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74 Comments on The Dual Agency Controversy...to have representation or to not?
To all who have commented on my post regarding Dual Agency... Thank you for taking time out of your busy day. :)
I would like to clarify again that while Dual Agency has various meanings, my post and passion refers to one Realtor (one person, not once office) representing both ends of a transaction.
I have read each comment thoughtfully and I stand firm in my convictions that legal or not, disclosed or not, easy for the Realtor or not, the buyers "decision" or not, whether you call it "representation" or not ... that one Realtor dealing with both ends of a transaction and getting paid to protect the "best interests" of both opposing sides is detrimental to the best outcome possible for either the buyer or the seller. One person is going to get the short end of that stick and it's not going to be the Realtor.
The Consumer Reader who posted above sums up the perception from a seller's viewpoint quiet nicely and I thank you for that. I also know that once a home buyer (one who is not caught up in the emotions of wanting a particular home so badly that they don't hear the explanation of agency and don't care what disclosure they sign to get this home) is educated and understands that they are not protected or represented in a dual agency (with one Realtor), that this buyer will choose to have their own financial interests protected and represented. I have educated buyers on this numerous times over the years as they come to my listings and want me to reperesent both sides. The only ones who say they "don't care" once they truly understand are professional investors.
Since many of us are passionate about the topic, I will at Ian Greenleigh's expert suggestion, continue to blog on the subject and I hope you will all continue to comment. Discussing industry issues is the only way that we can continue to improve our work environment as well as the perceptions of our industry :)
Evening Melody, I appreciate your firm stance on this issue. However, that alone does not make it true or correct. Others feel just as passionate about their ability to fairly represent both parties. I have done several and they were the some of the smoothest and open contracts I have done. There are situations where I would not represent both parties but if buyer and seller are comfortable working thjru me it is an advantage. I always provide the option to refer either side to my broker. If you feel so steadfast that you are not able to treat both sides fairly you should continue operating as you do. To be fair, don't assume others cannot.
It can be done, but we must walk a fine line to give both sides what they deserve.
Hi Melody! So many people think that they can get a better deal by going to the listing agent directly! I do my best to educate, but sometimes the consumer just does not get it! Great topic!!
Good Evening Bill,
Thank you for your response. As I said in my blog at the top of this thread "Many people will not agree with my stance in regards to dual agency and each person is welcome to their own perception based on their own life experiences which have created thier own reality." As you know, each person's perspective regarding what is true or correct is simply that... our own perception.
From my viewpoint, having a contract be "smooth" or an "open contract" does not mean that one of the two parties to the contract could not have obtained a better price or better terms by having their own agent dedicated to the outcome of one side of the transaction. I'm sure that you are a person who works diligently for your clients, that does not mean that you can simultaneously get the seller the highest price and best terms possible for the given market while also getting the buyer the lowest price and the best terms possible for the given market. Accomplishing both of those outcomes at the same time is not possible no matter how you slice it.
I agree with this! You are not serving your client if you are involved in this.
"I do believe that an agent can justly represent both parties. If ever for a moment, I thought I was doing it out of greed, I would never assume the role of a dual agent because with all certainty, the truth would come out and trouble would follow. Receiving the commission from both sides. Great. I'm not having a problem with it if I've done my job correctly, ethically and within the law. "
You simply cannot represent both parties equally. You can, however, abstain from representing either party.
When there are no issues with a transaction, it's all peachy and you can collect an even fatter paycheck and everyone is happy.
However, if there is an issue where both parties cannot come to terms, how can you represent both parties? Are you prepared to be a ruthless stickler to the terms and timelines of the contract? If your buyer wants to walk and keep their earnest money, will you do everything in your power to make sure they get what they want? What if the seller doesn't agree? Are you prepared to take advantage of ambiguous wording in the contract to put the screws to the buyer?
I would wager that the majority of the times when you "represent" both parties, there isn't going to be an issue... but are you ready for the aftermath of that one time where both parties sue eachother and YOU?
You have fiduciary duties to both parties, which is a definite conflict. The only way to carry out dual agency is by abstaining from the very core of your duties - to look out for the best interests of your client.
To the Consumer Reader who posted earlier - I'm sure it has been addressed already, but agency law is defined by your state legislation. Here in Washington (state), dual agency is permitted if agreed to in writing by all parties.
That doesn't mean that all real estate agents will abide by the law, or that they won't attempt to coerce sellers into agreeing to dual agency, you just don't know until you're presented with the opportunity to ask the question.
I'm going to have to write another article, I don't want to go off on a tangent here.
Hi Melody,
Great thought evoking post!
Emotions aside, let's be practical. Sometimes, you get a sign call or a buyer walks into your open house and they want to buy the house. You can bring in another agent but that doesn't always work out. Maybe the newly inserted agent isn't a good negotiator or doesn't know how to manage the buyers and the deal falls apart??? If you have a willing seller and a willing buyer that understand the representation laws and issues and still want to proceed, I think you have an obligation to your seller to put the deal together.
Next point that was covered is that there is nothing more ignorant and passe than hearing from buyers that they are going to get a better deal by going straight to the listing agent.
Have a great weekend!
Betsy
Thank you, thank you, thank you, Melody. I feel the same way you do about dual agency (in LA, it's only dual agency if the same agent (not office) represents both buyer and seller in a transaction) and refuse to practice it. I'm a listing agent and I've never had a buyer say they wanted to give up the opportunity to have their own representation through the purchase just to work with me. After you've given the "this is why you need your own agent" spiel a few times, you start to hear the feedback from the buyers that they appreciate the fact that someone is in their corner, working for them. I'm hired by the seller and I'm not going to give up my responsibility to them in order to double dip.
