Home : Blogs : Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc : Broker Bryant's Real Estate Ramblings

Double sided transaction should require hazard pay.

Hi folks. Today I want to play the "what would you do?" scenario game. The following, is a scenario that could happen to any of us so I'm curious to how you would handle it. What would you do if.........

First, business has been kind of slow. You're still making money but deals are far and few between and a really good closing would be a very good thing. You've been working very hard but have been supplementing your income with credit cards.

You have a listing. You took this listing several months ago as a single agent and just haven't had any luck getting it sold. The market is slow and houses of this style and price range are just not selling. The listing agreement expires in a week and even though you and the Sellers are on great terms they probably will not renew with you. It's priced at $400,000 which is very good for this particular market.

You are also working with some Buyers you met about a week ago. They met with a mortgage broker that you trust and he has them "sort of" approved. This means they are approved but very marginal. If rates go up or their FICO score or ratios move just a fraction they could be kicked out of the market. So it's about a 50/50. They're nice folks though and you want to try and help them get into a home. So they sign a BBA and you are working for them as a single agent.

After a week or so, of showing them properties, they show up at your office with a print out from Realtor.com. It's your listing that we mentioned above. They want to see it. (OK I'm going to skip the agency options for a minute). So you show them the house and they love it!!! They want to write up an offer.

You write up the offer and present it to your Seller(or do you?). The terms are acceptable to the Seller but the Seller ask you "What do you think? Are the Buyers qualified and will this deal close?"

Here's the scenario: First, depending on your State's laws, you will be in a Dual Agency or a Transaction Brokerage relationship at this point. This assumes, of course, that you are trying to double side the transaction. If you do double side it and it closes, the Buyer and Seller will be happy and you'll make $24,000. If you don't do the deal OR it doesn't close, you will be losing the listing anyway.

So what would you do? How do you answer the Seller's question knowing it's a 50/50 chance? Do you try to double side this transaction? Remember in a Dual Agency or a Transaction Brokerage relationship you can NOT work one side to the detriment of the other. You must be unbiased. Also, since you have already established a representation/agency relationship with the Buyer and the Seller reverting back to a non-agency or non-representative relationship is not an option, if you want to double side the transaction.

Now folks, bear in mind that I am a Florida Broker. Dual Agency is illegal in my State. BUT, it hasn't always been. I have practiced Dual Agency so I do know how it works. Also, I don't know if there is a right or a wrong answer. I'm looking for what you would do in this situation. So have at it. I will save my opinion until later. What would you do?

Here are some additional posts on Agency written by Broker Bryant.

Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 08/15/2007 01:59 PM

Comments (64)

agency, dual agency, transaction broker

64 Comments on Double sided transaction should require hazard pay.

AUG

2007

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Blog Boy...

Pick me! Pick me! I know the answer! :)

Let me know when I can come in and say "BINGO!" :)

TLW...ROAR!

Hey Bryant -

I know, tough call. Doing what is right is always best. My feeling is, if both seller and buyer are fully aware they are in a dual situation with one agent from the brokerage firm, and they accept that, then move forward.

Giving the buyer their options relating to agency is being up front and honest...I would have done the same thing you did.

The bottom line is, the seller wants to sell and the buyer wants to buy. Keep all personal financial information confidential as it should, negotiate.

In CT, a Transactional agent is an agent who represents a client that is more of a FSBO, we just handle the negotiations and paper work. We do practice Dual agency, in your case that is what it is here in CT, dual.

You are handling it excellent by being honest and up front, giving the options and making them aware of the choices. Remember what C.O.L.D. stands for and you are on your way to leading both your seller and buyer to a successful transaction.

It's still legal in Washington State.... Here's what I'd do. Get both parties to agree to dual agency in writing. Disclose to both parties that from here on out you are only managing the transaction and can't do anything to unfairly influence either party. Disclose any and all material facts regarding the transaction. Inform the sellers that the buyers are marginal, because you have that knowledge. All buyers have the same shot at tanking their credit or blowing the deal. It's in the seller's best interest to accept a good offer in a slow market. Keep your fingers crossed and collect your check when it closes.

I would first make sure that the buyers have an underwriter's approval before doing anything. I believe the seller has the right to know the buyer's position in regards to the loan and would let him know the facts. The buyer's loan being a contingency of the contract makes it the seller's business too. Don't disclose FICO scores, etc without permission but definitely let Mr Seller know what he may be getting in to.

- James

I have worked both sides a few times. I only do it when I am really familiar with all the people involved, and trust everyone to play nice and be fair. I still feel like I'm walking a tightrope the whole time. I document the heck out of every conversation and breathe a sigh of relief when it's over. I love being able to sell my own listings because that's kind of the point, isn't it? But I if turned into a battle, I couldn't protect them all the way I could if I were just in one corner.

Bryant - It's legal in both Nevada and California. As am sure you know, we have to disclose the "possibility" of dual agency up front, get written acknowledgement, then after that it it comes up, we have to get written permission again to proceed. Have never had a problem with dual agency transactions before, though we usually see only one or two of them a year.

If it were not legal though, we could not do it.

Another take on that is to get our manager to represent one of the parties, with full disclosure. Since we are a partnership with two licensed agents, we could have one of us represent one side and the other the other. In your case I'd have TLW represent the Buyer, and you the Seller. Our duties owed and standards of client care supercede marriage and/or partnership. That is not dual agency, though I would still fully disclose that too, of course.

Close this one, and then lets get back to having more fun.

It's not what I would do. It's what I could do.

When signing the BA Agreement, it would have excluded any home listed for sale with my company. I can represent you on any property not listed by my broker. If you are interested in any home listed by my broker, I can show you the property as a customer. That means that, while I will disclose any material defects, if any, to you, I cannot advise you as to value or condition. You must rely on your home inspection for condition. I can assist you in making any offers or negotiations, but not as your agent.

Before showing the house, and I would have showed it to the buyers, I would have provided them with a disclosure that, on this house, I represent the seller and, while I can show you the home and, should you decide to buy it, I can assist you as a customer.

