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35 Comments on Why Do Exclusive Buyers Agents Leave Money on the Table?
Well, I have a different feeling about dual agency. It is legal where I do business. However when I started in the business there was really only seller agency and sub-agency and buyers were unrepresented legally. The trouble was no one told the buyers that, they thought that nice agent they were working with was on their side and in many cases they were. thus they were violating their agency status with the seller. In the early eighties I started rejecting sub-agency when I presented offers on the MLS listings and It totally upset the status quo but if I was pretending to be the buyers agent, I was going to be the buyers agent.
What I would like to see is state law that makes it automatic dual agency whenever you are representing more then one party in a transaction in any manner, no customer status or any other choice, so no question that what is said in a buyers living room stays in the buyers living room, and the same with the seller. We would basically be referees for the fight and make sure no one hits below the belt and each follows the rules. And yes i know many argue that one party ends up being under represented but I know from my experiences it is more like two parties being represented by two agents of equal ability.
What table and where is it..? It must have slipped out of my pocket when I was sitting down
Gosh, Linda, I always considered myself pretty well-informed about Maryland real estate law and pending bills, and I have no idea what you're talking about regarding a Maryland law "providing better disclosure for consumers using agents to buy homes." Senate Bill 644, which attempted to modify existing disclosure laws but died in Committee, was not even mentioned on MAR's list of legislative priorities, so I don't know where you're finding all this "buzz" about it.
Since 1999, Maryland agents have been required to provide consumers at their first appointment a disclosure form titled Whom Real Estate Agents Represent, which spells out Seller Agency, Buyer's Agency, and Dual Agency under Maryland law. If Dual Agency is used in a transaction, all parties must sign another disclosure form, Consent for Dual Agency. These forms DO "make this stuff understandable" for consumers, brokers, and agents in Maryland. Perhaps it seems confusing to people in Pennsylvania, if the laws in your state are different from ours.
By the way, I'm totally confused about your linking agency disclosures in Maryland to "leaving money on the table."
Linda, I interpret your post to mean what Fernando comment #8 and Michael #11 say. Dual agengy (representing both the buyer and seller) is legal in California. It has to be disclosed and there is a C.A.R. disclosure specifically for that situation. Michael's comment of the potential conflict of being advocate for both sides--the conflict from my perspective and from what I've learned is to remain un-biased during negotiations and not disclose to either buyer or seller what would not be disclosed if there were two agents, i.e., I couldn't tell the buyer the lowest selling price the seller would accept and likewise, I couldn't tell the seller the highest price the buyer would pay if I knew that information. Of course, any other information about either party's financial status or situation would not be told to the other.
Seller still has to provide buyer all the legal disclosures, just like any other transaction. Disclose, disclose, disclose everything known about the property and all should be fine.
In California there is no requirement specifically to disclose that an agent is just working with buyers. However, agency does have to be disclosed whenever the agent engages in real estate discussions of a subtantial nature. The buyer is thus informed a relationship exists (nothing needs to be signed).
When the agent works with them to write an offer, that agent must disclose both single and dual agency and if the buyer's agent is also representing the seller. The agency regulations here are very strict and very clear.
You generated some great discussion! Multiple representation/dual agency is a slippery slope, but I agree with Pamela...disclose, disclose!
Well I am not in Maryland, but I am aware of the recent push in Maryland to make disclosures more meaningful by giving the consumer ALL the Agency choices including Exclusive Buyer Agency (OFFICES that never list property) and even Exclusive Seller Agency(OFFICES that never represent buyers).
...which failed when NAR decided to lobby against it...because it would give an unfair advantage to the few offices that operate with no possible conflict of interest.
I know what "leaving money on the table" means because as an exclusive buyers agent I hear that often, from agents and brokers that cannot imagine me voluntarily giving up one half of a possible transaction. Since EBA'S do not "double dip" many agents erroneously believe that we earn only half of what a traditional agent can make by cutting our potential income in half.
What they do not see is the smart consumers that seek out exclusive buyer agency offices so they get 100% loyalty, confidentiality, full disclosure etc. We do not deal in volume only "cream of the crop".
Eve in Orlando
Linda....of course, I know exactly what you mean! And thanks to Eve in Orlando to tell us that NAR lobbied against this..... Anyway, I am with you here. I can only give 100% representation to one side.
Congrats on the feature!
Hi Linda, In those states where representing both buyer and seller is allowed it should be done with full disclosure to all parties and handled only by agents comfortable with the process.
Linda, I knew what you were getting at. Dual agency earns you a double commission and possibly legal headaches. I would prefer to leave that half of the money on the table.
That said I have done dual agency but I am down the middle of the road every step of the way.
I am confused by your post. Dual agency is indeed legal in PA if disclosed and I have practiced it for 11 years with never an issue.
To all you "Double Dipper" crabby-pies: This is not a comment about "leaving money on the table"... the meaning of which I still do not know... but a comment about a phrase I absolutely HATE. "Double Dipping."
