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The Full Monty of Dual Agency

Some states allow a broker to represent both the seller and the buyer in a transaction with written consent. The state of Virginia does. This is called Disclosed Dual Agency. This is likely to happen when a buyer client wishes to purchase a property listed with the agents office. Because statutes generally limit the duties imposed upon an agent in this situation, both the seller and the buyer must agree to this LIMITED representation. Compensation agreements must also be disclosed in writing if the agent is receiving payment from both parties.

An agent in the state of Virginia still must be honest in dealings, using reasonable skill and care and can not violate any confidentiality or fair housing laws and disclosure of known and reasonably knowable material facts when working in the capacity of a dual agent however can't advise either client. There is a fine line here. Providing facts about the market such as comparables is certainly providing reasonable skill and care.

Although I have acted as a dual agent in some circumstances, I always contemplate each circumstance and review the situation to determine the best way for me to represent the parties in each transaction. More often than not I chose not to act as a dual agent as I then am unable to provide full service to the client.

I have to wonder when I hear other agents discuss this and say they disclosed dual agency to the buyer or seller because I have to ask if they have given full disclosure. Maybe the agent does not fully understand that dual agency means they can not give full service to both parties or offer any advise during negotiations.

I believe if I was Joe Public and I was explained full disclosure of dual agency I would opt for full representation.

Posted by Lynchburg Campbell County Bedford County Nannette Saunders ASSOCIATE BROKER on 03/03/2008 11:24 AM

Comments (68)

dual agency, disclosure, full disclosure, reasonable skill and care, fair housing law, material facts, joe public, full representation, real estate

Originally posted at: Real Estate Central Va: The Full Monty of Dual Agency

This post has been included in Virginia Information

68 Comments on The Full Monty of Dual Agency

MAR

2008

Nannette, This is a great posting. I use a standard policy when it comes to this - I DON"T DO THEM. I advice my clients that if I find a buyer for their house - before we even sit down to talk numbers I have another agent there. I look at it this way - there is no way I can get the best price for the seller and the buyer - so someone is going to be unhappy with me. Good luck

I agree with your call for full representation. Illinois allows dual agency and there are some unethical realtors not giving full disclosure.

Nannette, our listing agreements and buyer aggency agreements ask people if they would consider dual agency or would not. Personally, I think there is a conflict of interest and don't do it.

Nanette - Good Headline - I saw the play "The Full Monty" and your headline reminded me of that. You are right about full disclosure.

Nanette, you are absolutely right. Dual Agency in Virginia is illegal unless it it fully disclosed. It can be a conflict of interest when representing both sides of the transaction. That is why Virginia has Designation Representation to avoid conflicts should they come up.

Great Post!

Larry thanks for contributing.

John you may be right about the conflict of interest

Michael full disclosure means dual agency may not be the best way a client is represented

Vincent this may be the best policy

Michael Designation Representaion is the next blog tune in!

It's up to the seller and the buyer to agree on DA..... they are asked if they wish to do this. They also sign on the a Dual Disclosure page here in NH. I've done it many times and see nothing wrong with it. It the seller wants to sell and the buyer wants to buy.......WHY NOT!

Patricia Aulson Hampton NH Real Estate Portsmouth NH Real Estate

Patricia - your comment is a good example of a different style and business practice. Not saying it is wrong or bad by any means but that is what I love about active rain. We are all so different and have different opinions. Thanks for stopping by Patricia and thanks a lot for the comment!

Nanette, In Maryland you can't do that. It has to be one or the other. Dual Agency occurs when a seller's agent and the buyer's agent both work for the same broker. We then have to use the Dual Agency form, but it cannot be the same person. My husband and I bought investment properties in NC and there they do it similar to VA. We had one transaction where the listing agent was "representing" both parties. Being in the business and being a client, I thought it was a pretty slippery slope. There was no way there was "real" full disclosure, if there was it was done very carefully and with hesitation. Great post!

Disclosed Dual Agency is also allowed in Illinois. I agree that there are times when its use is inappropriate, but there are also times when it is a perfectly acceptable way of doing business.