Since they've already seen the house, it's too late for anything I would have done. I wouldn't have shown them the house as a BA. Agency must be disclosed prior to showing any home to have any value.

Good luck. I'm sure you can work it out. I've sold my own listings, but always to customers.

Hey guys, Just to clarify. I made this scenario up. I rarely if ever work with buyers and I don't do single agency. I'm always a transaction broker. I wrote this because it is scenarios just like this that will entice a REALTOR(R) to place their commission in first position. I am NOT a fan of dual agency and believe it should be illegal in all states as I truly believe it is a misnomer and not possible based on the strict definition of agency and fiduciary.

Gary, TLW is retired and is an inactive licensee. Her job is to keep us all amused:)

Sarah, I try to avoid double siding a transaction whenever possible. I just don't like being in that position.

James, Underwriter approval is always a good thing but very very rare in my market. I work the bottom end of the market and most buyers are marginal. In your answer...does the seller really have the right to know if you are in a dual agency relationship? Can you give your opinion without breaking your limited agency relationship with the buyer? It's a very fine line. You can give then the data but can you give them your opinion as you would in a single agency capacity?

Andrew, Being in a dual situation the sellers best interest no longer comes into play. What about the buyer? Shouldn't they have the opportunity to try and buy the property without the seller being biased by you disclosing the buyer's iffy financial status?

OK Maggie, What does C.O.L.D. stand for?

I want to park and learn. :)

We have dual agency here and there seems to be lots of controversy about it. Some Brokers will not allow it and some have no problem.

Thanks, Doreen

Unless the sellers were willing to sever that pesky fiduciary aspect by ending the listing and accepting your offer without representation, anything else in the market of watchful eyes could lead to trouble later on, I would think (in the absence of dual agency). Thanks for a great scenario to chew on.

BB,

Here is CA we do have dual agency and if acting in that capacity we have fiduciary responsibilities to both buyer and seller. We cannot disclose what price the seller is willing to take or what price a buyer is willing to pay unless we receive express permission from the respective party. If a buyer asks me what my seller will take on a listing I say let's write an offer and find out (unless the seller has given me permission to do otherwise).

My personal way of handling this situation is by explaining to each party that I am walking the fine line and won't disclose anything to make their position weaker if it's not absolutely necessary to move the transaction forward. If I'm asked a question by one party about the other that I don't feel I should answer without permission I just tell the asking party that I'll have to get back to them on that.

In your specific question, my opinion would be that the buyer has no right to make an offer without knowing (to the best of his ability) that his loan will fund and as his agent I would do everything I could to be sure that the loan is a lock before moving forward. If I know that there are potential problems with a client getting a loan I won't write a contract until I'm sure it's not going to be a waste of everybody's time. I think that is one of the most fiduciary things I can do for a buyer :)

As the seller's agent I would let them know that they are working with a lender and based on what we know, the loan will come through but there are some issues that may possibly affect the outcome. I would then recommend that the seller require the buyer to have loan approval in 7-14 days and the loan contingency removed at that time.

And finally, I give my opinion freely whenever asked (so don't ask unless you really want to know!)

- James

We have dual agency in Mi, I have both parties sign A Disclosed Dual Agency Form before discussing anything. Lately I have been having my buyer agents write and show my properties to keep it cleaner. But, I have done it. I tell them both upfront that I can NOT and WILL not disclose anything about the other party that I may have privy to.

In this situation, I would have:

1) Shared Disclosed Dual Agency before showing the house. If the buyers were OK with it, I would have shown it.

2) If they wrote the offer, I would have told them I could not discuss what the sellers would or would not take.

3) I would tell the sellers I didn't not know what they would pay.

4) If asked, I would have been honest and told them the lender said it would be tight but he would work hard to get them in the house.

5) There is nothing else on the table, so I would negotiate fully, completely, fairly with both parties and try to put it together for the mutual satisfaction of both parties.

I believe in negotiating until the bitter end. And if both parties came together on price, I would have the lender LOCK them asap. Order the appraisal asap.

You couldn't ask a easy one, huh ?

She does an excellent job at keeping us all amused. It's a daily pleasure to check up on the goings on.

I have not and will not do both sides. Period.

WOW!! Great answers guys.

Lenn, I really like the way you would have handled it.

And the same goes for James and Missy. Very good! My only question is...should they really be calling what you do agency? I just think that term is very confusing to the consumer when it's a dual situation. How can you give something fully (loyalty & confidentiality) and then take some of it back. The problem is they have already told you stuff they shouldn't tell you IF you had less than full agency. Now I know there are some of us that can handle it but there are many more than can't. That's why I put the financial strain of the REALTOR(R) in my post. If an "agent" is 2 months behind on their mortgage and now have the opportunity to make $24,000 can they really be unbiased in this situation. Or will they "sell" the seller on the deal and hope it closes? I'm not talking text book stuff here but real life circumstance and pressure. The seller and buyer believe you to be their agent. They are trusting you to be on their side. They do NOT understand the shared/limited/split loyalty thing.

Laurie, That pesky little fiduciary will NOT just go away. You can change the relationship but the prior info that was under the fiduciary is still under the fiduciary. Fiduciary is forever. You can change the future way it is handled but the past remains.

Doreen, as a broker I would NOT allow dual agency. It's a moot point now since it's illegal in Florida but I am just not a fan of dual agency. I think it's time that dual agency becomes a thing of the past in ALL States.

Sally, Never? What if it is in the best interest of your Seller? I do understand what you are saying though as I avoid it like the plague. BUT I just did one 2 weeks ago and I'm getting ready to do another one. It does place us in a awkward position but it can be done with proper disclosure. And I am NOT operating in an agency capacity. It's the double agent thing that really irks me.

It's a tough question. What about designated agency? We allow both here in GA, but my office doesn't do dual.

Many in my office do. I don't. Why? Strictly for personal reasons. I am one of those weird ones that enjoys one client at a time so I can do my best. If I represented both I would be a double agent...nope, nadda, not.

BB,

Agreed. I very seldom do it and when I do I make it very clear the awkward position I'm in. I am 90% of the time a listing agent - as a matter of fact, I haven't represented a buyer this year at all.

