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Has DUAL Agency Run It's Course?

real estate Some states do not allow dual agency. Others do. Is the trend towards doing away with this type of representation? In fact is dual agency a form of representation or does it really mean that neither the seller nor the buyer are being represented?

When practicing dual agency how does a REALTOR® deal with offers and counter offers. Do they offer advice to both parties, to one, or to neither? What about conditions, other than price, that may require negotiation such as the settlement date, home inspection repairs, pre or post occupancy, and any number of other things that can be a bone of contention between parties.

What happens when a buyer offers a very low price and the seller suggests a very low counter and you believe the counter should be higher. Do you consel them to rethink that counter? That would be difficult if you were also "representing" the buyer. Shouldn't you be looking out for the buyers's best interest? Therein lies the dilemma. The seller's and buyer's best interest are often in direct conflict.

Dual agency can be explained in a cursory way or in depth. In fact, in Virginia it is required to provide the sellers and buyers with the written explanation. How well they understand the consequences is another thing. Even when sellers and buyers agree to dual agency do they really understand the potential pitfalls? As REALTORS®
we have seen the variety of problems that can develop, many more than most people would realize unless they have bought and sold numerous properties.

This weekend I took a new listing and the seller said, while we were filling out the agreement, that she was saying no to dual agency as a result of my advice to her. Earlier this evening I read a post by Nannette Saunders, The Full Monty of Dual Agency and it, along with the discussion I had with my client, really made me wonder if Disclosed Dual Agency has a place in real estate.

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If you or someone you know is thinking of buying or selling property at or near Lake Anna, please contact Kathleen "Kate " Elim. She lives at Lake Anna, knows Lake Anna, loves Lake Anna, and specializes in Lake Anna area real estate. Reach Kate at 540-226-1964 or by e-mail at lakeanna.kate@gmail.com. Be sure to check Kate's blog at http://lakeannaandbeyond.com/ or http://lakeannacountry.com/

Posted by Kathleen "Kate" Elim LAKE ANNA, VA Real Estate on 03/03/2008 09:12 PM

Comments (26)

realtor, lake anna, virginia

Originally posted at: Lake Anna Country: Has DUAL Agency Run It's Course?

This post has been included in Virginia Information Spotsylvania County, VA Information Spotsylvania, VA Information

26 Comments on Has DUAL Agency Run It's Course?

MAR

2008

Dual Agency, or what we call Intermediary in Texas, is easy if you know how to educate your clients. When I list a house, I talk with the sellers at great length about the process and what could happen and how they should respond in this situation and that situation in case they come up. I let them know up front that if I bring the buyer, the buyer will receive the same information I gave them. I educate the buyer the exact same way, so if they decide they want to write an offer on one of my listings, they know how the process works, and they also know why the sellers are priced where they are because I show them the same comps. It's very simple, it's easy, and it cuts out a middle agent not returning calls in a timely fashion.

I find it hard to do dual agency though it is accepted. My broker does it well actually everyone in my office does it but it reminds me of a man and a woman having marital issues and well they decide to get a divorce now the wife finds an attorney and the husband wants to save a dime and go with the same attorney. Who is the attorney really representing here? I prefer to have another agent bring the buyer I mean yes it does cut out a lot of the hassle that Donna mentioned above to just handle it all but are we really being fair to our clients if it is our listing? I just don't think so.

In our state Kathleen, the Intermediary status is explained in the Information about Brokerage Services.

Kathleen -

I felt as you do, that if everyone is treated honestly, it can work out well. But, I've had 2 recent experiences where I could see how one party or the other was favored and it left a bad taste in my mouth about the whole situation.

In one case, the seller had been negotiating with a buyer after the home had been on the MLS for over 6 months. They had finally arrived at a sale price that the buyer was ready to accept ($50K under list.) Another buyer came to the listing agent's open house and expressed interest. The listing agent told the buyer that there was another offer working, so he would have to make his best offer right away. The 2nd buyer ended up paying $8K over list.

The listing agent took good care of her seller, but I have to wonder if the 2nd buyer thought he was being represented!

MAR

2008

As you know in Virginia we are a "Buyer Beware" state, I find it hard to believe an agent can fully represent both sides....just my opinion.

Your Friend in Charlottesville Virginia!

I don't like to be placed in the position of dual agency. I'm just uncomfortable with it. I have my clients read a little about it, and explain it to the best of my ability and let them decide if it is acceptable to them. I am always honest with everyone, but still find it to be a sticky situation.

Kathleen, I know of no other profession where one person represents two opposing parties at the same time. I don't do it. If we're talking about two agents with the same firm, one with buyer and one with seller, that can work, but I don't do it - even though it is legal in Virginia. Your post does a superb job of laying out just what the issues could be.

I hope they do away with dual agency. Usually I hear that agents doing this treat both parties as customers, not clients. I am always amazed by this as how can you be protecting any one party in this transaction. Our broker will step in if we get into this situation. To me it's simple, do what is best for your client.

Kathleen- I do not believe that you can fairly advocate for both sides simultaneously.

Kathleen,

We cannot do dual agency anymore in Tennessee but we really practice it when we work both sides. I think in a short time working both sides will not be allowed.

Kathleen - It's a tightrope act. I think as long as the agent follows "The Code" they'll be fine, but it sure muddies the waters.

MAR

2008

What a well written post. I just don't see how Dual Agency works well. It's like the agent just steps out of the process and waits for the outcome. I like designated rep, personally.

