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Could Dual Agency be outlawed across the nation in the future?

By
Industry Observer
 
Now before anyone gets excited about leaving a comment, (Please Read) this post!
Otherwise I may leave a reply to your comment knowing you didn't read it.
 
Dual Agency:
 
Legal in all 50 states. Dual agency occurs when a real estate firm representing the buyer shows the buyer properties where the firm has also agreed to be an agent of the seller. A real estate firm can be an agent of both the buyer and seller in a transaction with the knowledge and written consent of the buyer and seller. 


A real estate firm acting as a dual agent must carefully explain to both buyer and seller that they are representing both parties and their fiduciary duties are different if they represent both parties. 


When representing both seller and buyer, the agent must have the express permission of the respective party in order to disclose confidential information to the other party, such as price, terms and motivation to sell or buy. A Dual Agent owes both the buyer and seller equal representation, and must:

  • Treat both parties fairly.
  • Not knowingly represent one party to the detriment of the other.
  • Disclose facts each party needs to make an informed decision.
  • To assist, as the Buyer and Seller are empowered to negotiate on their own behalf.
  • Assure confidentiality on each party's price, terms and personal information.
 
 
Now there are going to some comments stating we have been doing Dual Agency transaction for many years and never had a problem.
That is great, no problems yet!
It only takes once... twice and then the reputation of your firm is under fire.
 
The number one reason that brokers & agents practice Dual Agency is ... GREED = $$$
There have been so many classes, articles, blogs, and lawsuits on Dual Agency so think very hard about this question.
 
Can you represent both parties, the Buyers & Sellers equally,
100% equally to both parties?
 
My answer & opinion to this question is (NO)!
 
Ethically there are really only two ways to protect yourself practicing Dual Agency, and still there is no guarantee.
 
1.   If you work on a team and have associates that can either represent the buyers side or sellers side on a transaction.
 
2.   Or if your doing a Dual Agency transaction, sit down together with the seller & buyer and let the two parties agree on a Dual Agency and let the two parties work together agreeing on the transaction.
 
We live in the 21st Century and times are changing, clients are becoming more apt to lawsuits and litigation. 
This not be the last time you will read about Dual Agency and I seriously believe in the future that Dual Agency will start being outlawed across the nation.
There are some brokerages that don't practice Dual Agency.
 
Don't let GREED get in the way of a lawsuit!
 

 

Posted by

Robert "Vegas Bob" Swetz  

Direct: 408 410 4171

"Have a Wonderful Day"

VIDEOS BY VEGAS BOB

 

Comments (25)

Robert Vegas Bob Swetz
Las Vegas, NV

Hello Dan ... very well said and the Realty One Group also frowns upon Dual Agency, but there are agents that do it 

Dec 11, 2015 06:15 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

It won't be "outlawed" as that would imply criminal in nature.  It should be viewed as UNETHICAL, however.  When there is a motivation for any agent to double dip, there will be those that will be motivated by that, and not their fiducairy duties.  #1 E&O claim is dual agency complaints.

Dec 11, 2015 06:51 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Carla ... very well said my friend, I totally agree and as time passes by in the Real Estate Industry we are going to see some huge changes with the practice of ... Dual Agency 

Dec 11, 2015 06:55 AM
Sandy Padula & Norm Padula, JD, GRI
HomeSmart Realty West & Florida Realty Investments - , CA
Presence, Persistence & Perseverance

Robert (Alaska Bob) Swetz I see no problem with dual agency. In fact, in Florida, it is assumed, and if acting as a single agent, then the agency disclosure for single agency is required. 

Dec 11, 2015 07:12 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Norm ... thanks for stopping by and this is very unusual and I have never heard of this coming from Florida brokers or agents 

Maybe brokers & agents figure it's cheaper to pay a fine if their sued than to collect commission on both ends?

Dec 11, 2015 07:18 AM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

We can never represent both sides ....as long as the buyer understands .....I sell a lot of my own properties ....but I make sure they sign that they are unrepresented ....

Have a great night!

Dec 11, 2015 08:05 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Rob ... thanks for stopping by my friend and you are right 

Dec 11, 2015 09:07 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

I agree with Carla Muss-Jacobs, Principal Broker/Owner .  In my market I feel many sellers do not understand it and they end up getting screwed by it ... read GREED.

Dec 11, 2015 10:59 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Alaska Bob

In Florida real estate professional are transactional agents . . .  and can be involved with both parties in a real estate transaction.

Good luck and success.

Lou Ludwig

Dec 11, 2015 12:07 PM
Lynn B. Friedman CRS Atlanta, GA 404-617-6375
Atlanta Homes ODAT Realty - Love our Great City - Love our Clients! Buckhead - Midtown - Westside - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

I am in agreement with comment #10 Rob Thomas - One side is the Client and the other is the Customer - with full written disclosure and full explanation to everyone involved.

As Bob states:

  • Treat both parties fairly.
  • Not knowingly represent one party to the detriment of the other.
  • Disclose facts each party needs to make an informed decision.
  • To assist, as the Buyer and Seller are empowered to negotiate on their own behalf.
  • Assure confidentiality on each party's price, terms and personal information.

Not always about "double-dipping" - doing both sides may just make the deal possible.