I personally don't have a problem with it because I know my ethics and I'm good at what I do. HOWEVER, if the public really understood what fiduciary is they would never allow themselves to be represented by a dual agent and really, we as REALTORS would never do it either just because of the possibility that a transaction takes a wrong turn you can get hit hard from both directions.

Usually, when I take on the roll of dual agency it's with people I know very well and I hash everything out between everyone before writing the contract - and I only do that once I know the loan is solid and everyone is in agreement on everything.

The last one I did was my listing and a friend of mine wanted it ... We negotiated everything and they came to an agreement on price and terms but we weren't able to get a loan that was comfortable for the buyer ... everyone understood the situation, an escrow was never opened, the property never went off the market so no marketing time was lost. All were disappointed, but no one felt taken. I was a hero to the buyer because he knew I did everything possible to get it done. I was a hero to the seller because they didn't get a month into a transaction that would have failed to close. I was a hero to my wife because I ... wait a minute, I didn't get paid!

But we don't do this for the money anyway, right? That would be obscene.

- James

Agency is always there. The agent is an agent of the broker. The broker is the agent of the buyer or seller or both (not me). We have Presumed Agency, Buyer's Agency, Seller's Agency, Sub-Agency.

But, we don't have to be anyone's agent. We can show properties to customers and that's the only way I'd show a company listing. And, I have not problem with that. I just notice them up front and all through the process.

As far as price goes, seller's price properties, buyers don't. Lots of buyers agents seem to think buyers can price property, but all they can really do is limit what they'll pay.

When showing a company listing to a customer, I write it for full price unless the buyer states that they wish to offer $______, then that's what I write. Not a problem. If a customer wants to buy my listing, they will be giving me a lot of information that will help my seller/client. That's the unrepresented buyer's problem, not mine or the sellers.

At any time during the process the buyer wants to bring in an agent, not a problem. I'll even pay them. It helps reduce risk. I don't take risks.

I DO NOT give agency level advice to customers, whether they are buyers looking at my listing or unrepresented sellers (FASBOs). If they ask for agency level advice, I advise them to get an agent. All I'll do for them is open the door, provide disclosures, write a contract, admit their inspector, arrange for settlement. I will carry offers and counter offers back and forth as an agent of my buyer or seller client. Not a problem.

I have absolutely no problem with single agency and customer. It's dual agency that is a problem.

Gee, that was fun. Almost like being back on RealTalk again.

BT,

Isn`t that the reason you have a buyers agent now? We have the same issues,I let the buyers agent rep the buyer and we rep the seller.

BTW, nice home....

BB, if you've ended the listing agreement with the sellers, wouldn't it sever the fiduciary? It would then be possible to re-enter with the buyers. This is a question, not statement. I'm not suggesting any lack of ethics, as you would have to disclose the 50-50 nature of the deal to the sellers, but at least you could work on it and preclude the next agent from gobbling up your money. WAIT- is there a time frame under which you're covered, and under which (by extension) your fiduciary remains? If I were the seller, and as you stated, thinking of using another agent anyway, why not permit you to proceed with your buyer while the other agent markets? It doesn't sound as though this place is going anywhere anytime soon, and as a seller, I'd rather have a bird (even with a broken leg) in hand, while pursuing other possibilities. Plus, if you charged them a percent less, everyone wins. The sellers obviously like you; the buyers want the house, it's semantics standing in the way, if you are able to offer the property and have a successful conclusion. Not representing the sellers doesn't mean that you're untrustworthy (they know better)- but it doesn't make sense, for the purpose of conflicted interests, to not sell the house- there has to be a way that works!

Bryan,

As I write this you have 18 comments, I haven't read any of them yet, so lets see how I do.

Some of us started long before the agency non-sense, the duel agency (not that we referred to it that way) was not at all uncommon.

1. Disclose your position.

2. You say it's a fair price, have your comparables up to date and in the file with you. Be prepared this is an excepted question.

3. Tell them about the mortgage broker and that you know him.

4. Tell the truth.

5. Listing agents earn their high fees for making a recommendations in just this situation. Any boob can fill out a listing and the MLS forms (well maybe not the MLS forms) it's your advice when there is money on the line that's important. Earn your money! If they don't want to accept the offer or counter, your recommendations should included a further marketing plan, if they don't trust you, you didn't earn it.

Good Luck. $24,000.00 will pay for a lot of beer and wet t-shirts.

Bill

William J Archambault Jr

The Real Estate Investment Institute

http://www.reii.org

http://www.williamjarchambaultjr.com

BB, another great post. I have some questions. Let's say I am the seller and I hired you to represent me in this situation. Now you come in with your own buyer who is ready to buy.

Do you ask me, or do you tell me, that you are going to be doing a dual agency deal? I assume as the seller, I would be able to veto it because we already have a contract for you to represent only me, right? What happens if I don't agree to let you represent both sides? If agreement from the seller is not required, I'd say that's a system that is broken. (I do understand that you do not do these kinds of deals; I'm just curious.)

John

Great question to chew on . . . Dual Agency is allowed in Indiana and I have not been on both sides of a transaction as of yet. Out of all the answers you've received, I like Lenn Harley's suggestion most. While I want to make money and sure could use it at this time, I also want to be able to sleep at night. I'm not a fan of dual agency. Thanks for making all of us think.

John S. (consumer)asked this question:

I have some questions. Let's say I am the seller and I hired you to represent me in this situation. Now you come in with your own buyer who is ready to buy.

My response:

Good to see you John. It's been a while. EXCELLENT question!!! John laws vary from State to State BUT I believe in all cases a Seller must not only approve it but must sign off on it in order for their agent to change over to a dual, designated or transaction broker. This to me is a MAJOR issue with dual agency. What if you have already agreed to represent the buyer and now the seller won't allow it? Then the REALTOR(R) can NOT do the deal. He would have to give up one of his "clients". And if I were the seller I would be pissed if the sale of my house was being jeopardized by this conflict. And agency is a pass down through the broker so even passing the buyer off to another agent in the same office it still creates a dual agency issue unless the seller agrees to a lessening of their representation. Sounds like a perfect opportunity to reduce the commission amount previously agreed with the agent. "Hey I'll sign off on it if you reduce the commission".

