Home : Blogs : Monika McGillicuddy Southern NH & the Seacoast Area : New Hampshire Real Estate Sales and Training Blog

Dual Agency Life in the Fast Lane

Dual Agency Life in the Fast Lane...whoa...gotta slow down a bit.

Understanding what Disclosed Dual Agency is and is not is crucial in today's ever changing real estate market.

In a previous blog I talked about Reasonable Care one of the Fiduciary Duties a REALTOR® owes to their clients. I explained that the easiest way for me to memorize the fiduciary duties I owe my clients is this way...OLD CAR.

O...Obedience

L...Loyalty

D...Disclosure,full

C...Confidentiality

A...Accounting

R...Reasonable Care and Diligence

I also learned to memorize what is compromised or limited in a dual agency situation, remember that Dual Agency is legal in many states including New Hampshire, I know it may not be so in your state but up here it is.

In fact in New Hampshire rather than joining the states that have banned or made the practice of disclosed dual agency illegal, N.H., has recently taken on changes that once approved would in fact make dual agency much easier to practice...much more in line with common practice.

Good -Bad or Indifferent...Disclosed Dual Agency, I think... is here to stay at least in New Hampshire. Which is why a good solid understanding of Dual Agency is a must both for the consumer and the real estate agent.

So lets look at it this way and hopefully this help you understand or be able to better explain it to your clients.

What is compromised or limited in Disclosed Dual Agency is the OLD part of old-car...Obedience, Loyalty and Disclosure.

O...Obedience, Lawful Obedience You can't be 100% obedient an example would be that The Sellers instruct you to negotiate the highest price possible and the Buyers also instruct you to negotiate the lowest price. This is clearly conflicting instructions of which you can not obey.

L...Loyalty You can't be 100% loyal as you now have two clients and you can not do anything to or for one that would put the other client at a disadvantage...imagine yourself walking a Razor Sharp Tight Rope as NAR's legal council Laurie Janik once put it...one wrong move and you fall off. Or better yet imagine having 2 children both who you love equally and must protect equally even if one needs your protection more than the other...you can not advocate for the weakest child more so than the strongest one. Equal Care no matter what...this can be extremely difficult to do.

D...Disclosure,full This One is very hard...the best example I've ever heard is...You list a home, your sellers are your friends, you've known them a long time. They fall on hard times..job loss, illness and may lose the house and have not a penny to spare.

You have been working with buyers who are clients, you like them very much and they have become good friends.

Suddenly the buyers financial situation changes and they can increase the price limits and now want to look at your listing.

After getting informed consent from all parties you put the transaction together as a dual agent...all is fine till the home inspection. You attend it and can't help but hear the inspector point out several items needing repair and you clearly hear the buyers say things like "No problem, I can fix that" or "No problem my brother is a contractor and he can fix that...I can get that done at cost" and "I'm handy that's a piece of cake for me to fix" all in all a pretty good inspection and later when the sellers ask how it went..you tell them only that it seemed to go well, but until the report comes back and the buyers sign off you really don't know.

Then the Buyers bring you THE LIST, the demands for repair or price adjustments to the tune of $25,000...your sellers cry when hearing this..they are devastated and need your guidance ...and you know that your buyers really don't need 25k and can do the repairs themselves for a lot less money than they are asking for... Suddenly the words Obedience, Loyalty, Disclosure and Confidentiality take on a whole new meaning!

Not only for the agent but for the consumer as well.

Remember...The CAR part of Old-car...remains unchanged in a dual agency situation.

C...Confidentiality...You still owe 100% Confidentiality

A...Accounting...You still have to account for all funds and for the property

R...Reasonable Care and Diligence...You still have the obligation of protecting the client and that includes making sure they understand the limitations of the dual agency situation.

Dual Agency is not easy and is not at all pretty. When you really think about it, it is most assuredly the hardest form of agency to practice and one full of hidden traps and with the most liability to the agent...a recent NH case resulted in a judgment in excess of $120,000...OUCH!!!

Dual Agency can be practiced successfully but only with Full Informed Disclosure and Consent in writing given by competent buyers and sellers and most importantly COMPETENT agents.

Jay and Monika McGillicuddy

Monika McGillicuddy

Serving Southern New Hampshire and Rockingham County

Monika McGillicuddy Real Estate Training Website

NH Real Estate Blogs

Prudential Verani Realty

Hampstead NH Real Estate

603-548-7728

Jay and Monika McGillicuddy, Southern NH and the Seacoast area real estate specialists.

Jay and Monika McGillicuddy, covering southern NH and the Seacoast area. If you’re thinking of selling or buying a southern NH or Seacoast area home give us a call…we’d love to help make your home ownership dreams come true.

E-mail Jay and Monika or call or text at 603-548-7728

Jay and Monika McGillicuddy, NH REALTORS

Prudential Verani Realty

603-944-9172 direct line

603-926-3648 office

Posted by Monika McGillicuddy Southern NH & the Seacoast Area on 12/22/2006 05:03 PM

Comments (79)

dual agency, nh real estate blogs, monika mcgillicuddy nh real estate training, hampstead nh real estate

Generate short URL

This post has been included in New Hampshire Real Estate News Rockingham County, NH Real Estate News Hampstead, NH Real Estate News
Post is included in group: Agency Laws

79 Comments on Dual Agency Life in the Fast Lane

DEC

2006

Great post, Monika, on a really tough subject. Very informative and inbiased. I think it really shows how difficult dual agency can really be, and howful we have to be to make sure we don't do or say something that puts one of the parties' interests at risk.

Thats the achronym I learned also; I use it when giving my listing presentation.

We don't have dual agency in Texas. We have the ability to have an intermediary relationship and I won't touch it. Can you say referral?

Our retired state association attorney Chuck Solhms once said the other word for Disclosed Dual Agency is "DEFENDANT".

Thanks your husband

Thanks Jeff...It is a tough subject and sadly I know many who practice it never really comprehending the scope of it...a law suit waiting to happen. I do Dual Agency and while difficult it can be done correctly...you just need to really understand what your doing.

