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What do you think of dual agency? Feedback please ! !

Scales of justice I don't like dual agency. I just plain down don't like it. When I first became re-licensed, I had to get familiar with all the new rules, one of which included dual-agency. It seemed from the start to involve so many conflicts of interest, it was hard to believe it was even an issue. However, I became familiar with the required disclosures and hoped it wouldn't affect me too much.

Unfortunately, a day soon came when that would all change. I was contacted by an unrepresented buyer on a listing I had. Being back in the business a short time, I was hungry to make as much as I possibly could. These folks were ready to go, prequalified and in love with the property. It seemed like a no-brainer. As I wrote the earnest money for them (explaining that I represented both buyer and seller), I became acutely aware of what I hadn't liked about dual agency. It's IMPOSSIBLE to represent both clients equally. Truly it is. It felt like a divorce attorney trying to represent the interests of both husband and wife. They had questions about the property and the seller, the seller had questions about their intentions, their funding....all of a sudden I was in an area I knew could lead to trouble. I treaded the water VERY carefully that day.

Fortunately, this deal fell through and I easily parted ways with the would be buyers. They went in a different direction and there was no harm done. However, that uncomfortable feeling stayed with me for awhile. I will not represent both sides, EVER. I WILL refer parties to another agent for representation before walking that walk again.

An ethics class with a highly respected broker later confirmed what I had already learned. In his words, "Dual Agency is a BAD idea, don't do it". Seeing how he reviews and rules on most of the ethic complaints in our area, I have chosen (wisely) to follow his advice.

What do you think of dual agency? When is it a good idea, if ever?

Posted by Bend Oregon REALTOR ® Kelli Fronabarger on 02/18/2007 04:44 PM

Comments (44)

dual agency, bend, bend oregon, oregon real estate

44 Comments on What do you think of dual agency? Feedback please ! !

FEB

2007

Kelli,

This is an excellent question and I am going to flag it, if that will help. The rules and laws that apply to Dual Agency, though, are different in every state.

I have not had a problem with it, if I have the listing and a buyer comes in "off the street", we inform them we work for the seller, have them sign a disclosure that we have informed them of that, and then just treat them honestly. If there's something bad about the property I am listing and they ask a question, I simply tell them to do their homework. Usually there's a disclosure with the property anyway.

After that, it's really their choice whether or not they want an agent to represent them.

I will say, it's a lot easier when there are two agents, if each is doing his/her job, but then of course, the pay is less also:)

Kelli, that didn't take you very long! Nice job!

Thank you Karen, good point about it being client's choice-

Thank you Mark. Starting to get the hang of things.

Sometimes it works out well, Lately I've tried giving the buyer the Buyer Agent fee and letting him hire an agent with it or keep it and represent himself. Works much better for everyone if you have the right people and situation.

I don't do dual agency for the same reason. I can refer the buyer to an agent in my office and have a referral fee from it and not have the liability. I like to be able to work for my client and in dual agency you just can't do it.

In a case like Karen is describing, I wouldn't make any more money by saying that I am a seller sub-agent than if they brought their own representation because my firm discourages us from co-oping with seller sub-agents working with the buyer.

Kelli, Fortunately in Florida Dual Agency is illegal. I never liked it and always though it was an impossible relationship to be in. Avoid it and your life will be less stressful.

Disclosed limited agency happen and disclosures are required by the state. Good post Kelli! I too have been in a position of dual agency and with disclosure to all parties of agency and who represents who the client is left to choose. At all times be very thorough with disclosure ~ easy with all the forms...

PS congrats on the star :~)

I also avoid it like the plague. There is a section of our Exclusive ListingAgreement that states I may become the agent for a potential buyer. I always tell the seller that if I was in that situation I would refer the buyer to another agent in my office to keep things seperate. Your absolutely right that there is no fair way to represent both parties. Thank you for the post!

Hi Kelli,

Hmmmmm, that did not take long at all, congratulations on your first featured post. Dual agency is very difficult and I don't recommend it for most agents. I have handled a fair share of them myself successfully, one was a nightmare, but it did close successfully. It requires a special touch and an understanding between all parties, which is not difficult to reach, but is difficult to sustain. Like I said, most agents shouldn't.