I hope we get some more comments related to John's question. Very good John!!!

Cynthia, Just remember there is a difference between working both sides of the transaction in dual agency. Lenn certainly has the right idea. Pick a side to be your client and let the other side be your customer. It's simple and it's fair. At least that way everyone knows who is working for who.

Bill, If only things were that simple. They just need to get rid of this dual agency fiasco. Call a duck a duck and do the deal. This is why I like transaction brokerage. Just get rid of the fiduciary. I don't need a fiduciary to be fair and offer advice.

Laurie, First this scenario is fictitious. To answer your question..a fiduciary does not go away when the listing expires. Example: You have a listing and the seller tells you their bottom line and reasons for selling. You lose the listing. A year later you are working with a buyer and show them this listing that has now been re-listed with another company for a year. Whatever confidential information these sellers told you a year ago under your fiduciary is STILL confidential and is STILL under the fiduciary. Since you now have a fiduciary with buyers you would have to disclose to them that you have confidential info related to this property that you can NOT divulge to them. And again, remember the agency affects every agent in your office!!! This to me, is the problem with agency in real estate. If you said to your buyer "Hey I had that house listed a year ago and I know the sellers will accept this amount" even though it is not your listing you have just broken agency laws. How many REALTORS(R) do you think know that? Very few. And that's an issue.

Scott, It's also the reason I ONLY work as a transaction broker.

Lenn, fortunately for me everyone is a customer. I can still represent my sellers just in a limited capacity. It just makes so much more sense to me.

James you wrote: "HOWEVER, if the public really understood what fiduciary is they would never allow themselves to be represented by a dual agent and really, we as REALTORS would never do it either just because of the possibility that a transaction takes a wrong turn you can get hit hard from both directions"

I could not agree more. Very few REALTORS(R) really understand fiduciary, the consumer doesn't have a chance. In Florida we are transaction brokers by default. We have to chose to be agents. A TB is a form of representation albeit limited. We can represent the buyer or the seller or both. If you were to ask 10 REALTORS(R) in Florida what a TB is probably 9 of then would say we represent the transaction!!! We NEVER represent the transaction. The name throws them for a loop just as agency throws the consumer for a loop. Dual agency? Forget about it, the consumer will NEVER understand what we are talking about. It's too confusing and it only benefits the agent.

WooHoo, good for you for just staying away from it.

Lane, In Florida we only have designated agents in commercial transactions. So I'm not familiar with it.

Bryan,

It's never been a question of your need, but rather the sellers!

I agree we need to have true buyer's brokers contracted to and paid by the buyer. Both buyer and seller need a trusted fiducary repensenting them.

But, who said life was fair?

Bill

Broker Bryant-after reading all the comments with your post, I really appreciated the fact you only work as a transaction broker. One thing that I come across as a trainer is we imply sometimes unintentionally by giving opinion, making profit statements, transaction brokers should only work based on facts and facts only. Implications are just as powerful as signed docs. When you speak Single Agent conversations you are impliying you are working in a Single Agent capacity. Don't think for a moment your agreement will always protect you.

When I sold real estate I acted as a single agent then transitioned, I didn't have any problems but today I would try hard to stay away from single agency.

An Escrow Dispute Attorney told me this.

Great topic and great info....Great reminder.....

I look at it this way ... Would you hire an attorney that also is representing your opponent? If you did, would you tell him everything he should know to represent you in the best possible way? No and no.

The public thinks of us as salespeople when in fact we are much more. If they would understand that then maybe they wouldn't complain about our fees as much as they do.

Hmm ... it may be time for another blog post of my own! :)

- James

BB I'm in California so this question is germaine to the practice of real estate here. We've always done double-sided deals. A lot of agents that protest "not me" work for large brokerages where a lot of what they sell is actually an in-house listing, hence a double-sided deal even if they don't know the other agent.

I cut my teeth on these kind of deals. The secret is truthfulness and full disclosure.

I now sell businesses and approximately 100% of business sales are double-sided.

It is a very fine line to walk. I tell both sides "don't tell me what you don't want the other side to know."

A fiduciary duty does not mean "secret" it means treating someone else's money as if it were your own.

Agency is the ability to act for somebody, again it does not imply "secret."

In certain market and certain practices dual agency is necessary. I am sorry to hear that you don't have it available to you in FLA.

Bill Roberts

P.S. what is this a southern thing? my graphic is "okra"

BB - This is tough! In Indiana, we have limited agency and no "customer" option. Our agency disclosure is determined by the broker, not a State Association Form. Ours simply states we work as a buyers agent only, a sellers agent only or as a Limited Agent if working for both the buyer and the seller.

Once you have taken the buyer out for a week, enough information about them and their financial situation has been disclosed to their detriment if you represent only the seller.

I do not like Dual or Limited Agency and we do not have the option of reverting to transactional brokerage. In this particular case, I would disclose the Limited Agency and work the transaction. ( aasuming both parties agree)

Here, it would be the fairest option for both parties. If I sent the buyer to another agent, I still know too much about the buyer to represent my sellers best interest and be fair to the buyers. My .02 !

BB - BTW - In Indiana, I can pass the client off to another agent in my office without it being Limited Agency. Agency passes only to the Broker.

This is a great question. The problem is that even if you now hand the buyers over to a buyer's agent to represent them, you already know their personal details that the seller is going to want to know about. I don't see how that can be avoided.

This is different from an unrepresented buyer coming into your open house and wanting to put an offer in. You can hand that person over to your favorite buyer's agent for a referral fee, but you don't know their financial strengths or weaknesses so both parties are still protected.

Hi BB, In WV dual agency is legal. I have only worked one deal this way. To be honest with you, I would really have to think twice about doing it again. Luckily, both parties were wonderful and everything went very well. However, every conversation with either party was like walking on eggshells, making sure that nothing ever came out of my mouth that would be a violation of ethics or any other code. After over a month of having to be painfully careful about every word I spoke to either party, I have to say I decided that dual agency really should be illegal in all states. There is just too much that could go wrong and it really isn't worth it. Just my opinion.