Thanks for reading my post.

Peter...I do the same...use it on listing presentations...usually my clients are impressed that I can rattle them off so easily....they have no clue that in my mind I'm picturing a beat up old car. thanks for commenting.

Sam...DDA has been such a mess up here that I really thought we'd end up doing away with it. Instead it will be come easier...interestingly but I think ultimately it will bite a lot of agents...because people will always take short cuts and with DDA that can be fatal.

Jay...Thanks for the comment hon...I forgot about Chuck saying that. I think most attorneys start to salivate when hearing dual agency...

Dual Agency is illegal in COlorado. If we wind up representing both sides of a transaction, we revert, automatically to transaction brokers (TB). If, lets say, we cant be a TB (ex: we are selling our sisters house ...) - then we can be an agent to our seller and the buyer would be a customer.

Dual agency does not make any sense ... well, maybe if I were schizophrenic.

Super informative post, Monika - Congrats on the Gold Star!

Mariana..We had Oliver Franscona from Colorado speak at our state association REALTORS in the Cross Fire program years ago...he talked all about "Another Relationship" or Non-Agency as we call it up here and your Transaction broker. It was very interesting. Have you ever heard him speak? I love hearing how it is handled in different states. DDA if clearly explained and practiced with utmost care can work.... as screwy as it sounds to you, and can work well. Thanks for the kudos on the post and the Gold Star.

Moni I have to agree with your Jay; I give credit to anyone who can pull off Dual Agency; I don't do it. I can't be neutral; I can be all those other things in the acronymn, I just can't be neutral. Thank god I have a listing partner; when we get buyers we split up; in fact, on listings, only one of us is pirvy to all the little details of the house we are listing; then the other one represents the buyer; of course this is after we have disclosed how we will handle this to the seller before we list and the buyer when we first show them our properties.

After all that, all I can add is, I could be a defense attorney before I could do Dual Agency.

Carole...Great points. My HARDEST dual agency was when the seller was listed with my firm..not my personal listing but in NH agency flows through the principal broker and then down to all agents associated with that firm...so in this case I represented the seller...never met them but represented them and the buyer ended up being MY son!!!! Who I love and know quite well. So My whole company was in a dual agency....It was HARD for me to be neutral...thankfully though it was an easy transaction.

LOL I'm glad to hear you know your son well! lolol Yes my first year I had a neighbor who came to see a property I had for sale; two homes on one lot, both single family rentals I kept saying can't I get you an agent, he kept saying no no no. So we got to present an offer but the Seller did not want to come down as much as my neighbor would have liked (imagine that lol) That is as close as i got to a dual agency deal. Well, yes, you are right, my Brokerage is dual but we disclose very well and it's fine. It's only when I am the only voice someone is hearing that i have an issue.

We have Dual Agency in Hawaii. Any transaction where two agents from the same company are involved is a dual agency. We have all the same responsibilities as a normal transaction except we have to practice confidentiality in any matter that may injure either party.

For example the home inspection comments from the buyer can not be shared with the seller. Both parties have to sign a release that they understand that before they can even see a contract. All listings have the question whether or not the seller would accept a dual agency.

Unfortunately you can not avoid them when you have communities where one office does the lion share of the business. It is the number one reason agents get in trouble, soon to be passed up by agents providing more than one service in Hawaii.

Yeah...It was hard on me and I REALLY wanted to get rid of my son :) ...so that was a major factor (wink-wink)...I tell him today I would of done anything to make that sale happen! I think I even packed his bags <gg>Poor kid!!!

I've been the only voice at times and that is pretty hard..basically I end up being more like a transaction agent...which is not accepted up here at all. But since in a dual you can't advise or negotiate against the other party...you have no choice.

How is that cup of tea?

Randy...We still have the option of working with the buyers as a customer when showing our listings or I should say the buyers have that option...but once we're hired and we represent the buyer and they want to look at an in-house listing we're in a dual agency. In-House we're a dual...out-house we're a buyer agent. Buyer agency is very popular therefor dual agency is just as popular. They go hand in hand.

Thanks for reading and commenting Randy.

Dual agency has caused nothing but problems for me in the past, even when you act as a listing agent on one side and a transactional agent on the other. Never again!

Thank you for shedding some light on an often misunderstood subject. I believe that both agents and consumers should know exactly what they are getting themselves into when they consider dual agency. I don't believe that this is often the case.

Jennifer...It sure can be a nightmare! Most of our real estate commission complaints involve dual agency...when things go wrong they just spiral out of control. Knock on wood...I haven't had a problem yet but thats not to say that it is easy.

Stefan... Thanks for the comment. I agree that agents and consumers probably have no idea what they are really getting themselves involved in. Sad to say even with heightened education agents struggle with explaining DDA so that they and the consumer understand it. Thanks again.

Monika - Great article. Very informative.

Stefan - Agency is a vastly misunderstood subject to both the public and agents.

DEC

2006

Monika ~ Oliver Frascona is awesome, he's entertaining and always manages to scare the dickens out of me. I do believe he emphasizes some experiences to beyond the norm, but they do get your attention.

Richard...Thanks so much for reading my Blog. Agency is misunderstood...even by regulators now thats scary.

KK...Oliver is very entertaining...LOL he caused quite the ruckus up here when he spoke. Even at national (NAR) meetings when he speaks up during the committee meetings and such..people listen to what he has to say.

You all shoveled out...that was some snow storm.

Hi Monika- I think this is a great topic to hash once in a while..this is a great forum for such topic. I feel alot of Realtors can be dual agent effectively but I also feel many "interpret" the black and white differently.

NC has a nice brochure for all buyers and sellers we have to give them at substantial contact so they can read in a laymans language the roles of agency.

Great post Monika,

Here in NJ we also practice DA and everything is full disclcosure but we really have to practice keeping our mouthes shut to protect everyone, including ourselves. Thank goodness for Seller Disclosure and the Consumer Information Statement. These two docs are crucial in the transaction and then of course the Attorneys. When providing names of Inspectors and Attorneys we also always provide a minimum of three names to our clients and customers. Of course it's always nice and best when they come with their own in the situation when we are selling our own listing or a listing listed out of our own Office. I never heard the old car tool but I'm bookmarking it!

