper job representing the interests of the two parties involved. The agent ends up representing his own interests, in practical terms.

I think of it like a boxing match. Each boxer has a trainer in his corner to guide him between rounds. If each boxer was represented by the same trainer, and he gave advice to each boxer between rounds, which one is getting the best advice? Which one is the trainer really trying to help win? The trainer benefits no matter who wins. Does he really care if the advice he renders is good advice?

It is for these reasons that I have chosen to not practice dual agency. It may cut down on my income opportunities a bit, but I believe I will make up for it with repeat business from clients that know they got the most honest, dedicated level of service possible.

Posted by Rich Schiffer, REALTOR, e-PRO on 10/05/2006 09:24 PM

Comments (32)

dual agency, honesty, integrity, consumer notice, agency, responsibility, confidentiality, fiduciary, trust, respect, dedicated, service, pennsylvania

32 Comments on Why I Don't Practice Dual Agency

OCT

2006

I attend all of my Closings, which is unusual for a Loan Officer around here. Last year at one of those Closings I watched a Realtor sit and squirm because she was a dual Agent on this Deal, and the Buyers and Sellers were having a disagreement at the Closing, and both sides were looking at her for support. Talk about being caught between a rock and a hard place.

Exactly my point. There is no way to ethicly choose who gets your best representation. There are at least two other agents in my office that also will not do dual agency situations. More and more, I believe people are recognizing the terrible position they could be putting themselves in.

In the closing you referred to, I would be interested to know if either party felt satisfied with their agent enough to give them repeat business or refer their families and friends to them. I would guess not.

Here in NJ an agent sometimes gets involved with Dual Agency because another agent in the same office finds a buyer for one of our listings. Most folks here will not act as the agent for both the buyer and the seller (a true dual agent) but even without that, it's a sticky situation and one that requires "meaningful disclosure" It's difficult enough to develop a trusted relationship with your customer/client without muddying things up with conversations about how we will forfeit 2 of our fiduciary responsibilites that are in conflict with dual agency.

OCT

2006

As a rule, I do not practice dual agency. But there have been a couple instances where it worked, but that is a rare exception. I take my representation obligations and duties very seriously. Once I am under contract, I feel I owe them my full and complete allegiance. And who needs the added potential liability?

Rich Jacobson, www.KitsapLife.com

Your guess was right Rich. The young couple who were the Buyers in this transaction, looked liked they expected more support from the Agent then what they got. They expected the support that they would have received if the Realtor was only representing them.

OCT

2006

One of my realtors almost got sued, along with the broker/owner, over a dual agency. I agree with your policy. It's our job to look out for the customer, because we are the professionals.

MAR

2007

Read What do you think of dual agency? Feedback please ! ! by Kelli Fronabarger for another Realtor's view on this topic.

I have a problem with K. M. M. S. - (Keeping My Mouth Shut), so I won't do dual agency. I don't think I can serve either client sufficiently. If the seller hires me, my loyalty is to them. Working with buyers, I'm theirs.

MAR

2007

For all the reason mentioned, this is why I have chosen not to do dual agency. I look to build strong client relationships and I don't see how it can happen under these circumstances. I have come across some buyers that seem to prefer agents that work this way. I guess it's the feeling that they will get a break on the price of the home; not realizing some of the services they stand to lose.

MAY

2007

My very first transaction in the business turned into dual representation. It didn't take me long to realize this was not a situation in which I was comfortable. I too have made the personal choice to represent only one side of any transaction. The deal closed with out any problems but I was left with an icky feeling for long after it was all done even though I never crossed ethical lines. I applaud your decision and feel it is the best decision for I never want to doubt my integrity or to whom I owe my loyalties. Serving one client in any transaction is the only way for me.

Ditto,Rich. Even though I would be losing money in the end, I would prefer not to ever dual. I don't see how I could keep my fiduciary responsibility to the seller or buyer if I were to represent the other in the same transaction. It's just not possible.

Debbie, Gwendolyn, Darrel, Edith, and everyone else that has responded -- I appreciate your input. It reinforces my opinion that this industry has many highly ethical practitioners who recognize that what is in the client's best interest, ultimately is in your best interest, as well.

MAY

2007

Thanks for your take on a touchy area. We deal with it a lot now that we have a website and get direct calls for our listings.