BB - Great question. I've worked both side a number of times. #1 of course is to get signed agency from both buyers and sellers that they are aware you are representing both. Then, you owe both fiduciary responsibility. If you were reprsenting only the sellers, you would most likely call the mortgage broker and get a read on how viable this buyer really is. So, call the lender, get their take on the situation and report to the seller.

AUG

2007

Ok..... My answer is not what I would do.... but what I could do.

When the seller asked about the stability of the loan - I would share that the although currently the buyers qualify with the changes of the industry every day that could change in a heart beat (blame the empty chair without compromising my confidentiality to the buyer). I would explain that in Oregon Dual Agency is legal and allowed, but to truly do this I must keep confidentiality to both the buyer and the seller - that I can explain the offer, the general options of the offer and the chances they are taking in a general sense of the terms - the few times I have had to participate in this type of transaction - I cover my back side after presenting the offer by recapping our conversation and having the party the conversation took place with initial the recap - this way my notes are more than just my word - they have been read and acknowledged by the party involved in the conversation..... For me I feel it keeps me out of court or away from an ethics complaint.... which I avoid at all costs....even $24,000

FOR THE LOVE OF GOD!!! If these people barely qualify then find them a house that fits their finanical income. It is realtors like you that claim "I just want so bad to see them in this house" That put the US in this horrible inflated real estate market..... OH MY GOD.. JUST STOP IT .... I hope they enact laws that crimimalize comments and actions like above.. FIND THEM A HOME they CAN AFFORD.. NOT JUST BARELY get into so they can foreclose in a year..

GO FIND A REAL JOB

Annon, This is a learning exercise NOT a real transaction. You are correct though that we should not try to squeeze every last dime out of a buyer. Just because they qualify doesn't mean they can afford it. Thanks for stopping by.

Thesa, What if the seller will not ALLOW you to switch over to dual agency? John S asked this question above and I'm curious to what you guys would do in that case.

Marlene, same question to you. What if the seller doesn't want dual agency?

Melissa, I'm with you. It needs to be illegal.

Christal, Handling the buyer off is a good option. Even if it's in house it at least keeps you out of the conversation.

Paula, I think your limited agency is very similar to dual agency. Same duck different names.

Bill, I think transaction brokerage is one thing Florida got right. It doesn't prohibit me from two siding a transaction if I chose to it's just a better representation of what we do than trying to pretend we can really be "dual agents".

James, Sounds like a good post idea go write it. Feel free to come back and give us a link.

Midori, Your point about implied agency is very good. You should write a post about that.

Bill, I agree the easiest and fairest way to work would be to pick a side be an agent and always work the other side as a customer.

I would be forthright with the seller and tell them exactly what the facts were. I would then stay on the mortgage broker to get the loan locked and closed as quickly as possible.

Bob Mitchell

ValueList Real Estate Services, inc.

I agree with Bill Roberts' comment above. My personal experience is that my (few) dual agency deals have been some of the best ones with the happiest clients. But dual agency aside...there is something to be said for having any chance at a deal these days. Is it not worth exploring the possibilities of every deal that comes along? Present all the facts, disclose everything you can, then give the parties the opportunity to decide for themselves if they are willing to accept that risk.

As for Annon, the buyers (and their lender) are the ones that decide what they can and cannot afford. It is not our job as Realtors to babysit the buyers or their finances. We can only advise them as best we can and try to persuade them to purchase a home that more comfortably fits their budget. But what, when and how they choose to spend their money is really their perogative.

I say avoid the problem and just call me! LOL

Seriously, in a Transaction Brokerage Agreement, the way I understand it you cannot reveal to the detriment of the other, what a buyer will pay or what a seller will accept. So what the underwriter decides is not something you could speculate on with any certainty.

Allison...

That was my answer when he ran this scenario by me. Call in another Realtor from another company.

Blog Boy wouldn't let me play on this post yesterday. Can't imagine why :)

TLW...ROAR!

Bryan, TLW,

From my point of view, it's to late to call in help! Who are we kidding? At this point bring in another REALTOR® is smoke and mirrors! Bryan is the listing agent, Bryan wrote the offer. What is the new REALTOR® suppose to do? Sit there acting as the buyer's agent, a buyer he hasn't met.

If anything goes wrong, for either side they'll hang both brokers. This could be broken by any second year law student. It's likely that neither of your E & O insurance companies would protect you, they'd claim you were committing fraud and conspiracy, good intentions would be no defense.

Bryan did nothing wrong, uncomfortable yes, but not wrong. Perpetrating a sham with another REALTOR® would be wrong.

Bryan's mistake, if he didn't want a duel agency was in writing the offer! You should have shown your listing, not to would have been a disservice to the seller, but when the Buyers wanted to make an offer you should have sent them to a trusted REALTOR® with another office!

In the last year I have repeatedly written how much I admire Bryan for only representing sellers. I think that's as honorable as a commissioned person can get. There is always a question when an advisor is paid on commission. I learned when times were different, duel agency was not only common, but strived for. At a time when the buyer's agent doesn't present the offer to the seller and the seller's agent what's the difference? If you present the sellers an offer you got off the fax, you're still giving advice on both sides of the issue.

Soul searching is good for the soul. I'm sure your advice was good for both sides, I doubt you could do other wise. So live with it, learn from it, and enjoy the commission, you helped two families!

Bill

C.O.L.D. = Fiduciary duties of a real estate agent to our clients: Care, Obedience, Loyalty, Disclosure. This was drilled into me during RE classes.

Bill, Dual agency is illegal in Florida. I am NEVER an agent for either party. I wrote this post to stir up a conversation on dual agency. I totally agree once you have created an agency relationship you can't just change it and forget about it and that is my biggest issue with dual agency. Because that is exactly what practicing dual agency is doing...it is taking away something you have already given. And when what you have given is fiduciary(and are now limiting) we are walking on a very slippery step.