Lisa

" We don't have dual agency in Texas. We have the ability to have an intermediary relationship and I won't touch it. Can you say referral?"

So, Sam, how do you not "touch it"?

Are you saying that you won't show your buyers with whom you have a buyer's rep agreement any listings held by your broker, but will cancel the buyer's rep agreement and refer them to an agent with another broker? Or does your broker handle listings only or buyers only? Because in Texas, buyer's rep and listing agreements are with the broker, so if your buyers are purchasing a listing held by your broker through another agent with your broker, intermediary goes into effect at that point. How do your buyers and your broker feel about that?

Hi Michele...Is that brochure available on line? I'd love to take a peak at it. We have a written disclosure but it still leaves a lot to be desired as far as layman terms go. Thanks for commenting.

Thanks Lisa, NJ sound similar to NH...we also have problems keeping our mouths shut. I always say there is not enough duct tape in the world to tape up the mouths of agents...loose lips sink the ship!!!

Tricia ...In NH the agreements rest with the brokers as well and flows down to the agents much like Texas except we have no "intermediary" relationship....we'd be in a dual.

Monika, I suspect it's pretty much tomayto, tomahto, really.

In Intermediary, either one agent communicates with and carries out the instructions of the parties, or the broker can appoint one person to do so for the buyer and another for the seller (or the buyer already has one agent representing them who is with that broker and the seller has another agent representing them who is with the same broker, and those two agents are "appointed" by the broker to communicate with and carry out the instructions of the two parties that they're already working with. Or, one agent can communicate with and carry out the instructions of both parties (which is where it gets really complicated).

We have an Information About Brokerage Services form that is to be handed out, by State mandate, at first "substantive" meeting (meaning, in person) to EVERY person with whom an agent has any dealings, whether there's a buyer's rep or listing or not. It explains in plain language who works for who in Texas under what circumstances, including intermediary. There's a place at the bottom of the form for the buyer or seller to sign and date to indicate that they've received it. I give everyone a copy to keep after going over it with them so that I know that they didn't just take it and put it in a file and never look at it, and get them to sign and date a copy for me for my files - we HAVE to have that in our file, per our broker, for it to be complete, so he'll know that we all obeyed the law. ;-)

What's shocking to me is how many people I talk to who have had several agents show them homes who have never seen or heard of such a document or had agency in Texas explained to them. I make that one of the very first things I do when meeting with a customer, especially a buyer, because so many people don't understand that until you have a buyer's rep agreement, every agent in Texas works for and has a fiduciary responsibility to the seller, not the buyer. That's why the form, and the law requiring that we present it, exists - buyers easily form the impression that just because an agent is showing them properties and helping them that that agent works for them, when as long as the relationship is customer/agent, they work for the seller and anything the buyer tells them that might benefit the seller is supposed to be passed on to the seller.

Both parties, by the way, have a section of the buyer's rep agreement and the listing agreement that explain intermediary and where they can check that they agree to it or they don't want it (in which case we won't show our buyers our listings). And then, if an intermediary situation does arise, both parties have to be notified, in writing, and sign off on it.

In other words, everybody is to be informed and sign off on it THREE times at minimum before intermediary can happen.

Dual Agency?? Wouldn't touch it with a ten foot pole.

Someone comes to look at Open House and wants to buy? "Go get your agent." Or, "Go get an agent, I'll pay them."

If they really want to buy the house and don't want an agent, great. I'll write the house with the buyer as a customer. I proceed very carefully with disclosures out the gazoo and if they have a question tht I consider "agency level", I send them to get an agent or an attorney. I don't care.

I will not practice dual agency.

But, then on the other hand, I don't find single agency at all difficult.

Good post. Thanks. Lenn

Loved the big D. Great example. I rated this post a 5

Tricia...Your Intermediary sounds much like designated agency...which in NH is not allowed but would make it much easier in my opinion.

NH is in the process of allowing a dual agency showing to proceed without getting written consent IF at the time of listing you got written permission to be a DDA in the future...However written consent with all parties named must be received prior to the drafting of the P&S agreement. It should be interesting to watch this unfold.

I'd rather over disclose than under disclose any day!!!! 3 times at a minimum...is the way to go!!!

Monika, we don't have to get the document declaring Intermediary Status now exists signed just for a showing, but if an offer is going to be written up, at that point both parties have to be notified in writing.

And, yes, I think the more sunlight on anything, the better, and if that sunlight is in writing and signed by all parties, all the better for me! I want to be able to show, via signed documents, emails with headers, etc., the paper trail that I did what I was supposed to. And that's whether it's dual agency, intermediary, single agency, anything at all.

Lenn...I have many many times been in a single agency situation very successfully...especially with the open house scenario you've described above. That said I have more often been a Dual Agent...usually when in a established buyer agent relationship and they suddenly want to look at my own listings.

Or when my sellers...want to look at a company listing they may wish to purchase upon the closing of their home. Happens often up here an dneds to be handled with care. Thanks for reading Lenn.

Thanks so much...The Harper Team..for reading and rating :) The big D makes me squirm thinking of it!

Monika,

Thanks for the post. We have Dual disclose Agency here in New Jersey. As Randy from Hawaii pointed out you have this type of agency when the buyer's agent and seller's agent are from the same office. In point of fact, before we had the terms "Buyer Agent" and "Disclosed Dual Agency" we practiced dual disclosed agency. We got the listing marketed the listing and then got the buyer. Sometimes the buyer was represented by an agent other than the listing agent and sometimes the listing agent. Personally, I thrive on dual disclose agency. My goal is to sell everyone of my listings.