I have a question...let's assume you've prepared the listing contract or buyers agency contract so that you remain the seller's agent or buyer's agent (as the case may be) so you don't revert to dual agency (or to a transaction broker in Colorado - I don't know how the other states work).

So, what do you do when you're representing buyers, have a good relationship with them, understand what they're looking for, AND THEN, you happen to get a listing that you KNOW they'd like? Do you refer the buyers to someone else for that specific property (so another agent can show it and possibly "sell" it?) If so, what if the buyers don't offer on that specific listing and want to resume their search, do you "get them back" from the other agent? Seems like they (the buyers) could feel like a ping pong ball at that point.

It seems all well and good to say you don't work with both sides of the same transaction (and I'm sure you don't and I've only done it once myself), but I'm wondering if anyone has any real life examples of how they've successfully handled a situation like what I mentioned above.

I don't know how the agency contracts work in other states, but in Colorado it's addressed in the listing and buyers agency agreements (whether you will remain their agent or become a transaction broker under certain circumstances). I've yet to work with a seller who didn't want all buyers exposed to their property, including buyers I'm working with, even if it means I become a transaction broker for both sides. On the flip side, I don't know any buyers who want to "pass" on a listing just because it's my listing -- when it may be the perfect property for them.

In Colorado, we must disclose in the purchase contract how we are representing the buyer and/or seller and if that representation has changed (i.e. from seller's agent to transaction broker for instance.)

I'm relatively new to AR, but I have the impression most of us here are very ethical and want to do the right thing, providing the best possible service for our clients. I know that's how I operate.

So, I'm still looking for real life examples of how you handle this situation? Thanks.

Susie, That is an excellent question without an easy answer but one I had to ask of myself.

If I were to properly represent only a single side of any given transaction; from an ethical and moral perspective, I felt I had to first make another decision to insure there would never be a conflict. I realized I had to choose to work one side or the other exclusively. I ultimately chose to become a buyer's agent and as such made a commitment to myself to never take another listing.

This was a difficult choice because it went against the conventional norms of real estate practice in the minds of not only my broker but most practitioners as well. We have had it drilled into us from the beginning to think listings, listings, listings as the sacred mantra of the business and the only way to survive in it. For me this was frightening ground.

I spent days thinking, I decided to narrow my focus and define the parts of the business that I was (a) best at and (b) enjoyed the most. After lots of soul searching I realized that working with buyers best fit my personality, was more enjoyable and in the end left me feeling more satisfied with the job I was able to perform for them.

That was almost a year ago and even today it is still challenging to look at a potential client wanting me to list their property, especially if they are a friend or a past client and having to say; "I am sorry I can't but I will refer you to someone who I know will do a good job for you." Most are shocked by my answer but after hearing my reasoning, ask me who I would trust to help them sell and if I would be willing to represent them for their next purchase because they too feel strongly about having unquestioned loyalty through each part of their deal.

This decision effectively removed me from 50% of the potential business out there but I feel I have gained more time to better serve the clients I do work with and the time to work with additional buyers, plus I sleep better knowing that I never have to question to whom I am loyal.

This is not a direct answer to your question Susie but is my way to aviod being placed in the situation you are asking about because I personally believe that you either practice dual agency or you don't, there is no middle ground.

interesting approach. In PA are you allowed to act as a sellers agent and what we call here a non-agent, or transactional agent for the buyer?

Bill -- PA does have transactional agency, but it seems to me like a rare occurence.

Darrel -- I appreciate the commentary, and I am certain that your clients appreciate the quality of representation they get from you. I believe you are more likely to get repeat and referral business from them, because of your unfailing stance for their best interests.