First of all. What gets dipped ? And second of all... into what... is whatever it is... being dipped ?
Double dipping... getting both "halves" of a commission... does NOT get you any more commission... because of the following: You have a listing, and it sells. Not by you. So, you get one "side" of a transaction. And one commission.
You have a buyer. You sell that buyer a home. Some "other" home. So again, you get one "side" of a transaction. And one commission. Two total "sides"... each of which brings a commission.
OR... you might take that buyer of yours... and sell them your own listing... (assuming in your state that you can do that) and you still get "2 sides." A listing side, and a selling side. There IS no difference.
So this talk of "oh, he sold his own listing... so he gets the FULL commission..." just serves to make it sound like you are a selfish greedy Realtor. How silly. You closed a seller, you closed a buyer. There is NO windfall as far as commission in concerned.
Karen Anne - Where is the "like" button. If there were one, I'd have to click on it for your comment.
Barb said it all "Good morning, Linda.... I could never understand the purpose of dual agency except to reap the entire commission..... I say "leave money on the table" and pick a side.... earn half the commission.... but make sure everyone is represented properly...."
I too am waiting for some answers asked of the writer on this one.
Well, this certainly generated a lot of talk! Sorry I could not respond quickly but I was in an all-day SERS designation class. Anyway, to those who have not heard of this expression, it is a fairly well-used one in business transactions and means that someone did not get every last cent they could have gotten out of a deal. That is what I meant by asking why exclusive buyers agents do that. It is a choice and NOT a condemnation of those of you who do practice a type of agency that provides a greater commission. And I am well aware that what I do is a choice that is beyond what is legally required. My point was that it is a choice some make because the disclosure laws do not address the actual problem with being on both sides (typo corrected, thanks to those who pointed it out!). That fact is borne out by the high level of lawsuits that are brought by buyers and sellers as reported by litigation surveys I have read. The Maryland bill was the first attempt I have seen to try to introduce some new ideas into this morass.
So thanks to all of you, this was an interesting thread. And much more informative than the SERS class I went to!
Margaret in #29: Thanks to your inspiration, I have expanded my comment slightly, and turned it into a post.
Joan in #30: You are completely missing a major point, here. One important "purpose" of Dual Agency... is being able to work with a buyer and a seller on the same home... when they really want to WORK WITH YOU.
Linda, with your (hoped-for) blessing... I am leaving a link to a post I just wrote expanding my comment in #28. Selling Your Own listing. Double Dipping ? What A Crock !
Thank you so much.
I'm a late to the party . . . "Disclosure" and "as long as they agree to it" is bullshit.
The majority of people, including many agents, don't understand the LEGAL law of agency and representation, let alone fiduciary duty. Most people do NOT understand, and many agents fall into this as well, that a FIDUCIARY can not "represent" both sides. It's a legally flawed theory. And yet . . . the "Disclosure" forms in my own state have "Disclosed Limited Agency" (our version of describing "dual agency) with the wording: "Disclosed Limited Agent: Represents both buyer and seller in the same transaction." It's a LEGALLY FLAWED definition and can not possibly be "repesentation" of BOTH buyer and seller -- especially when the BROKERAGE has the listing and was legally "representing" the sellers the minute the ink was dry on the listing agreement.
The disclosure form goes on to state that agents CAN NOT do thus and so in a Disclosed Limited Agency relationship. Which kinda screws up their language of "represents both buyer and seller."
The Agency Disclosure falls under the OAR -- Oregon Administrative Rules, whcih is a legal ruling. HA HA HA. It's LEGALLY FLAWED. When people AGREE to this "disclosed limited agency" -- they have NO CLUE they are agreeing to a legally flawed, on its face, Oregon Administrative Rule.
The sport agent "represents" both the owners AND the athlete?!?
The lawyer "represents" both the plaintiff AND defendant? And law firms go the extra mile and run a "conflicts" checks PRIOR to taking on new clients . . . before they . . . wait for it, wait for it . . . "represent" a client. You know about conflict checks Linda. Lawyers and their legal staff won't even talk to potential new client PRIOR to running a conflicts check. They don't even want to hear the issues PRIOR to running a conflicts check. That's how strong their REPRESENTATION IS!
The CPA "represents" their client AND the IRS?!?
Yup, only licensed real esate agents can do this sloppy, non-representation, crap and got away with it because "they" agree to it [they:buyer/seller]
So if the brainacs that created this "agency disclosure" write that a Disclosed Limited Agent "represents" both buyer and seller -- how can the consumer even possibly understand how double-speak this truly is? AND how can they know what they are giving up?!? They are giving up FIDUCIARY DUTIES of their real estate agent. BOTH seller and buyer are giving up their right to having a FIDUCIARY "repesent" them.
Carla: I am sitting here straining my poor little brain trying to remember. Since you are interpreting the Oregon Administrative Rules... exactly WHERE did you get your law degree from? And when did you pass the bar exam in Oregon?