In your example about obedience, the seller wanting the highest possible price and the buyer wanting the lowest, I always discuss the comparables with both parties. Both the buyer and seller know that the comparable information has been shared with all parties concerned and that a reasonable offer would be best based upon the comps. It just so happens that the appraiser will be using the same data. In this respect I have taken care and given both parties what any professional would have. This makes for a level playing field. The buyer's not pulling numbers out of the sky and the seller cannot be unreasonable, when give the information.

Full disclosure is the key item for me. I can only disclose that with which Ii have been to observe in my capacity or been informed of. This is handled at the time the listing is taken. Where appropriate I supply a list items that need to be addressed. I explain to the seller, that I have taken the time to highlight these items, because they have the potential to cause concern for the prospective buyer. Better to be proactive and correct the situation than wait to be reactive and trying to fend off request for huge concessions.

I have never breached confidentiality. I am loyal to both parties. The beauty of the arrangement is that I have a full understanding of both sides. I always ask the each party to consider the other. Mr. & Mrs. Buyer, would you consent to a $25,000 reduction in the agreed upon sales price without repair estimates from at least three licensed contractors? Mr. & Mrs. Seller, did we not discuss the issue of being proactive? Now that you have chosen not to, do you still want to sell? Reasonable care and diligence at it's best!

DUal Agency is legal in california as well. Great tips you are a very ethical realtor Monika i would send you a referral. Merry Christmas to you and your family.

Monika, I give credit to anyone who can pull this off and keep both Buyer and Seller happy. I am sure glad that I do not run into anything like this as a Loan Officer. The closest that I come to anything like this, is when the Realtor for the Seller calls me up wanting information. My responsibility is the Borrower first, and their Realtor second. So unless I have been given permission from my Borrower or their Realtor, I will not disclose any information to the Sellers Realtor. There are those who disagree with this, but I have seen deals go down the tubes because a Loan Officer stuck his/her nose where they should have not. I handle the loan for the Borrower and their Realtor handles the negotiations and supplying information with the other side of the transaction.

Again, dual agency would really present a big problem for me for basically the same reasons as Carole gave. God bless those that can pull it off.

Dual agency, one of the "hot potatoes" of our industry, is permitted in the State of Washington. Most dual agency occurs here with new construction or condo conversions. Some of these are not strictly dual agency but the buyer may be "represented" by another agent from the same listing office or another office of the same company. The Northwest MLS identifies those kind of transactions as "in-house deals." Thanks for writing on the topic, Monica.

This is an interesting post, but I think it misses the target slightly.

Dual agency or Dual Representation is not really that difficult. It only becomes an issue if one lets emotions interfere with acting in the proper manner, at least that is true here in Ontario Canada. There are clear rules on what changes in a multiple representation scenario. First or all the duty of confidentiality over rules the duty of full disclosure so that personal information cannot be passed to the other client without written consent. This means that even if the buyer can afford the 25K you can only explain the conditions of the offer or amendments and the potential consequences of any choice they make. It is their choice as to whether they want to accept or not. After all, just because someone "can" afford a higher price does not mean that they will pay more.

You can also be loyal to both parties by protecting their information by not giving out personal information to the other party. If they make a request to get a higher price then you just need to make up the offer and present it. If they want you to tell them what the other persons financial situation is then you have to explain that you need your other clients consent in writing as a protection for all of your clients and then go and ask for permission. When client 2 inevitably says no, you report back that you are not able to discuss that topic, and explain that if you were to discuss that topic with them then you would probably have to discuss their situation with the buyer which they would probably not like, and ending with a statement that you are protecting them by upholding your duties to all of your clients.

The biggest problem with multiply representation is that many agent just do not get it. I had a very seasoned agent tell me that under dual agency he was working for the seller. That took a trip to the broker to get him to stop insisting that he had a right to know more about my buyers that were interested in his clients home (we were both at the same brokerage at the time).

If we stick to the facts about the home, the real estate markets and the comparables in the area then there are no issues that conflict. If either the Buyer or the Seller are not being reasonable with their expectations given the facts then you just have to keep looking for them. You might want to dump the unreasonable one as they may do that on many other offers and waste a lot of your time, if your mood moves you that way.

The bottom line is know the rules and don't let friendships or emotions get involved. If one of your clients is a close friend or relative though you had better disclose your relationship so that nobody can cry foul if they get second thoughts down the road.

William...I give you credit because it sounds like you know what your doing, make full disclosure and practice reasonable care and diligence. Being in a Dual Agency state it doesn't wig me out...I know what I can and can not do. I think NJ and NH are indeed very similar. We can provide comps as well but allow the parties to come to their own conclusions and interpretations. Level playing field is the buzz word..do for one as you would for the other. DDA is not to be taken lightly but practiced with professional care it works. Thanks so much for your comments!!!

Eddy...Thank you so much for your kind words and potential referrals! Happy Holiday to you as well.

George...I understand what you mean but trust me when I say I have had many happy buyers and sellers who were in DDA with me and that were very happy with the service and care I provided. They refer business to me and I know that wouldn't happen if they felt they didn't get good service. Again, I'm not saying it's easy...but is real estate ever really easy??? You need to know what your limits are and get informed consent. There will always be those that do it wrong...cut corners and stuff...sad to say that. Thanks so much for reading.

Monika, I love your responce "but is real estate ever really easy???" Yah sure anybody can do it.....LOL

Monika- here ya go, it is a brochure they sign to acknowlege the receipt of the brochure...then of course we have agency documents, buyer and Dual.

NC Agency brochure

Good stuff Monika, No dual agency on Florida. Andrew Hodge in his comment above has a good handle on how "Dual Agency" should be handled. The only problem with that, in my opinion, is that according to the way it is to be handled, it is no longer an Agency relationship, no matter what they want to call it.

It really is simple in my mind. Agency creates a fiduciary. Dual agency requires limited fiduciary. A fiduciary relationship can not, by it's very nature, be limited. So, call a duck a duck, and get rid of dual agency. Call it what it is, limited representation, for both parties, with no fiduciary and therefore, no agency.

And when they do this, make it a part of our COE so all Realtors are uniform regardless of State Laws.

George LOL...Yup anyone can...seriously you should of see some of the people that get RE licenses.

