Dual Agency Life in the Fast Lane

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.

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. 

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 

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.

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