Dear Betsy - Thanks for response. :)
Yes, I have buyers who contact me directly via sign calls and open houses and want to buy my listings as you describe. My obligation to the seller is to get them the highest price and the best terms that the market will allow. I educate my sellers as to the risks of dual agency when I list the home and I get my sellers permission at that time to refer buyers to qualified local agents to represent the buyer's side of the deal. (Someone with a stong local track record if they don't already have someone that they know and trust.) Before I refer the buyer away, I make sure that my listing is the home they plan to place an offer on. If have not decided for sure, then I have an in-office buyer consult with them to perform a complete Needs Analysis, I then have them get preapproved with a lender from my Circle of Excellence. After they are preapproved, I show them any homes that they were wanting to see prior to making their decision. If my listing turns out to be the best choice then I refer them to a local qualified buyer's agent. If they decide that another home meets their needs better than my listing, then I have them sign an exclusive buyer agreement which graduates them from "lead" to "client."
Lisa - Thanks for the response. :) I agree! I receive many listing referrals each year from my sellers as a thank you for only representing them in the transaction. Sellers are savy these days (at least where I live) and they truly appreciate when you give up an opportunity to make more money in their best interest. Being true to your own personal ethics will always come back to you tenfold. :)
Melody - As one of the top listing agents in Philly, I understand what you are saying. Often times, buyers will come directly to us. More often than not, they will go to our team or someone else in our office if they do not have their own representation. I am a bit mixed on this debate as it is a good debate for sure. I still think it depends on the situation and the clients involved. If I am not comfortable or if my seller is not comfortable with it, well it is a no brainer to refer the buyers somewhere else. But sometimes one agent handling a tough deal may be better than one incompetent agent handling one side. Or what about the cash, as-is deals where the deal is straight-forward ? Is interesting. Love the conversation here !
Michigan operates under real estate laws that define what is called Designated Agency. That means that two agents opeating under the management of a single broker can represent the two sides of a transaction, with each having full fiduciary responsibility for their client and the broker being the only one in a dual-agency role in the transaction. However, we also have the concept of a single agent acting in a dual role. The Agency Disclosure that we have to use with sellers and buyers defines Dual Agents as follows:
A real estate licence can be the agent of both the seller and the buyer in a transaction, but only with the knowledge and informed consent, in writing of both the seller and the buyer.
In such a dual agency situation, the licensee will not be able to disclose all known information to either the seller or the buyer. As a dual agent, the the licensee will not be able to provide the full range of fiduciary duties to either the seller or the buyer.
The obligations of a dual agent are subject to any specific provisions set forth in any agreement between the dual agent, the seller and the buyer.
So, legally a single agent can be a dual agent in Michigan. Having said that, my own opinion is closer to yours. Dual agency is a slippery slope, full of many landmines that even the best intentioned agent can step on. I try to avoid it.
I'm posting part of my comment above again, because it still seems that many agents think that simply because a buyer contacted them directly that a buyer's agency relationship exists. It doesn't. You can be teh only agent involved in a transaction and STILL be a seller's agent only, folks.
Problem #2, I think many agents think that if a buyer contacts them to see/make an offer on a property that they have listed, that dual agency is automatically created. It's not. You have to be a legal buyer's agent for the buyer AND the listing agent (in states where "dual" means agent and not agency) in order for a dual agency to be created. If you're not a buyer's agent, then the buyer has NO representation.
I love being aduel,,agent and have been doing duel agency before we even had to disclose it. I see no problem in it, If you tell the truth and treat people right, there is no harm, You get the job done, When I act as a buyers agent only, I do not feel like my job is to beat up the seller, it is to close a deal and everone walks away happy. I vote for duel ageensy
I have a question:
you have a listing and a buyer calls you to see it////they are working just with you(single agent) and now they want to write a contract....what do you do?
As a builder in licensed Realtor in Florida and Georgia I have never seen so much corruption in a small town like Thomasville, Ga. 90% of all Realtors are out for themselves. They do not care for the buyer or the seller just the commission. As a state that allows the practice of dual agency is like allowing Hitler to continue in his destruction. This type of practice just makes it hard for ethical good realtors.
Thomasville, GA. is a nice town. All we need to do is have someone create a big roach motel for Realtors and add a few dollars in it and watch the decline of the infestation. "Realtors check in but they can't check out".
Hi Melody,
I just happened to come across this topic coz my advisor wanted me to look up dual agency... anyway i agree with your posting, unless full information disclosure is possible, it is not feasible to represent the best interests of both parties by the same agent.
However, if the agent is neither interested in the buyer or the seller's interest, then dual agency is not a problem. ultimately, it is not neccesarily the case that buyers and sellers are being ethical anyway, so why should the agent be?
Rahul,
Interesting comment. It is a Realtor's duty to be ethical at all times. We are representing what is often a client's largest asset and they are putting their faith in us. If someone cannot be ethical, then they should choose another line of work. When you think about it, being ethical is easy and it's common sense. If you ever have to wonder if something you are considering doing or saying is ethical or not... if you have to question it, then it is not ethical and you should therefore not do it or say it. In life and in real estate you will succeed if you always do the the right thing and treat others as you would have them treat you.
I'm very much agree with you, Melody.
I love being a listing agent, but recently work with a lot of buyers.
Buyers do think that they will receive better terms and price working directly with a listing agents.
Also, some buyers( believe it or not!) don't know that a buyer agent works for them for no extra cost. They do think that having an agent can be an additional expense. I'm often asked: 'how much is your service?'
I wish we work for a fee:) But we are at the mercy of a listing agent( yes, I will not show the house where is my commission is ridiculous, you know what I mean?)