Have a successful day -
Lynn

Dec 11, 2015 12:43 PM
Robert Vegas Bob Swetz

Hello Lynn ... 


I agree with Carla on her comment and feel in my opinion that it impossible to represent both the Seller & Buyer in a transaction.


How can a broker/agent disclose equally 100% to both parties in this type of transaction?


 

Dec 12, 2015 05:32 AM
Carla Muss-Jacobs, RETIRED

An agent CAN NOT provide a comp, CMA for the buyer under the dual agency model.


They CAN NOT tell the Buyer that they ran comps of the market, and the price they listed the property at is $25,000 HIGHER than the current market value.  


How can a BUYER be protected in this scenario!?!?!?!?!?  If you're the listing agent and you OVERPRICED the listing -- oh, yeah, that never happens {rolling eyes} -- how is the BUYER PROTECTED in that scenario?  


Oh, right!  They can not be!   So keep dreaming Lynn B. Friedman that a DUAL AGENT gives a crap about how much the buyer is going to pay.  You can talk about it all day long, but unless the BUYER is protected, and one aspect in the list price, there is an inherent conflict of interest!  Period.  End of story.  A agent can do all the bullet points . . . and the BUYER STILL GETS SCREWED!!!

Dec 12, 2015 03:23 AM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Robert.  Yes, many call it by different names, but it's still dual agency.  Though, some states have some better rules than others.

Dec 11, 2015 08:02 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Robert (Alaska Bob) Swetz Actually, you misstated the law as we have it here in California. You are practicing Dual Agency only when you sell your listing to a party that you have previously shown properties THAT YOU DON'T HAVE THE LISTING. If you ONLY show  your own listings then you are merely representing them in a transaction, not as an agent. You a have a duty to your listing client to show that property to everybody, including someone that walks into your office. It is NOT about greed, but rather FIDUCIARY DUTY.

Now, in my particular niche (business opportunities) we normally represent both sides in the transaction for control, not greed. When another agent gets involved it is a foregone conclusion that the transaction will fail to close escrow.

Bill Roberts

Dec 11, 2015 11:49 PM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

You are not a "dual agent" for showing a property to an unreprested (or represented) buyer.

The FIDUGIARY DUTY is to the SELLER/OWNER to show their property.  There is NO FIDUCIARY DUTY to an UNREPRESENTED BUYER!

"Represenation" of both buyer / seller is an oxymoron.  A lawyer can NOT represent the plaintiff and the defendant in a legal action.  A real estate agent can NOT represent the buyer and the seller in a real estate transaction.  But go ahead and think you can.  True representation of a client comes with conflicts of interest.  A dual agent has conflicts of interest inherent, built in.  One misstep and it's a breach.  

I've found that "old school" agents are always saying "it's not about greed" and are the first to spout "representation" which they NEVER can provide either the buyer and/or the seller.  They represent no one.  Legal impossible to represent TWO CLIENTS in the same transaction and be BOTH of their fiduciaries.  

Dec 12, 2015 03:30 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Ronald ... thanks for stopping by and you make a great point! So do you think you can fairly represent both parties in a Dual Agency transaction?

Dec 12, 2015 04:39 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Bill ... thanks for stopping by with your comment.

The main reason for my post is to clue certain individuals on the liabilities of doing a Dual Agent transaction in the 21st Century.

Sure you may have done many in your years in the real estate industry, but times are changing and more and more transactions are ending up in court because of agents doing Dual Agent transactions.

I just finished up the last of my CE classes for the next 2 years as a Realtor, and several teachers from the Realty One Group in Las Vegas are frowning and or staying away from Dual Agent transactions because of lawsuits 

So back one of the questions in my post Bill ...

CAN YOU REPRESENT BOTH PARTIES - THE BUYER & SELLER IN A REAL ESTATE TRANSACTION?

100% Equally?

Dec 12, 2015 04:48 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Carla ... thanks for stopping by again my friend and I may have messed up in my wording in this post 

The main reason for my post was to express the word GREED in these types of transactions and I seriously think it's (almost) impossible to represent both the Seller & Buyer this type of transaction 

Dec 12, 2015 05:02 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I can definitely see conflicts of interest rising up into the ether of the business.

Dec 12, 2015 03:03 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Robert (Alaska Bob) Swetz What I do is "real estate" so I have to answer your question in the affirmative. The important issue as I see it is to get each what they want. It is not a matter of telling one side what the other side is thinking (unless they say that you can, and often times they do), but rather getting the two sides together for a meeting of the minds. Too often in an adversarial environment that consensus is impossible.

I don't make decisions for either side. That is entirely up to them. But I do shepherd the deal. Without that guiding hand they will surely go off the tracks.

In my niche it is very different from most real estate transactions because it is necessary for the two sides to have direct contact. Just try that in a traditional real estate deal,  especially one where there are two agents involved.

Bill Roberts

Dec 13, 2015 01:19 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Laura ... thanks for stopping by my friend and there are some gray areas 

Dec 13, 2015 03:02 AM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

I follow the real estate laws of California and Hawaii. I am a licensed broker in each.  Each of the two states has a different legal slant on what dual agency is. Dual agency is legal in both states and is practiced very successfully. Many clients want it and I do not turn them away.   

Dec 31, 2015 06:16 AM