Gerhard... you and Andrew slipped in under the radar here. Hot potatoes absolutely right. Often we're dual agents up here simply because of the in-house situation...I may never have met the sellers but they are listed with my firm so I represent them. Thanks so much for reading.

Andrew...Excellent post but I don't think I've missed the target at all... in fact I think we agree whole heartily...It is the agents that do not know the rules and let friendships and emotions get involved that miss the target...100%.

In my example...When I use it in my classes it makes the agents understand clearly that even if one of your clients is a close friend or relative you STILL can't disclose without permission of the other side (as in the home inspection example) and yes they had better have disclosed that (relative..close friend) relationship in writing up front. Great post Andrew, thank yo so much for taking the time to write it.

BB...I wish we had transaction or designated agency up here but it is not to be in NH...now our commission is making it easier for us to be DDA...I agree Andrew hit it on the mark. It is the agents who have no clue what they are doing that really make DDA hard. It sounds easy in Florida and pretty clear cut. For those that understand DDA and practice it correctly it is easy and clear cut as well...call it what you will but in NH it is an agency relationship albeit limited. Gotta change the state laws to change what we call it or how we practice it. Thanks BB for reading and commenting.

Michele...Awesome thank you so much for posting that link!!!

George - The mortgage business has it's share of dual agency, too And this is often of the most dangerous form, undisclosed. This usually happens when a mortgage broker treats his customer like a client, giving the impression that the broker owes the full range of fiduciary duties to the borrower. This creates an implied agency relationship with the borrower. Combine the implied agency with the borrower with the express agency with the lender and you have dual agency, of the undisclosed variety.

Sorry Monika I must have read your post a little too fast and misjudged the end point. Sometimes I have to slow down and digest before I comment, my apologies.

Bryant- I disagree with your statement of

"A fiduciary relationship can not, by it's very nature, be limited"

It is more correct to say that all fiduciary duties are limited. First it is limited to only actions, requests, etc that are permitted by law. Second, we all deal with multiple clients, many of them are looking for the same type of homes with the same criteria, and if one client decides to be nosey and ask about what your other clients are looking for and why are you going to tell them? Whether or not they are looking to buy the same house or they are selling similar homes you still have to protect all of your clients information. Lawyers and Doctors have had to deal with these issues forever (well a long time), have you ever tried to call up your doctor to get your child's test results, if they are over 18. It doesn't matter if you are Mom or Dad you don't get them. You just get told to have you son or daughter call the doctors office. Even if you are also the doctors client they won't tell you and it is a good thing to, do you really want to know or confirm what your adult offspring has been into / up to?

It could even be argued that dual agency exists when you list two homes that are competing with each other. After all if someone brought in a buyer to Seller client A's house and they were going to put an offer and you didn't try to get the buyer to put an offer on Seller client B's house are you upholding your fiduciary duties to client B? Would you tell Seller B that if they drop their price by $5,000 they will be lower that Seller A is willing to go, and therefore drastically increase their chance of selling before Seller A?

I am not saying that anyone would do this but to deny that we are always limited on what we can say to a client, be it a dual agency situation or not, is to over simplify the facts and risk retribution. Any time we give out information to a client we must always insure that the information does not include personal or motivational information related to other clients because you never know when those clients might turn out to be competing against each other, be it selling similar homes, putting an offer on the same home or as a seller and potential buyer. The only way to make sure that all of our clients are protected is to insure that their information is protected above and beyond our duty to disclose to another client.

Sorry if that sounds too preachy. It is hard to state the above without sounding like I am on a soapbox, but is very easy to see dual representation as a completely different scenario to our regular client relationships even though it is not really different at all. You just get exposed to questions about other clients more often when you are in a "multiple representation" situation.

We wish you a merry Christmas! We wish you a merry Christmas! We wish you a merry Christmas And a happy New Year! Glad tidings we bring To you and your kin! Glad tidings for Christmas And a happy New Year!

Broker Bryant and The Lovely Wife (pretend we are singing it works better like that) ROAR!

Andrew - I agree that all fiduciary relationships are limited in one respect or another. As you pointed out, they are all limited by the Law.

An unlimited agency relationship would be....well it would be scary. That is the reason why agency should always be created by a contract, whether a listing or a buyer's agent agreement. Those documents define and limit the agency relationship.

Andrew I do see your point. In reality it all boils down to disclosure. A principal can waive some of their rights in the fiduciary relationship. Here is a clause from Wikipedia that I agree with:

Conflict of duty and duty

A fiduciary's duty must not conflict with another fiduciary duty.^[4] Conflicts between one fiduciary duty and another fiduciary duty arise most often when a lawyer or an agent, such as a real estate agent, represent more than one client, and the interests of those clients conflict. This usually occurs when a lawyer attempts to represent both the plaintiff and the defendant in the same matter, for example. The rule comes from the logical conclusion that a fiduciary cannot make the principal's interests a top priority if he has two principals and their interests are diametrically opposed; he must balance the interests, which is not acceptable to equity. Therefore, the conflict of duty and duty rule is really an extension of the conflict of interest and duty rule.

Even though I understand how dual agency can be handled, personally I think it is way to complicated of an issue for your average Realtor or consumer to grasp. BTW Dual agency was legal in Florida up until about 8 or 9 years ago and I have worked that way before. My only point is that if we have to sacrifice some our agency duties why not just work as transaction brokers from the get go and avoid the confusion and possibilities of crossing the line in a dual agency situation.

Here is the outline of Transaction Broker from Florida law:

2) TRANSACTION BROKER RELATIONSHIP.--

(a) Transaction broker-duties of limited representation.--A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent. The duties of the real estate licensee in this limited form of representation include the following:

1. Dealing honestly and fairly;

2. Accounting for all funds;

3. Using skill, care, and diligence in the transaction;

4. Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer;

5. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing;

6. Limited confidentiality, unless waived in writing by a party. This limited confidentiality will prevent disclosure that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, of the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information requested by a party to remain confidential; and

7. Any additional duties that are mutually agreed to with a party.

In my opinion it's a clearer picture of what we as Realtors do. Especially if we are on both sides of the transaction.