Audrey thanks so much for your input here! Very interesting. I have a feeling if the agent had provided full disclosure you would have opted for full representation and thus the agent would have lost 1/2 of a commission. It is hard to put your clients best interests ahead of a pay check but the test of a real professional to do it!

Hank I like to take it as a case by case basis. I am very careful about it and offer complete and full disclosure.

I don't do dual agency either even though CA allows it. I would rather refer the buyers to another agent.

Jim I can understand your policy. It can get complicated.

I'm like you. I look at them on a case by case basis. I've done a few when everyone knows upfront what it means and is fully educated. If you have looked at the press recently and seen agents being put on the hot seat by dual agency I'm less inclined to go that route now and have an associate who is included on all of my listings. If I get a sign call from an unrepresented buyer and they decide to write I turn them over to her.

Great insight Nannette, I have not been in this situation yet, but it definetly makes you think to refer the buyer out to another agent...

Cindy this is a good policy I think! I agree upfront and fully educated! Thanks for the comment!

Mike It is a good problem to have! This means your closer to closing a deal!

I like this post and am surprised to hear that a lot of you have the same/similar "personal" policy as me. Utah allows dual agency transactions, but I have a really hard time understanding how I can represent either of my clients best when I'm representing them both. It's a tight line to walk on IMO.

Bryan I am not surprised that so many great minds think alike here in the RAIN!

Disclosed Dual "Designated" Agency. Gotta love it!

Dual "Designated" Agency

Stefan I only wish I had that cartoon to post on the original post! Thanks for sharing the picture says a thousand words.

I cringe when I get a call from a buyer that is involved with a dual agent. I just don't see how they can ever get the best representation. Some times they look to me for the "balance". Very difficult.

Charles - Makes you the middle man/agent/representative huh? This could even be an liability for you couldn't it? I'm not sure how things work in WA.

Nannette, I pretty much just stick to my job

LOL smart man Charles

Nannette,

It's a great post. It actually boils down to educating the clients in the initial meeting, whether buying or selling. I usually spend 15-20 minutes explaining the whole process of agency relationship. If I am a listing agent on the property, I just represent the seller in single agency capacity. I explain it to the buyer also that I have to be honest in the transaction and what ever they tell me I have to convey it to the sellers or they have the option to go find some other agent to represent them. The interesting part is almost 90% of the buyers went thru with me on the transaction. I feel as long as you have explained what you can and can't do for them they feel very comfortable with it. If I have a buyer agency agreement with a buyer that client knows ahead of time if I show any of my own listing I will represent the seller in that transaction and buyer has the option to get their own agent. I do not even refer an agent.

http://www.cgri.com

Sanjeev - That is the exact purpose of this post. I was hoping to educate Joe Public about agency and hopefully give some clarity to the subject! Thanks for the comment.

In the state of Mississippi we have Disclosed Dual Agency. The only problem is when these agents don't receive proper training. It has to been explain and then signed. Not just another paper that people sign.

Michelle - You are right there are agents that don't even understand the concept! Great comment.

Great post. This is an issue in our state and it creates a tough line to walk. I've been down it before and there is so much grey area that it's tough for the Realtor

Joe - it's the grey areas that can be the most trouble. Thanks for the comment

Michelle- I like to keep it simple. Lesson learned. One side only and advise the other side to have full representation. It's better for everyone, plus the stress benefits are great:)

Nannette,

As was hinted at in the cartoon there is a difference in what is considered Dual Agency dependent upon your office. If the office practices designated agency then dual agency would not exist in the case of your buyer purchasing a listing that is in the same office unless the listing agent was also you. Just wanted to mention that for some of the newbies that might get confused.

Katharine thanks for the comment

Thanks Mike for the clarifying. Agency can be confusing to some.

As stated above, DA is allowed in California. As most of my work is REO, my clients don't allow it. If I happen to write an offer for a buyer I make it clear that I am representing the seller only and have them sign a Buyer Non-Representation agreement.

In a few cases over the years, I have been a DA, and it is not easy ... a very fine line needs to be walked and in my opinion, there aren't many agents that can do the balancing act.