Here in NH it is legal to practice Disclosed Dual Agency. Another name for Disclosed Dual Agency is "DEFENDANT".

You really need to walk a fine line. It is very important to make the buyer very aware of your role as an agent in this type of agency relationship.

My wife wrote a post on this here a while ago.

I have been asked to sit on a task force for our state association to implement designated agency and transactional brokerage. I would love to get rid of Dual Agency.

I think consumers are for the most NOT ok with it. We have had many law suites here in Texas, so now we appoint intermediaries. But of course most agents want it. I just don't think one can do a good job for anybody when they represent both sides.

Interesting you should post this as it has been on my mind quite a bit. Before I go on, I always ask my sellers up front if they do or do NOT want me to represent any buyers. Then it's a no-brainer. They usually do NOT want me to represent any buyers. And that is fine with me.

That said, I have clients that do not yet have their house on the market. They have a newborn and would love for me to find a buyer without having to put their house on MLS and go through all the open houses, etc. I do have a client that is interested in seeing their home and we have an appointment to see it next weekend. If my buyer is interested, then my sellers would be happy to sell it as long as the price and terms work for them. I need to have a long talk with my sellers and get everything in writing beforehand -- which is going to be difficult given their schedules. I guess every situation is unique. These people would be happy to just sell and move on with their lives with as little intrusion as possible.

Dual agency is tough. One time, I was a dual agent in two seperate contracts on the same house. That was interesting.

I think there is a lot of confusion about Dual Agency.

In NC Dual Agency automatically exists when the property is listed and sold by the same Brokerage Firm.

When this is the situation, and two agents from the same company are handling the 2 sides, a Disclosure form must be filled out if permitted by all parties.

When we take a listing we have a Dual Agency agreement signed permitting agents from our company to show the property.

If one agent is working both sides of a transaction that is Dual agency of another stripe.

In this situation, some agents use a "Designated Agent" to represent one side in the transaction, it could be for the purposes of negotiating an offer, of for the entire transaction.

Designated Agency is still Dual Agency because the Broker has both Listing side and Selling side

It depends on the parties to the transaction giving written permission, and the agent's comfortablity level of working the both sides. Neutrality must be maintained at all times. Not easy!

I LOVE having control of all sides of the transaction. Being fair and balanced, as O'Riley says, is actually an easy task for me. Our office offers either single agency or transaction brokerage to our buyers and sellers. Our state in its wisdom says we can sell our office's listings (thank God for that since we are hired to sell the propertiy).

As you probably know, most of JQpublic has no clue what we are talking about when we talk about agency. I have a thorough understanding, went through ABR training, have worked in four states and feel that I can articulate most things clearly, but I am astounded every day at the lack of understanding of "agency". Most everyone signs the forms, pushs them to the back of the folder and never look at them again.

Yes, we need to be careful, but we as professionals can truly represent both sides of a transaction fairly. Good luck with this. Christine, Pensacola, Fl.

Never have practiced dual agency. Don't practice dual agency now. Will never practice dual agency.

For me, I represent home buyers. When, in the past I have listed properties for owner/sellers if a buyer wanted to buy the home, they either got themselves an agent, or proceeded as a customer.

Not all buyers WANT or NEED an agent. With an honest and ethical listing agent, it can be done. The buyer is a fool, but so be it.

I practiced law in California for 28 years -- and I think anyone who determines they are fine with dual agency should look at the number of lawsuits/settlements as a result of attempting to practice dual agency. First of all, most agents don't fully inform the parties and there is no true "disclosure." Second, the actual and potential conflicts of interest are not discussed - especially the limited services to both buyer and seller -- and the inabilility to be an advocate for either party. Third most agents do not let the consumer know they don't have to agree to dual agency. The best course of action, is to refer the buyer to another agent in another firm. It is still dual agency when another agent in the same firm "represents" the other party. Designated agency is still dual agency -- don't think because you are in a designated agency state the problem is solved. Dislcosures, consent and confidentiality must be mainted. See my former blog on dual agency and proceed with caution.