Richard, I am not a Broker and so I represent the Lender so I don't see where the same thing applies in what you describe. But even in the case of a Broker, I do not believe it is the same thing as in the case of Dual Agency with a Realtor. A Broker does not have a choice, a Realtor does.

George - As a direct lender, it should be more clear to the customer who you represent. It should be clear that you are a fiduciary of the bank, not the borrower. The problem comes when a lender acts like a fiduciary to the borrower. If the borrower has a reasonable expectation of an agency relationship based upon the conduct of the lender/broker, a implied agency may be created. That is obviously much easier to have happen to a broker as the lender's name isn't on your business cards.

Monika - GREAT job on this post!! This can be a very touchy subject, and you did a great job spelling it all out. This post of yours should be required reading!!!

Ann

Richard, I still don't think I agree. The borrower and the Loan Offer both sign a 1003 and as far as I know so does a Broker stating that the information on the 1003 is the truth. The Borrowers also signs a Borrower Certificate of Authorization stating that they are being truthful to both the Loan Officer or Broker and the Lender, so I don't see where there is a conflict if everyone is doing what they are suppose to, which is to tell the truth. The only time I see where a conflict could happen, would be in a case of fraud and that would be illegal under any circumstances

Wow..some awesome comments here!! I'm too tired to read them all tonight but I will tomorrow morning with my coffee.

Good night

DEC

2006

Monika... As someone else said, great post on a difficult topic. I will be honest that I am always leary of a realtor that has both sides.... and sometimes when the office has both clients. You sometimes have to wonder who is helping who. It's tough....

George..... I am in the middle of this one. But Brian Brady and Richard both talk about your fiduciary responsibility being to the lender or bank of whom you work for and not the client. It's the lender that you need to protect. The client, you are just giving them a service and your service to them is to help them, give them their best options, but still owing the largest part of this to your company. Their is a lot of truth in this and unless you don't understand the true meaning behind it, it can be confusing at times. Hence the reason why I am in the middle of it....... on the fence per se.

BB...Great post...thank you. I think DD and fiduciary duties all depends on state law....some states do not follow common law and Wikipedia is basically using common law definitions...as they should but that does not make it the way all states/agents conduct business.

In NH we have only Seller Agency, Buyer Agency, Dual Agency and Non-agency (customer level service only) BUT when showing any listings listed by our firm We have no choice...we work with the buyer customer as a sellers agent w/full fiduciary or if the buyer is a buyer client..with signed buyer agency agreements in place...we then HAVE to be a Disclosed Dual Agency with limited fiduciary. No other options remain for us because we can not be a non-agent when showing our own (company) listings...we are sellers agents or Disclosed Dual Agnets.

Thanks so much for your comments and have a Happy Holiday!

George and Richard..

I always thought that the Bank worked for the buyer...and the mortgage officer/broker worked for the bank...not really the buyer...just like the closing attorney in my state represent the bank not the buyer...while they help the buyer their duties and obligations are to the bank.

My experience has been that mortgage officers many times won't give me information as an agent...because it's confidential to the buyer??? So I figured some sort of fiduacry...somehwere but was never really sure...LOL still not sure.

Thanks you guys this discussion is great and I am learning more each day!!!

Happy Holidays!

Jeff...I didn't see you here when I responded.

I can understand your feelings but a competent well trained experienced REALTOR...one who is ethical and honest can do both sides without compromising either of their clients.

I imagine you might have seen or experienced some questionable actions to make you feel this way. Sad to say but some REALTORS will abuse their role..as lenders will and attorneys...you name it... we all have some bad apples.

Happy Holiday to you Jeff....thanks for your commnets.

Ann...I missed your comment here as well! Thanks for the kudos...It is hard to try and explain DDA in a simple way. Thanks for reading and commenting...have a Happy Holiday!!

It is legal in Arizona. We hate it! Arizona draws a distinction between Single Agent Dual Agency and Two Agent Dual Agency. We never practice Single Agent Dual Agency - we have a team member take the other side of the transaction.

Monika.... it's not that I had a bad experience, but just for the fact, that you can't trust all realtors or even all loan officers. Many are just sales people and they will sell you what you want to hear.

I have a client that was just referred to me and both realtors are from the same office. When I first spoke to the client on the phone, she wasn't sure who was her realtor or even if she had a realtor. Make a long story short, even though there was a language barrier, I could tell that it wasn't explained to her.

Gee...after getting my information from an appraiser to who was who... and then calling the realtor that was helping her, I was able to explain to her what was going on and their roles in the transaction. After this, she understood very well and said thanks...... it wasn't explained to me this way. And you know she signed a dual agency form...... still, not fulling explained to her. Just makes you wonder if she was trying to hide something... or didn't want to take the time to explain it.

Jeff...Many times buyer have told they never signed a agency disclosure before sometimes they're telling the truth and sometimes they're not. I don't doubt that some agents don't really do a good job explaining what it really means. I usually use my example that I stated up in the blog about the home inspection...and trust me when I use that example it usually initiates a TON of conversation...how can it not? It would make anyone think twice...as they should.

Suzanne...We have both single and two agent (same company) DDA and do single agent DD often.

Thanks for your comments and Happy Holidays.

Jeff, Monika, I've had customers who've clearly not had agency in Texas explained to them. However, in my past life as a legal assistant, I've also known people to sign things after they were explained to them when they really didn't have a clue what they'd been told but didn't want to say so (which we found out later - they seemed to understand at the time). And I've also had things explained to me by one person that didn't make sense but, when someone else put it another way, suddenly the lightbulb lit up.

In your example, Jeff, since the woman said, ". . . it wasn't explained to me this way (emphasis mine)", I'm guessing that it might have been the latter situation. It was explained, perhaps by someone who's not good at conveying confusing information, or perhaps simply in a way that wasn't easily comprehended by the woman, and your explanation was much clearer to her.