Susie -- As far as real life situations goes, I can tell you about a few intances I have witnessed, but not been actually party to, and I can tell you what I plan to do if the occasion comes up. There are several agents in my office that will not practice dual agency, for many of the same reasons I listed, I would imagine. If a buyer they represent wants to see a listing of theirs, they will ask another agent in our office to show it. If they do decide to write up an offer, the listin agent would release them from their buyers' agency contract, and the buyer would sign a buyers agency contract with the new agent, specific to that property. The broker is then considered the dual agent, and the listing agent and buyers agent are considered "designated agents" The original agent may of course request a referral fee, and such arrangements are negotiated on a case by case basis between the agents. All of the issues surrounding dual agency, and fiduciary duties are made clear to the client from the start, when we go over the consumer notice, and the agency contracts. They know what to expect, so if it should come up, the "ping pong" reaction is minimized. Another thing that many sellers agents in our office do to minimize these situations, is to not sit an open house at their own listings. By building relationships with the other agents in the office, and contributing to the marketing of all our listings, it builds a copperative synergy in the ofice, and makes negotiations much less adversarial when the time comes. You can read another post of mine on that topic: Sitting another Agent's Open House -- Professional Courtesy

Tim and Pam -- Websites will definately attact more contacts regarding your listings. Have you blogged your listings on Active Rain, and Localism? That will serve to increase your exposure, and drive even more traffic to your site.

JUL

2007

Rich this blog is how I feel about Dual agency. I feel that when I am the dual agent I have a rope around my neck.The first person we meet on our journey is the seller to list their home and how we promote fiduciary duty. The buyer comes along and now here we go its all about disclosure !!! Talk about thin ice !! I like doing what I do or I would not be in Real Estate and yes it is a very good income. I am a listing agent and I do prefer it as well.However when I get the call to show my own listings I do not turn it down. Yes the money is good on a dual agency but is it worth the risk that also comes along with it. Sometime it is not all about the money , its the client and the referral you get from the client. Dual agency has cost some agents referral because the seller thinks or the buyer thinks the agent did not represents one or the other fairly. Yes I have given a buyer to another agent , but in my office we do have people who will sell what ever to make that dual agency work, why ? My own interest is not representing my clients clients interest. This has been a big thing for me and I want the business but at what risk is the question.

JUL

2007

I do many dual agent transactions in my rural area. I am known as an area specialist, and do a lot of referral business. I explain that fact, and my percentage of dual agency transactions to my listing clients, disclose agency right away to potential buyer clients as I present the buyers contract to them. My sellers know that I will go into "neutral" if a buyer comes under contract..my buyers know that I will not be disclosing more than the seller will allow me to, usually in writing. I believe my reputation as an ethical person has helped immensely, with the majority of my clientele referral based. I find that not having to work with another agent speeds things up, streamlines communication, and just plain makes it easier all around! I have had only one major problem in the past four years, and was able to represent both parties to a mutally agreed outcome, and garnered referrals from both! I am not trying to toot my own horn, but the widely held opinion that it can not be done is not always true...sometimes our role is changed to a negotiator, arbitrator, but as long as the role is defined to all parties, it is acceptable in my book!

JUL

2007

Victoria:

While it is true that in many states Dual Agency is allowed, it must be disclosed to and agreed to both the Buyer and the Seller.

I recognize that for many professionals it works. I don't want to make it seem like people that do it are doing something untoward. I simply think that the potential for problems is not worth the risk. I would rather go to bed at night knowing that I did everything I could to represent my clients needs, rather than having to wonder, "did I say too much to Client A about Client B...?"

Each of us has our own style of practice. Not every client would agree to your approach, and not every client requires my approach. It is really a matter of our personal comfort levels. I am just not comfortable with the risk.

JUL

2007

I can see your point..I have thought it through over the years, and still feel like I can provide peak service to both clients just by cutting out the endless loops and broken communication that occur sometimes in the two agent transaction. In my small area, the possibility of saying too much to A or B is ever present..many could be related! I own other businesses in the same area, which I believe has helped hone the ability to communicate while holding each parties confidentiality. It is a role I have been in for so many years I guess it feels comfortable. One of the first pieces of information that I give my sellers is my record of dual agency, and the implications. Buyers are told immediately that I represent the seller, and if they choose to utilize my services, what they can expect from me in this dual role. My attorney has helped develop some added forms that I use because of the amount of dual agency transactions I complete, and everyone so far seems happy! (knock wood!)

NOV

2007

State laws take different stances on this subject. In Oklahoma, we do not practice "agency". We act as either a transaction broker (indifferent middleman) or single party broker(representation). I know it sounds like semantics, but so far it is working. Our Office, 99% of the time, uses transaction brokerage as an office policy. When helping customers in transaction brokerage you are simply educating them on all aspects of the real estate transaction from law to contract to negotiating to closing. We educate & give them options to chose, at the same time keeping all of what you discussed with them confidential. When doing both sides of the transaction, you do not recommend or suggest decisions, we educate them and let them make the decision themselves. We still need to be very careful in what we say & do, but we always look forward to working with both sides. When it comes time to getting something done, it's easier to work with yourself.