My recommendation would be to stick to one side and you won't fall off the wire into the legal black hole that waits below.

- James

James smart move there! Thanks for the comment

In Arizona it is called Dual Representation as you can not be an agent to two parties, in Colorado you default to a Transaction Broker working towards the sanctity of the contract, and here in Texas it is called Intermediary when the Broker is in the middle and agents are assigned. I have effectively done all three and am very comfortable with it.

Deb wow that is a load of information! Thanks for sharing!

I live in Illinois where Dual Agency is also allowed. I explain very thoroughly what that means to all my sellers during my listing presentation and again before they sign. Most sellers that I have come across seem to mind this situation. I believe that most of the sellers think that YOU are going to sell their property so Dual Agency is not a problem for them. There are a few sellers that won't agree and I never try to encourage them. I find more objections with the buyers than the sellers,

Thanks for the comment Phyllis! Interesting how different parts of the country are handle things differently

In New Jersey, we have Dual Disclosed Agency and it is a fine line for realtors. Unfortunately not all agents understand it well enough to educate their clients. In addition, since NJ has no requirements for ongoing licensee education the situation isn't likely to change in the near future.

Great blog. Bravo...

Where's my socks??

Great post -- I have acted as a Dual Agent in a few situations and ALWAYS give full disclosure... and honestly I'm amazed when the unrepresented buyer doesn't want to find an agent. I did have a situation recently with one of my listings and the potential buyer was so, how should I say it, HIGH MAINTENANCE that I decided it would be in everyone's best interest for him to have representation. Going forward, I'm just going to look at it on a case-by-case basis.

In Oregon you can act in DA. I haven't and not sure I even want to go there. How can you truly represent both sides without some conflict or grey areas? It would be like an attorney representing both sides of a case.

You are wise in your approach to dual agency Nannette. I have turned it down many more times than I have accepted it. Everything has to be just right.

Dual Agency, the ultimate oxymoron.

It's a contrivance designed to perpetuate collecting both sides of a listing commission.

Nannette...As you know the question is how are you able to effectively negotiate price, home inspection repairs, etc. when you are "representing" both parties.

Kathleen

Interesting thread! Dual agency is legal in Oregon, and I know agents on both sides of the fence. Full disclosure is legally required and is absolutely essential. If both parties to a transaction fully understand the disclosure and the implications thereof, and trust the realtor representing both of them (after all, trust is the essential basis of successful relationships of all kinds!), then dual agency works fine. That being said, it is not the best approach in every situation, or for every client. Blessings to all!

MAR

2008

We've acted as dual agents a number of times. It is a real tight rope walk, and the negotiations can be very difficult. We always give a discount on commissions in our dual agency transactions to help with the negotiation. It seems to help the seller and the buyer when they know that everybody involved is giving a little.

Arizona law allows dual agency with disclosure. Still... how does one provide full fiduciary service under dual agency? It's rife with potential problems.

I think it is only a matter of time before dual agency is banned or strict requirements are imposed upon its use.

Laura - Wow that is scary

John Hurbon LOL Thanks! I was afraid to talk about the Full Monty - figured I'd get a few wise arses. :-)

Kerry - studying each case can be helpful but not a 100% way to keep your nose clean as evidence by these comments.

Lori Good Point

Wayne P Great minds think a like!

Lenn - you say in 2 sentences what takes me an entire article. Thanks!

Kathleen - I believe the statue assmes negotiations are psooible but we shouldn't give advise - how is that?

John G - Trust is absolutely essential great point!
Craig & Amher - Glad to hear you have found some succes as a D/A

Chuck W - you're right and it is evedent by the comments here.

Joh Hokkanen - this is a possibility!

Hi Nannette - I list and sell in both New Hampshire and Maine, and both states allow for Disclosed Dual Agency. Maine has Appointed Agency, which allows an agent within the office to be the formal appointed agent for that client. And here in NH, we're working on legislation for Designated Agency, which will be similar to Maine's Appointed Agency, however NH's law (if approved) will keep the dual agency to the level of the owner/broker or the managing broker. It will not flow down to the agents in the office, nor to agents working in a multi-office company.