Jeff, I understand my responsibilities all to well, that is one thing that the Mortgage Company I work for made very clear from day one. But that responsibility is different then the one I have to my Borrower. In representing my employer I am a direct extension of them in dealing with the Borrower, as a result any information the Borrower shares with me whether verbally or in writing belongs to my employer. All of the paperwork has the Mortgage Companies name on it, and what they are agreeing to, is between them and the Mortgage Company not me. Also all the loans close in the name of the Mortgage Company. On the same note what ever private information that my Borrower shares with me does not go any further then between them, me my employer. Both myself and the Mortgage Company I work for have a responsibility to our Borrowers to be honest and upfront with them, and to keep their information confidential. That is what my employer expects of me and I follow it. The conflict would come if I started to share their personal information with the Sellers or their Realtor without their permission.

I think that the example that Andrew used above in the relationship to a doctor and attorney have with their clients is very good, but I would even go further. Is a doctor or attorney relieved of their fiduciary responsibility to their clients if they work for a hospital or a law firm? Of course not. Are the fiduciary responsibilities different? Yes they are. Can both fiduciary responsibilities exist at the same time without conflict with each other? I certainly hope so, or we are in big trouble.

The same thing can be said of a Realtor who works for Realty Company in a single agency situation. Do they have a fiduciary responsibility to both? Again yes.

Bryant- If you use that definition you could not list two similar homes in similar areas that would compete for the same type of buyer because each of your clients needs are diametrically opposed. Both clients want to sell first for the highest price and they are competing for the same buyers. With your definition we would have to disclose to all of our seller clients when ever we wanted to list another property and get their permission to list a home that could compete for the same buyers. We would also have to inform all of our buyer clients if we found a new buyer prospect that was looking for a home with criteria that over laps any other clients search criteria as they would be looking at similar homes and we can only call one at a time. Which one are you going to call first? Which ever one you choose you are neglecting your fiduciary duty to the others as the first one has the advantage of time to set up a showing and book your time.

Even if your buyer clients are not looking for the same type of home, you can only show one group of client homes at a time, unless you are showing them all the same Which client are you going to say is going to have to wait until you are free? After all if they say they want to see a home at 2:00 a non limited fiduciary relationship would have us dropping whatever we are doing, no mater how important to us or another client, in order to show them that home.

Dual Agency is not that difficult it just takes a basic understanding of the process and a strong set of principles that allow the agent to actually do what is best for all clients within the limitations that one person working for many has. It is generally understood that showings are done on a first come first serve basis and that we all work for many clients for a variety of purposes. Keeping their personal information safe is the paramount duty and to think that all duties are equal is to open every industry, which has "clients" instead of customers, up to excessive volumes of court actions. After all if you went to your lawyers office unannounced and they were with a client do you really think that they would put everything on hold until they had addressed your needs, just because you wanted it that way? I think not.

Andrew...There was a case a few years ago... very similar concept...Same firm...2 agents.. each with a buyer client. one co-broke listing...both buyers made offers..unbeknown to each other or to the agents...undisclosed dual agency BUT the only person who knew who the players were was the listing agent...I believe this is still in appeals...I can't remember where or when..But it was very interesting!!! Do remember hearing anything about this? Great points and certainly food for thought.

Tricia... I've experienced that myself. Buyers usually just want to go see a house and initially at least they don't care about agency disclosures. They usually nod say okay and sign. Some agents don't recognize when a buyer doesn't get it or they simply take the easy road and go along with it or they really don't care. I remember being told in the my early years that.... buyers are liars...I never believed that but said instead that agents don't know the right questions to ask.

George..Thanks for the clarification...that's actually how I thought it was in banking.

Merry Christmas

Monika, I think that the saying "Buyers are liars" comes from the fact that buyers frequently insist they want one kind of property and, in fact, end up buying something totally different. People who say that they do NOT want to live in a suburb and want an acre and a particular kind of house end up buying a house on a tiny suburban lot, after the agent has spent a lot of time trying to find for them what they *think* they want. I think it's because buyers - some buyers, by all means not all of them, but enough to create a cliche - don't really know what they want, in many cases. One part of my job is to help them figure it out, even when they think they already know - there are usually signs that they're not really in touch with their own needs. I learn a lot more from what they say when they're talking about how they live now and what their plans for the future are than from what they say about the house they're looking for, usually.

DEC

2006

Andrew, And there lies the problem with a "true" fiduciary in Real Estate. By working as a Transaction Broker, the difference is that I have no clients. All of my sellers and buyers are customers. I have a agency relationship with no one. That's the advantage of Transaction Brokerage or no agency relationship. That is why I feel a no agency relationship is a truer picture of what we do. As a TB we can work with all buyers and sellers without ever crossing a line as long as we are fair and honest with all.

Tricia...I understand your point and agree with it in general.

But....I've asked buyers in the past if they are working with another REALTOR only to be told NO and then an other agent comes out of the woodwork.

So now I ask them "are you contractually obligated to another REALTOR...the reason I ask is..I would not want to do anything that could put you in a position of owing multiple commissions"!!!

Let me tell you that many times they look at me and say..."well I did sign something...not sure what, let me go out to the car and get it so you can see what it is"...Usually they come back in with a buyers agency agreement.

So I do think sometimes they omit the truth but many times we don't ask the right questions or ask them in the right way.

DEC

2006

Bryant...You can work with your sellers as a transaction Broker..owing them no fiduciary duties? Do you always work with them in that capacity?

JAN

2007

What a Great Devise! Oldcar super thanks so much I love it!

Thanks Allison!!! Oldcar was the best way for me to memorize them! :)

FEB

2007

Great stuff

MAR

2007

What do you think about when you have a listing and a buyer comes in without an agent, to call them an "Unrepresented buyer" (Like a FSBO,but a buyer). Thus allowing you to work for the seller, instead of being an intermediary pencil pusher?

I dont like straight Dual Agency since I can't give advice to EITHER side.