Rod, Thanks for clarifying COLD for me. I guess I was sleeping during that day of licensing class:)

Allison, You are correct. In fact if working as a TB for both parties we are actually more of a facilitator for the buyer and the seller. Just don't say I'm representing the transaction and I'm OK:)

Kelly, You get it. My issue is that in order to get it and do it right you have to do this: "Present all the facts, disclose everything you can, then give the parties the opportunity to decide for themselves if they are willing to accept that risk." My question is why are we calling that an agency relationship? Where's the counseling? Where's the loyalty? Where's the obedience? I'll tell you where it is..it when out the window when we became a "dual agent". Our Seller had it and now we have taken it away. That to me is where the problem lies.

Bob, You wrote this: "I would be forthright with the seller and tell them exactly what the facts were." If you are acting as a dual agent you have just limited your ability to be forthright with the seller.

Bryant, as you can see from all of the above comments, we could all go round and round about agency, dual agency, fiduciary responsibilies, etc. because everybody has a different opinion about whether they are comfortable undertaking it, refuse to do so, or whatever. Which is fine! In my opinion as a former legal professional, the people who are most uncomfortable with it feel that way because they don't fully understand what they can and cannot do and are worried that they will do something wrong and get themselves in trouble. A very valid concern, BTW. Personally, I think we should all do what we are comfortable with (so long as it's legal and you follow the letter of the law) and let others do the same, instead of labeling one "right" and one "wrong." Not that you said this or implied this...but others sometimes do.

That being said, even attorneys sometimes represent both parties in a divorce...so long as both parties have already come together and basically decided on the division of assets, etc. Can it create a conflict? Sure, the possibility is there. But the attorney is there to make sure the legalities are covered and that both parties are equally represented, not to advocate for either of them. Dual agency is similar.

I think the hang up is on the word "agency" itself. Perhaps the term"dual agent" should be changed to "transaction facilitator" or something that doesn't mention the word "agency". Or maybe the term "agency" (when referring to representing a single party) should be changed to the word "advocate." We need terminology that more clearly defines the role we play in each circumstance.

Is it in the best interest of either party? Maybe and maybe not. It truly depends upon the parties involved and their knowledge and experience. One of my dual agent buyers had an attorney for a father...and even he was comfortable with me being a dual agent for his daughter. Go figure.

Kelly, That's an excellent comment. I had not looked at in the context of an Attorney handling a divorce. Very good analogy. I agree about the word "agency". Thanks you for your very good thoughts.

I do want to mention that I have practiced dual agency before it was made illegal in Florida. I understand it and I am capable of performing this way. My concerns are really geared more towards the consumer. It seems whenever I have these discussions it's always about how WE feel or what WE can or cannot do. When the reality is it should be about how it affects the consumer AND do THEY fully understand the ramifications of letting their agent switch to a dual position after they have hired them as a single agent. It's the switch in the level of agency that concerns me. And it would certainly concern the consumer if they were fully aware of what it meant. There's a lot more to it than just getting a form signed and moving forward.

It seems to me that dual agency is completely to our advantage. Where does the consumer benefit?

Bryant, I agree...the focus should be on the consumer and what's in it for them. I'm only successful if I have happy and satisfied clients.

Our dual agency form that must be signed by all parties is actually kind of ominous. It states the following:

"Representing more than one party to a transaction presents a conflict of interest since both clients may rely upon Licensee's advice and the client's respective interests may be adverse to each other. Licensee will undertake this representation only with the written consent of ALL clients in the transaction.

Any agreement between the clients as to a final contract price and other terms is a result of negotiations between the clients acting in their own best interests and on their own behalf. You acknowledge that Licensee has explained the implications of dual representation, including the risks involved, and understand that you have been advised to seek independent advice from your advisors or attorneys before signing any documents in this transaction."

It then goes on to explain exactly what a Licensee can and cannot do for them. You'd think they would all run the other way...but they don't.

So, what's in it for them? Why do clients decide that this is the course of action they want to take? Here are a few reasons that I've been given:

1. They like me, trust me and want me to represent them in whatever capacity. They are confident consumers and have been given factual information about the entire process, from financing, to inspections, disclosures, comps, procedures, etc. It starts with education.

2. I charge a lower commission rate. Both sellers and buyers see this as an opportunity to keep more money in their pockets. I do this for a few reasons. One, because I am not providing full service to either party, so why should they pay for it, and two, because it shows the parties that I am not pushing the deal to earn both sides of the commission or to be greedy.

3. I may be already representing one party in another transaction (the buyer in the sale of their home, for example). It makes all of them feel more confident knowing that I am the one that is taking care of things all the way around. Plus, they simply don't want another Realtor.

The times that I have undertaken dual agency have been positive. As an example, here are testimonials from clients (involved in same transaction) in which I acted as a dual agent:

"Kelly is the most amazing Realtor I have ever had the pleasure of doing business with. She has so much experience and knowledge of the business. I was fortunate to have Kelly on my side through the selling of my home to the purchase of my new home. When the market was weak, she made my home one of the most visited in the area...that is saying a lot about her. She made it so easy for me, I would use her as my Realtor for a lifetime. I really cannot say enough about her. Use Kelly Sibilsky as your Realtor...you won't regret it." -Sean Bishop

"Kelly was great! She was always available to answer our questions and help guide us through the entire home-buying process. You will not find a more honest and competent Realtor!" -Jonathan and Nora Corbitt

Jon and Nora bought Sean's home which I had listed. Nora's dad was the attorney I spoke of earlier.

Sorry this is so long! Thanks for allowing me to take up so much space here and for a great discussion! :)

OK.. I'll put in my $.02 here as we can do dual agency in CA... I rarely do dual agency as I don't like the idea of it... however if both parties want me to represent them this is how I handle it...

I notify all parties that my office will be representing both parties in the transaction as a dual agent... but that during the offer period I will represent the seller and an agent from my office will represent the buyer..still dual agency but I will not have contact with the buyer about the offer.... should the offer be accepted I will then represent both parties with the signed permission of all the parties but will not disclose personal things to either party about the other party.

That said... I would not encourage the buyer in this instance as they are not qualified to buy this property... I would tell them the truth..they are marginal at best and buying this home...even if the squeaked by.. is not in their best interests. They need to look at something they can afford or they won't own the home very long anyway. If they don't like my answer and want to find another agent that is OK.. because I would never be comfortable with them trying to buy a home they really couldn't afford..