Ann

Dual agency made me feel sick to my stomach when I had to say "I'm sorry, I also represent the seller/buyer and can't tell you what to offer." I decided that, for me, the better way to go was Exclusive Buyer Agency. Now I no longer represent houses, I only represent buyers. It works for me.

What I see as a big problem is a document that some boards in Nebraska use called "Exclusive Buyer Agency Agreement" which essentially makes the buyer give up their right to object to dual agency when it comes up. The only exclusivity is from the buyer to the agent, not the reverse. The state can't do anything about it because it is a contract controlled by the courts. If the agent has the dual agency disclosure signed at the right time, even though the buyer already waived their right to object, the state is okay with that. I just don't think they understand when they sign the contract what the ultimate ramifications might be.

Nannette... Related problems with dual agency are most obvious in the new construction scenario, where the buyer thinks builders agent is the buyers agent. Implied agency. The builders agent at all times acts like he or she is looking out for the buyer, but has a duty to the seller. The relationship becomes even more untenable when the builders agents compensation is based on certain requirements.

That doesn't work either.

I have never represented both sides of a transaction as I don't feel I can be a full advocate/fiduciary for my clients. I will, however practice dual agency with another agent in my office representing one side. I have written about this too. Congratulations on the feature!

In Maryland you can sell your own listing if you represent the seller. At that point, there is no agency relationship with the purchaser. Disclosure is critical, but some purchasers are fine with the arrangement.

Seems the general feeling is don't do it and I agree. It simply opens the door for issues and I believe you are not servicing your client 100%.

I completely agree. It puts you in a tough spot and they don't get the best you have to offer them!

Ann Thanks so much for all the information! Wow it really is interesting hearing so many different ways to do something.

Gloria That is an interesting take on the subject

Corie that happens all the time.

Diane thanks!

Meyer full disclosure, does that mean the all parties understand?

Francis less liability if one avoids DA all together

Christy there is no way you can give your best when divided

Dual agency is allowed here but it always must e disclosed. We always look at the situation very carefully if we get involved in this and make sure we are being true to both parties in the best way we can.

MAR

2008

Bob & Carolyn it is a tight rope walk! Thanks for the comment.

In NY it is Dual Agency whenever the Brokerage house has the Buyer and seller. Since I primarily am a Buyer Agent, anything "in House" I do as a designated agent. Dual Agency is fully explained to my Client upon our first contact, then reminded again when the situation arises. Also any listings I may bring to the Brokerage, through my sphere/contact list, is given to the listing coordinator on our Team, so I can not have this potential conflict. This helps to alleviate any problems and appearance of impropriety

Ray - sounds like a clean solution! Thanks for the comment

I have read with interest all the comments to Nanette's well-written post. As a teacher of ABR classes and an expert witness for attorneys in dual agency cases, I agree completely, that consensual disclosed dual agency is not well understood by brokers and agents, therefore, it is not explained well to the public and therefore not understood by the public. 3 of the 6 fiduciary duties are limited. When explaining that to consumers examples should always be used to show how disclosure and confidentiality are in conflict, to show how loyalty is eliminated. I invite you to read an article I posted on RealTown News called "The Truth About Dual Agency." Or, if you e-mail me I'll e'mail you back with a copy attached. I agree with one of the responders that when it is explained well to consumers, they appreciate the honesty and 9 times out of 10 will agree to stay with the dual agent. As for the agent, it is indeed difficult to walk the thin line. One thing I noticed in the repartee is that no one addressed dual agency between buyer and buyer, i.e, when two agents in the same company are working for two different buyers who both want to make an offer on the same property. Since the agency is created with the broker of record, both agents represent both buyers and that means not giving the full fiduciary duties to eather buyer. The buyers need an explanation of that at the time of the buyer consultation, in the buyer representation contract, and at the time that circumstance arises.

MAR

2008

Joseph thank you for your comment, insight and wisdom. You bring good in goog points. You put in better than I did, in simpler terms that make it easier to understand. Hopefully now I can take that and better explain it to my clients as well.

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