Full disclosure about the limitations and potential conflict of interest of DDA is a must. I've been a DDA many times...do I enjoy it- No... BUT I can do it successfully because I know what must be disclosed and I get full informed consent before I become a DDA. It can be done but if you don't know what you're doing...don't do it!

If I double dip, I like to try and be a sub-agent of the seller. Makes things alot easier........

Dual Agency benefits no one but a greedy agent. I wish they would ban it in Georgia also.

Didn't like it when we had it in New Mexico and glad we don't have it here in Florida

I agree with the no dual agency votes. I don't see how you can represent either client effectively.

As long as you Disclose, what is the problem. I don't think most sellers and buyers care as long as they are getting the house they want at the price they want to pay or sell for........

http://www.MarylandHOMESTeam.com/

I don't like being a dual agent. I don't consider it in the best interest of either the Seller or the buyer. In the first place, I contracted to sell the clients home which this accomplishes but at the expense to one or both parties. I have been asked to represent the buyer on several occasions and each time I have asked one of the newer agents in the office to represent the buyer. I get a referral fee from the agent, they get the experience and the buyer is well represented.

In California if the property is sold and bought through the same broker, then it automatically is a dual agency. However, there are two agents involved in the transaction, one for the seller, one for the buyer so both sides are well represented.

Still think about it before doing it. I always ask "can I be fair and impartial for both side? The answer is probably "no" - then there is a conflict. Added stress - I can do with out it!

I don't like dual agency, won't do it if at all possible. And my sellers love why, when I explain that I'd rather refer buyers out and get a referral fee for my marketing effort, than walk that very fine line of a conflict of interest. Several posts out here if you search, some very heated discussions. =) I personally hope that NC outlaws it one day. Greed is too strong for many, many agents.

Our brokerage simply doesn't allow dual agency. End of discussion. Even if it didn't I find it too full of land mines...

Interesting post reading this as a mortgage banker --- thanks for the post - great perspective to hear this from realtors........ LP

I have done dual agency many time effectively and think it can be done well. Everyone knows what hat you wear andif everyone is aware of it and in agreement , WHY NOT!.

Patricia Aulson/SEACOAST REALTOR/NH & ME

There are different levels of Dual agency in our state. If you have a listing and another agent within your company has the buyer you essentially have a dual agency situation often referred to as split agency. One of the benefits of having a team with independent buyers agents who are also licensed agents is that the buyer agent can represent the buyer while I am representing the seller. This works well because the buyers agents do NOT have access to the confidential seller information.

Kelli,

I am just up the road from you in Portland.I think that Dual Agency is partially a mind set. I have always had an easy time with it for the following reasons. I first began selling on the Coast and often times found myself Selling my own listings. In fact my first year I did 65 transactions where 68% were double sided. Because a great deal of the folks buying were from out of state ( most Californians ) and the fact that at that time we all represented the Sellers with a strong buyer beware attitude. I took to educating the buyers in advance of showing them any property. I would tell them at the first meeting straight up how it would work. And that during the negotiations I would not be able to coach them at all.

So I think it is definately a mind set. I just completed a transaction yesterday. My Listing My Sale. I let the property stand on its own. Both parties have already been advised in advance of any problems that they may encounter. In any sense you become a faciltator. In over 18 years I have never encountered a single problem as it relates to Dual Agency.

Don't be afraid of putting your self in a position of recieving a pay raise. Talk to your peers about it better yet invite them to Active Rain and include them in this Post.

Good Luck

When I represent someone, I want to put in 100% effort into it.

If I were to try and represent both a buyer and seller, then they each only get 50% of my representation becuase I am limited to doing no harm which means that I have to limit my strategic counsel on all the negotiation processes which is part of why I am paid...sometimes a big part! The fact that I could "earn" both sides of the transaction means that instead of putting my clients interests first, it looks like I have put my own interests ahead of my clients...I think that looks ugly and greedy to do so.

I realize that there may be some special circumstances wheret an agent might act as dual agent, but it does not feel right to me and I can't see myself as ever doing it. I have heard other agents (on rare occassion) talking about it, and when I do, it always sounds to me like the only interest they were looking after was their own, as in: "Hey, I got both sides of the deal on that one!" See...ugly and greedy.