So I guess the reality is I wouldn't have to worry about dual agency in this case...

When I first got into the business, it was pretty common to sell your own listing, but with the understanding that you were representing the sellers. With buyer brokerage, it gets tricky, of course. I have a trusted colleague whose style and values are very similar to my own. When I have buyers who wants to write on my listing, I refer them to her and get a referral. It doesn't come up often, but we do pass people back and forth.

I am not comfortable with "Dual Agency" even in those jurisdictions where it is allowed. Even in cases where the buyers agree to be unrepresented, I am a little queazy - I make them sign an addendum of my own where they acknowledge that I represent the seller and that my job is to get the seller the highest price and most advantageous terms as I can. It's sort of tempting to represent neither buyer nor seller, but our own check book balances.

AUG

2007

Kelly, Another great comment. I do agree that it is to may sellers advantage if I'm able to have control over both sides of the transaction. Fortunately for me, in Florida, I do that without being a dual agent. Why can't they just get away with that "dual agent" term and call it something else? The double siding is not the issue it's calling a facilitator a dual agent that poses the problem for me. Hey I can dream right? :) Maybe I'm just nit picking on semantics.

Kaye, I met with buyers yesterday(something I rarely do) and went over their mortgage terms that I had faxed to me from their MB. After speaking with the buyers their comfort level was $1,200 per month. The terms they were being offered were closer to $1,700 and in my opinion the numbers were too low. The buyer is currently paying $750 a month in rent. So we are talking more than double in housing expense. My suggestion to them was to start this month and save the difference between their rent and their anticipated mortgage payment. If they did this for 12 months they could be sure they could afford the payment AND they would now have money to put down. I also tried to place them with another MB that could offer them a FHA or rural housing loan which would lower the payment substantially. The buyer just called me this morning to say they have decided to move forward with their original MB at the terms he has quoted them!!!! There's nothing else I can do. I work for the seller in this case and will present the offer. I will use some of the offered co-broke to buy down the interst rate to try and help.(BTW this will be done by a seller contribution with me lowering my fee to the seller to offset the expense). So hopefully it will work out for my represented seller. The unrepresented buyer? Well I hope it works out. This just reinforces why I do NOT work with buyers.

Patricia, I'm with you completely. It just doesn't feel right. That's our clue that it ain't right no matter what the law states.

Wow! I started reading this post this morning, got busy, then came back to it.

Interesting responses from all. I happen to live and work in Orlando, and the agency laws are different in each state. Transaction Brokerage is great, and allows those agents who can actually abide by those laws to do a double sided transaction. I still prefer NOT to, it just gets messy.

I would refer the buyer to another agent at another brokerage, don't like working buyers anyway. Or, Plan B would be to do real estate consulting. Get paid for what you do, when you do it (upfront) and not have any fiduciary to ANYONE. That is what every other profession does. Get your taxes done, they don't charge you continengent on how much they save you, neither does a Doctor charge you based on whether he cures you.

I love the commercial in our area of the guy with Charles Schwab, on the phone with the Doctor (pan to Doctor at ER) who tells him to take his knife and place it between the 3rd and 4th rib cage and make a 3" incision (pan to client with knife in hand sitting at kitchen table)

"Shouldn't YOU be doing this?"

Yeah, but he wanted the cheap method. lol! If you do real estate consulting, you get paid upfront, non contingent on the house selling. If the buyer wants to buy, you do the same thing, pay me xyz and I'll handle your paperwork, or go get your own BA. There can be fiduciary, or not. I honestly think that most consumers are a little smarter than we give them credit for.

I haven't found a lot of them telling me what their bottom line is, what the buyer's interest level is, and frankly, I don't really care. You pay me upfront for a specific job and you can buy or sell the house or not. It should just be that simple. Just like buying a car with no commissions. Here is the price,here is what you get, you can get an insurance policy, I will do the paperwork, help you with financing and I will get paid xyz amount of money. Now if you want to know what may be wrong with the car, get it inspected, but don't rely on me to tell you that, because A) I may miss something, after all, I sell cars, I am NOT an auto mechanic! B) I'm not going to be unbiased enough to tell you the car is a lemon, I want my money. So my .02 is to work with a consultant and hire other people for their unbiased expertise.

You get a better deal, No high commissions, get paid whether house sells or buyer buys, therefore you can be more unbiased, and there is no legal garbage hanging over anyone's head.

This agency stuff gets harder and harder for agents to understand, I can't imagine how the public gets it!! Enough already! If I were a seller or buyer, I'd rather get unbiased advice, hire my own inspectors and legal counsel and get a better deal than to worry over who is making how much money in commissions.

If anyone wants more information on this new model of real estate, visit http://www.MyREconsultants.com and visit http://www.RippingTheRoofOffRealEstate.com The commission model is broken, and BB's theoretical situation here is a prime example of that. In this scenario, the seller may not sell, the buyer may not buy. The agent doesn't get paid.....WHO BENEFITS FROM THAT???

Paula Bean

Paula, You know I DO appreciate you reading and commenting BUT please quit selling your services on my posts. I'm going to leave this one but I will have to delete any further solcitations. Why not write a post about your product? I've laready checked it ou and I'm not interested. Thanks

Bryan,

I've got egg on my face!

When you said "Bill, Dual agency is illegal in Florida." I had to go back and read the blog twice to find this.

Then I wounder why you were doing it. It took three more readings to discover I'd never read the first paragraph.

I stand by my advice, just not in FL. Personaly I'm not sure they did get it right, but I can understand your postition.

Red fasced in Las Vegas,

Bill

Bill, That's what happens when you come out of retirement. You get discombobulated:)

AUG

2007

Do what is in the best interest of your clients!

Get the buyer the best agent you know (other than you) to represent them!

Transactional brokerage is not what the seller typically understood that they signed up for. They think they are paying your for representation - so go represent them.

Did I say do what is in the best interest of your clients. Don't worry about your pocketbook - that will take care of itself when you do what is in the best interest of your clients.