Kathleen - I can only answer for Virginia, but I believe it is fraught with possibilities for a lawsuit, because agents (myself included) are not qualified to cover all the legal issues - I do not use it or recommend it to my sellers, Karen

The best advice I've ever received was, "If you want to stay out of trouble, stay out of dual agency." You can not serve two masters. And when operating as a true dual agent in VA, you become a paper pusher, unable to advise anyone on price. Is that what they hired you for?

I don't believe you can be a dual agent and represent both clients as they should be represented.

MAR

2008

I am guessing that at some point we won't be allowed to have dual agency. I think you are right when you said that neither party is represented in dual agency. Our company does practice dual agency and do most companies in our area. There is full disclosure at the listing and again at each dual agency showing and again at the time of the offer. I do feel that in these situations that we are acting more as facilitators. Thanks for the post... makes us think.

In Arizona it is called Limited Representation. It is still allowed here but I don't see too much of it. In ten years I think I have had maybe five transactions where I had both the seller and the buyer. I am not a fan, it is very difficult to wear two hats in a transaction. I am working one now and fortunately both parties are very cooperative and it is working out. There are agents out there though that only want to do both sides and go out of their way to see that happen. Don't answer phone calls from other agents, fail to present offers or acknowledge them, or speak for their clients, don't put any information or pictures on the MLS so no one calls about it. They just depend on sign calls or internet hits and sell the properties themselves. As I've stated before, there are brokers here that penalize their agents if they sell out of house. Certainly not ethical, and perhaps in some cases illegal, but they get away with it. Here especially because it is such a small community no one wants to rock the boat.

Kathleen, you are correct in that neither side can be fully represented in a dual agency situation. Sorry to say, but one of the primary reasons for dual agency is for one person to get the commission from both sides. Old habits die hard. I think a simple question gets to the core of the issue. Is it in the client's best interest to be fully represented by a Realtor or is it in the client's best interest to not be fully represented and to allow one person to collect the commission for both sides? It's funny how many controversial issues come down to money so often.

Great post, Kathleen! I was told early on that "no one wins with dual agency - including the agent". I will not participate in dual agenycy and once I explain this to me sellers, they totally agree and respett me for my decision.

MAR

2008

Donna...We can do a great job educating our clients. However, I believe it is impossible to fully represent two opposing sides in a transaction.

Linda...I agree with you and love your analogy.

Gary...We must disclose the types of representation so that clients may choose which they prefer. I'm not sure they always understand all the possible difficulties that may arise and how important it might be to have someone representing you alone.

Vicki...Actually I am questioning if there is a place for dual agency. I do not think it is the best thing for our clients. I agree with you.

Charles...I find it hard to believe also. I cannot figure out how it possibly could.

Lissa...Usually it can be avoided by going with designated representation, which is what we call it in Virginia when one agent in a brokerage represents the buyer and another agent in the same brokerage represents the seller. That works much better.

Pat... Although dual agency is legal in Virginia I am very reluctant to do it. When I've been a designated representative in my office it has worked out very well. We work very hard to take care of our individual clients and never disclose confidential information to one another. We also work very well to make sure everything goes as smoothly as possible.

Karen...I agree. It is the best relationship for the buyer and the seller.

Dana...You are correct. It is impossible to advocate for both at the same time.

Mike...How can you work both sides when dual agency is not allowed?

Tom...It not only muddies the water but it also conflicts with the Code in that we cannot fully represent our client when we are representing opposing sides.

Natalie...Designated representation is the answer and enables us to do the best job for our client.

Karen...That is exactly right. There are enough potential pitfalls without creating more.

Chris Ann...Yes, just because it is legal doesn't mean it is the right thing. We should have so much more to offer than just pushing paper.

Bonnie...It's simple. You cannot.

Katherine...It isn't worth giving up our role as their agent to become a facilitator. You are right and it is not what most of us got into real estate to be.

Sandra...Perhaps you are in a large market and agents can get away with things like that but thank goodness it doesn't happen where I am. If you speak to the brokers do you receive any satisfaction? I should hope so.

George...Of course it is hard to give up the other side of the commission. But I agree with you that it is necessary. When we do designated representation we are helping another agent. That agent will often think of us when they need a designated rep. That's the best solution for all.

Tina...Respect will support us in the business a lot longer than the other side of the commission. It is well worth earning.

Thanks to all of you that have added comments to this post. It has been interesting and comforting to see that most of you believe that dual agency is not the way to go. I appreciate the feedback.

Thanks,

Kathleen

JUL

2008

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

Christina

OCT

In Kansas, dual agency is not allowed (illegal). In Missouri, dual agency is legally allowed but many brokers do not allow it. We do have Transaction Broker which is very similar: the realtor is obligated to the transaction but not to either party. Some agents like to be on both sides of the deal; there are even a few who go out of their way to take both sides so that they can get the whole commission.

I know two agents who both lost sleep last month because they inadvertently found themselves converting to Transaction Broker. In both cases, they thought it would be okay because these were all repeat clients and the transaction looked like it would be straight forward. However, in each case, something unexpected arose and each agent expressed to me that they had serious misgivings about proceeding. Deep down, they both felt more loyalty to the sellers because of their previous relationship and yet had knowledge that they could not share with the buyers. One agent has said that she will never do that again. The other is undecided.

OCT

Hi Maria...I really appreciate your comment. No matter how many times some agents are told that dual agency is not recommended, they insist they can handle them.

Your example shows exactly why agents should avoid putting themselves and their clients in that position. By using a designated representative we are able to be reimbursed for our efforts and yet not short change the seller and/or the buyer.

Kate

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