Kelli,

I have never had a problem with dual agency. In Idaho it is called "Limited Dual Agency". When I explain to buyer and seller that I am limited as to what I can disclose to either party and that I cannot disclose personal information, ie: what a buyer will pay or what a seller will take, parties are fine with it.

I also use the analogy that if you and I went to an attorney to create a partnership between you and I the attorney would ask "How do I represent". If we were to say both of us then the attorney would simply say O.K. but I need you to give me permission to do so and I (the attorney) cannot disclose any personal information about either of us to the other.

Using these explanations I have never had a issue with it and never had a legal problem related to dual agency. I hope this helps.

Good for you Kelli! Consumers may choose to be a customer and when they are customers they know to be wary of salespeople. But when a consumer makes an informed choice to enter in an agency relationship, they have the right to the undivided loyalty of the agency (and every salesperson in the agency) which is representing them.
Beware of the Doubles!

Double talk
Double-cross
Double dipping
Double dealing
and the Double Agent

FEB

2007

When your in a dual agency situation you really just become a mediator at that point and don't represent either party. You have to walk a fine line and treat each party as you do the other. Pass information along and let the party decide what the next move is then pass that along to the other side.

But at the very outset you have to let both parties know that this how things will be. If you have an agreement already in place with the sellers side. You will have to get their permission to do this with the understanding you no longer represent them. If the seller doesn't want to release your representation then do the right thing by referring the buying side to another agent. Preferably in the same office.

It's kind of like having a listing where your clients are selling because they are getting a divorcee. You can't favor either party. You have to treat them both alike and more times than not you have to present things to them separately because they often are separated and aren't speaking. So you do your job twice.

JW- Just in case...I'm thinking Purple Cow.

It definitely takes a lot of tact and care when handling a dual agency situation. I've done them before, and don't necessarily enjoy them. Whenever in a dual agency situation my role is more to explain all the options and ramifications of every possible action and tactic, and then let the client decide on what course to take.

Solomon Romano
The Royal Team
Re/Max OTB Estates
http://www.theroyalteam.com

Ditto to the "Doubles"... :)

Who really needs the stress?

TLW...ROAR!

I think it takes a very level headed agent to handle a dual agency contract successfully but I do think it can be done.

MAR

2007

Any Realtor who says they can be impartial to both, Seller and Buyer, in Dual Agency is fooling only themself.

God's Word says, "There is a way that seems right to a man, but it leads to destruction." Enough said.

Any Realtor who says they can be impartial to both, Seller and Buyer, in Dual Agency is fooling only themself.

God's Word says, "There is a way that seems right to a man, but it leads to destruction." Enough said.

I never imagined that this article would stir up SO many DIFFERENT emotions. It is interesting to me to read all of the different viewpoints and I want to sincerely thank EVERYONE who took the time to comment here. Thank you for sharing your thoughts : )

Lots of interesting comments here... I seem (oddly) to be in agreement with the minority. I happen to really enjoy acting as a dual agent!

Although some transactions are easier than others, as a rule, I find them to be significantly less hassle and more efficient. I often find myself relieved that I am able to avoid dealing with a potentially unpleasant, lazy, ineffective realtor on the other side. I know that if I'm working both sides of the file it will be complete, accurate, on time, and the transaction will progress with minimum drama.

On the less selfish side of things, I have yet to have a client from a dual agency transaction that has been unhappy with the level of service or representation they received. Being in California, we are fortunate to have some great standard forms that explain agency relationships, and the differences in each. I always speak with my sellers at the listing appointment and ask them to decide right then if they would prefer to avoid dual agency. I give them full disclosure to the potential drawbacks before they sign the form. Same goes with the buyers that come to me on one of my listings.

It does often feel that your new position is as a mediator, rather than a representative and advisor. When both parties are willing to accept your assistance under that term, it can be a pleasant, well-orchestrated event. It certainly does take tact, and a strong ability to edit what comes out of your mouth, but if those are characteristics that an agent possesses, I am of the opinion that it is entirely permissible with educated parties.

MAR

2007

The very first blog I wrote on ActiveRain was on this very same topic. I am glad to see it championed by others as well. Why I Don't Practice Dual Agency

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