AUG

2007

Hi Byant,

Please accept my apologies regarding your comment that thought I was "selling services" on your blog, my viewpoint, albeit not yours obviously ;-) was that I was trying to educate and inform, as well as give different views and options for those who were unaware of differing methods of selling real estate and wanted more info to check into it.

I guess that's a difference of opinion, based on how you look at it. You took it as "selling" and I took it as "educating and informing"

I for one, would love to see different opinions on a wide variety of topics and I thought this was what AR was all about, but it is your blog - your rules, and I'll respect your wishes.

It won't happen again.

Paula, It's actually not my opinion it's one of the community guidelines for AR. Linking to a service that you are trying to sell is advertising and doesn't belong in some else's post. That why it's better to write a blog about it so you can spread your message to the whole community. I agree, it is useful information, for some. And I would be very interested in reading a post from you about. It would probably stir up a good conversation. Go for it.

AUG

2007

Interesting BB! I've posted several comments to your blog (with no mention of consulting) and others as well....... but am fairly new to the blog world.

Where can I find the "AR rules" you spoke about? It was never my intention to advertise, as that is not what this model is all about, and rofl, for anyone who's EVER done a startup venture, you don't make any money for YEARS... so believe me when I say it was not about the money ;-)

I am in your same area, I responded to a post that I thought was relevant to what you asked with my .02, it was not my intention to "advertise" something I'm not making money off of anyway. I train agents all over the U.S. and most will tell you I give way more than I ever get, so with that thought in mind, and many other things to do, If I'm going to continue with this AR thing, I guess I need to look at their TOS and not piss anyone off ;-)

BTW - got an email today from someone in your neck of the woods, wants to sell their house, but as usual, a little upside down in their mtg situation. . . now this was the point I was trying to make earlier when you accused me of 'advertising'. . . sometimes, consulting is the only way to make these deals work.

I have another house, in my neck of the woods (NW and SW Orange county) where the seller lives in San Francisco...house is here. We chatted about his house back in JANUARY. He didn't believe me about how the market was. Listed with several other agents. No sale. Tried to rent, no deal. Now he is calling me back because at least I was honest with him, and he knows that consulting is his only shot at getting out of this mess.

THAT was the reason for my post. There are many agents who are losing lots of money in this bad market by not offering consumers choices. Many consumers getting foreclosed on when it's unnecessary.

Now as to me doing a blog about it on AR? Probably a good idea, but then there will probably always be those out there (like you) thinking I'm doing it for the money ;-) lol......right now I'm waiting for my non-profit paperwork to come in the mail! For those that really know me, they know it's never been about the money. I have given more help to agents over the last 30 years than I've ever gotten back, but I love training, helping, giving. I guess that is why I was a little taken aback by your post that I was "selling my services" lol.....if only I got paid for it, then I'd consider it 'selling".

As I said - it won't happen again. It is your blog, and your rules. I've not found the AR rules to know whether or not I violated one or not, but it doesn't matter as I think it's really a matter of opinion and/or perception.

Not to worry though..... I will not speak on your blog to this subject again, so it doesn't matter. I would appreciate knowing where to find the official rules though, if you could give a link - since I'm fairly new at this AR stuff and still not sure it's worth spending my time on, especially when I get chastised for what I thought was sharing and helping.

AUG

2007

Hi Paula, I hope you are doing well today. Here's a link to the AR guidelines.

http://activerain.com/blogsview/44665/ActiveRain-Community-Guidelines

Please don't take my comments as chastisement. I'm really much to laid back for that. This is a great place and you should certainly hang around and start participating more. You have lot's of experience and are in a good position to help others in their business. OK I'm still waiting on that blog post:)

Paula...

This is Broker Bryant's wife (alias TLW) I too hope that you will write a blog post about your business model.

By the way...The "Learn about Real Estate Consulting" link in your profile is busted.

TLW...ROAR!

TLW - saw your Happy b-day pics, you don't look a day over 29! WHAT is your secret?? Share!!

BB - Thanks for the link, I'll read through it. I'm way laid back too, after 30 years doing this it's just too hard not to be. I did think it woulda been better had you sent me the email direct, not on the blog for God and everyone to see, so I did take it as a chastisement, but hey - life goes on.

Since I'm so new at the blogging thing, I am really not sure I'm ready for this! lol! I did have wicked fun at the Inman Connect conference though and met some really awesome bloggers! Ardell was someone I've emailed and talked to for YEARS, but never met, then there was Mary Pope Handy who won the blogger contest, never met her in person either, so that was fun.

I can't figure out how anyone has time for this, updating websites, selling real estate and still having a life, but you and TLW seem to have it figured out ;-)

I'll check the broken link, although I'm not the tecno-geek webmaster, I probably typed it in wrong ;-) Must cut fingernails! argh!

;-) Paula Bean

AUG

2007

My secret??

Bubble Wrap...Lots and lots of Bubble Wrap :)

And Some Days I Just Skip :)

I am on my way to see what you've written.

TLW...ROAR!

AUG

2007

TLW!!!

I HAVE now saved your bubble wrap thing!!! WHAT A GREAT stress reliever ;-) I agree with you on skipping some days too - some days the mood is just not right or you need to take some down time.

Now, where is that great restaurant BB and you went to for your b-day? I must check it out! I love Dixie Crossroads, but there is always such a long line to get in, 3 hour drive to get there and no reservations allowed. Maybe we could meet one day at your restaurant and you can teach me how to blow a bullet hole through bad offers ;-) THAT was the funniest video I've ever seen,lol!!!!!! I sent it to several people, including one of my sellers who had just received a really low offer on a house he was practically giving away to begin with.

Didn't help that the other agent was new, spoke no English and his buyer probably thought they were putting in a good offer. oh well, the buyer came to the sellers house later, apologized, blamed his agent - fired them, then wanted me to start all over again because he really wanted the house. Buyers agent not real happy about that. Not that I could understand what he was saying when he called, but let's just say the 'tone' didn't sound real happy. Now we have an arbitration in place, and all of this even after I offered to do the transaction and give the other agent his full co-op!!!

How do you say stupid in several other languages? Must go look that up.......

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?