Frank

Frank...When a buyer comes in and wants to see my listing or any listing in my company...I must represent the seller UNLESS the buyer wants to be represented...then and only would I be a disclosed dual agent. I work with buyers as what we call a Non-Agent when showing co-broke listings unless of course they want representation then I would be a buyers agent. We have some changes happening that if approved may allow us to just what you do. Thanks for stopping by.

Paul...Thanks for the visit, My comment notifier must not be working as I never saw your comment...Sorry for not replying.

APR

2007

We were really burned in Hawaii using a dual agency agreement with a reputable firm. The agents were a husband -wife team, the husband was the lister and the husband and wife were the buyer's agent. We had no representation and, indeed, we believe confidential information was passed on to their buyer on price acceptance and a number of other items. By paving the way for their buyer, the agents collected commission on both sides. I would tell anyone never to sign a dual agency agreement. It is a complete conflict of interest which is probably not tolerated in other businesses.

APR

2007

J Mackenzie...DDA is a conflict and must be disclosed properly. I'm not sure what the rules/laws are in Hawaii but in NH we have to use a written disclosure. Sounds like your experience was really bad. Did you file a complaint? I hope so and I 'm sorry you had such a bad experience.

JUL

2008

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

Christina

AUG

2008

Yeah, what annoys me about using a real estate agent is that it feels like a bad game of telephone. The buyer talks to his/her realtor, the buyer's realtor talks to the seller's realtor, the seller's realtor talks to the seller, vice versa, repeat.... It is utterly stupid, and half the conversation is never passed along at each stage. While I like having my house listed with an agency, I want to talk DIRECTLY with the buyer's agent and the buyer. I want to do my own negotiation, not have a proxy. It's the same reason that, while I respect the right of a group to have collective bargaining, I don't want it myself. I stand by my own ability to negotiate. Where are the progressive agents who will let their clients negotiate for themselves?

Here is a major problem with agents. Sellers overprice their homes to account for commission (myself included). Say a house is priced at $266,000 with 3/3 split of 6%, and both agent and seller know the house would fly at $250,000. As $250,000 adds greater exposure (in other words, it can appear at both the top or bottom end of a search), listing a house for $250k on a solid FSBO site (in a location where FSBO is strong) offers close to the same end price for the seller if no negotiations are made. The seller could come down to $250k with the agent, but why would he or she? Why not wait until the listing expires and list for 250k FSBO?

P.S. I love the idiots who would price the house at $249,900. Why the HECK would you do that when you get increased exposure at $250,000? What are houses...check out aisle snacks?

DEC

2009

I am writing a White Paper and a Book on why Dual Agency should be eliminated. Please provide any lawsuit information or other horror stories on how the clients' best interests were compromised or diluted.

There are multiple forces in the works: 1. In Congress, with fault being discovered that many buyers were not properly represented that added hot sauce to the housing melt-down, 2. With Errors & Omissions insurance carriers seeing that in 50% of all lawsuits agency is brought in as an allegation, see new Standards of Practice coming soon, 3. Well funded consumer advocacy groups (as in the 1993 Edina lawsuit that cost $18 Mil) are preparing to file multiple class action lawsuits in early 2010 against all the major players for inherent conflict of interest on dual agency and double-dipping brokers trying to "represent" both sides of a transaction, 4. The courts are getting tired of issuing warnings, eliminate dual agency or else.

It has been ten years since the real serious shot over the bow from Oklahoma:

In the case of SNIDER v. OKLAHOMA REAL ESTATE COMMISSION, June 1, 1999 the Oklahoma Supreme Court said: "Sellers' agents and dual agents do not and cannot by law give a buyer the same degree of loyalty as an agent who acts on behalf of a buyer. Sellers' agents owe their allegiance to the seller. Dual agency invites a conflict of interest. A buyer who relies on the seller's agent or on dual agency does not receive the same degree of legal protection as that afforded by an agent acting solely on behalf of the buyer".

Professionally, I find the concept of dual agency as completely indefensible and should be eliminated along with the perverse ways to thread the needle with transaction brokerage, designated agents, and disclosed dual agency.

There is no way that you can deliver a true informed consent from a Seller that is no longer going to have full fiduciary level of representation when somebody in the office is now going to be representing the buyer.

Just like the Veterinarian's Office; Cats go in one door and Dogs go in another:

Step 1. Need for only an Exclusive Buyer's Broker to represent the BuyerMake sure that the agent / broker that represents you gives you the highest level of representation possible, full fiduciary duty to only represent your interests as a Buyer and not the Seller. Engage an agent that will pledge in writing to exclusively represent only your interests. Say NO to: dual agents, designated agents, transaction agents and seller's agents. The Seller usually in 95% of the deals will fund the fees (just a normal real estate commission) to pay for this Exclusive Buyer's Broker to only represent the Buyer.

Step 2. Need for only an Exclusive Seller's Broker to represent the SellerMake sure that the agent / broker that represents you gives you the highest level of representation possible, full fiduciary duty to only represent your interests as a Seller. Engage an agent that will pledge in writing to exclusively represent only your interests.

PLEASE GIVE ME YOUR BEST VIEWPOINTS AND COMMENTS

MAR

2010

Would you let a lawyer represent you on the prosecution side and the defense side at the same time? Do lawyers represent both sides in a legal transaction ever? Of course not! Its highly unethical and hence illegal and puts the clients, ie buyer and seller LAST. Whomever is stupid enough to let a Realtor, Attorney, accountant, whomever to represent them on both sides of a transaction is a FOOL!

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?

Monika McGillicuddy Southern NH & the Seacoast Area

Hampstead, NH

More about me…

Prudential Verani Realty/Hampstead

Address: 314 Lafayette Rd, Hampton, NH, 03842

Office Phone: (603) 327-0247

Cell Phone: (603) 944-9172

Email Me

This blog is all about real world real estate from market conditions to community information. It offers a personal perspective and an insider look at real estate, real estate agents and the services they offer. I not only list and sell for a living but I also train other agents on all aspects of real estate sales.

Listings

Links

Archives

Find NH real estate agents and Hampstead real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.