NOV

2007

Ok, I agree about dual agency... not being one. However, you recently blogged about sitting another agents open. So if you are doing an open for someone and a person views the home and wants to write an offer... do you? Sitting the open aren't you really a sub-agent of the listing agent therefore representing the seller..if so, if you write the contract you have entered into dual agency... just a thought.

Steve -- I agree with you about the importance of educating consumers. Once armed with the right information, the educated consumer can make educated decisions. As long as you provide both sides with the same degree of information, you are providing a valuable service, and in the end, that is what the consumers want, and deserve.

Perrin -- it is a very astute point that you are making, and points to one of the details discussed in the "Consumer Notice" I am not familiar with the regulations in Washington, where you practice, but in Pennsylvania, the potential conflict of sub-agency has been addressed by the creation of an agency relationship termed "designated agency." In the situation that you described, where I am sitting another agent's open house, if an unrepresented buyer came to the open house, and wished to engage my services to prepare an offer, I would be representing them as their Buyers Agent. My Broker would assing me as the "designated agent." for that client. The Seller's Agent, who invited me to sit the open house, would be the "designated agent" for the Seller. The Broker, whom each of us work under, would be serving in a Dual Agency role, but the individual licensees, each representing their respective clients, are not privy to the confidential information of the other and are thereby not in the dual role. It may seem like a matter of semantics, but it does make a difference. The agents in our office do not discuss confidential client matters with one another, and respect the lines that must be drawn when protecting the interests of our clients. I hope that clarifies the issue for you.

What a touchy subject. Even with full disclosure it can seem abit uncomfortable. My husband and I are both full time REALTORS usually in an intermediary situation one of us will represent the buyer and the other the seller. Then we agree not to talk about it except while negotiating.

NOV

2007

Jeff and Lisa -- wow -- I hope for your sake (and your clients') that you are able to leave work at work and not "bring it home." I would love to work with my wife, but I don't think I would want to do it across the negotiation table. It seems like it could create too many opportunities for conflicts of interest, or at least a strong appearance of impropriety.

NOV

2007

Jeff and Lisa I think it is great you both work together !!! Like Rich said not with my husband we would be not talking to each other. At least if it was my husband I could say more to him than to the client Hummmm. I vent with him enough that he want's no part of Real Estate. Talk about dualing agents !!

I make it my policy not to do dual representation - and my broker does not permit us to do dual representation. This is a good policy and I think every real estate agent should practice this. How can you adaquently represent two sides to a transaction? You can't!!

I'll refer the other side to another real estate agent and take a referral fee - that way I'm still getting paid something for finding the client - and I'm still representing my client's best interest.

Good post!!

JUL

2008

Great post! Please contribute to my post on dual agency here http://www.activerain.com/blogsview/579085/The-True-Test-of

Christina

SEP

What can happen if the seller refuses to sign the Dual Agency agreement? Does the sale grind to a halt. What are the possible ramifications?

OCT

We are currently doing a SHORT SALE on our home in PA, our agent found us a buyer, but he is acting as a dual agent. After reading this post and all of the comments, now I am a little bit worried. However, this house has been on the market for almost 3 years and we are desparate, if the bank will take the offer, is it doing us harm in any other way? I would love some advice.....

OCT

Frybreads -- as long as both you and the buyer agree to allow dual agency, there is no direct problem. I suggest you re-read the Consumer Notice that your agent provided you with, and be clear that there is a difference in how he represents you. Congratulations on finding a buyer for your home. In a short sale situation, having your agent act as a dual agent may actually be beneficial, as it will have the bank only need to communicate with one individual, and it may help make an already rocky process go more smoothly.

NYCoopSeller -- In PA, Dual Agency is an option included in the Listing Contract. The Seller has the option to allow dual agency or not. If a situation arises where the seller does not permit dual agency, the seller's agent must disclose this to any potential buyers that he introduces to the property, and explain to them that for this property, he solely represents the seller. As buyers, they will need to use their own agent, if they wish agency representation.

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