Dual Agency Should Be Banned in All States

By
Real Estate Agent with RE/MAX Executive Realty 91362
http://actvra.in/54gG

 

Dual Agency Offers No Benefits to Buyers and Sellers

How Does Dual Agency Work

For those of you reading who are not real estate agents, dual agency is when one real estate agent represents both the buyer and the seller in the sale of a property.

In some states, dual agency can be the two agents from the same company each representing the buyer and seller. I will get that situation in a minute.

Frankly, dual agency is the dumbest thing that was ever invented for the real estate industry. Why might you be asking yourself? Simple -  neither the buyer or the seller has proper representation. Both buyers and sellers often ask what is dual agency and how does it work.

When a real estate agent becomes a dual agent, they technically represent both parties in the transaction. To give you an idea of how stupid that is think about an attorney trying to represent the plaintiff and defendant at the same time in a lawsuit.

If that sounds moronic to you, it's because that situation it is just like dual agency.

When a consumer hires a real estate agent, they expect that person to be in their corner. They are hiring a professional they can count on to give them sound advice. They may be even looking for their agent to guide them through the process if they are a first-time home buyer.

The advice an agent normally gives can start before, during or even after a sale has taken place. With dual agency, a real estate agent is not able to give proper guidance to either a buyer or a seller.

For example, if a buyer finds a home they would like to purchase and asks the agent what they should offer the agent is not allowed to give them advice.

On the other side of the coin, if the sellers asks what they should counter offer at, the agent is not allowed to help them either. It is one big cluster $#&*!

Both the buyer and the seller are in an awful position because neither of them has any true representation!

So who benefits from dual agency? There is only one party that benefits from dual agency and that is the real estate agent. With dual agency, an agent has the opportunity to what's known as "double side" the deal or make double the commission.

There are lots of real estate agents that will tell you that dual agency can be done. No problem they will insist. Of course, they will tell you that because they want the opportunity to make more money.

Human nature often gets in the way of ethics, and that's exactly what happens with this arrangement.

Is there any wonder dual agency is still around? In this ethical agents opinion, dual agency should be banned in every state. In many states, it already has been!

Dual Agency is Different in Some States

One thing that should be made abundantly clear is that the term "dual agency" means different things depending on the state you are located in. So when someone asks how dual agency works in real estate, you need to know where the parties are located and the associated laws for that state.

For example, as mentioned above, in some places dual agency is defined as when two agents from the same company each represent a buyer and a seller in the transaction. Frankly, I have no problem with this arrangement as each party has representation.

This is completely different than one agent trying to be masters to two different parties. They are not even remotely similar situations.

In Massachusetts, where I am located this is referred to as "designated agency".

There are a lot of real estate agents who will take offense at me writing an article like this. Do I care? No! Doing what's right for a client has always been more paramount to me than making more money.

I like seeing consumer laws change for the better. Banning single agent dual agency would do just that!

Do yourself a favor and take a look at the two references above on dual agency. You will find the first article on dual agency is one of the most detailed posts every written on the subject.

If you are planning on buying or selling a home shortly, it is vital to know how agency law works in your state.

Not understanding the law can put you in a terrible position. 

If you find the article helpful, I will encourage you to share it with your social networks.

You will be helping a lot of people that have no idea what dual agency is and how it works! There are lots of real estate agents who love to sugarcoat dual agency into something acceptable. Don't believe it.

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Barbara Todaro 04/18/2017 05:41 AM
  2. Tony and Suzanne Marriott, Associate Brokers 04/19/2017 06:42 AM
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Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Alice Billman why are you not able to remain as a seller's agent (landlord's agent)?

Why does it need to become dual agency? If you remain working for the landlord is the tenant going to care?

Apr 22, 2017 04:37 AM #165
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Without a doubt the best comment in this thread comes from Alan May as it sums up really well the sad reality of dual agency.

"The only one who wins in dual agency is the agent.  If consumers truly understood the dynamics behind dual agency, they would never agree to allow it.  Unfortunately, they don't understand and the one who's explaining it to them is the agent who will benefit from them saying yes to it."

Alan I will be featuring this quote in an up coming article and will mention that it came from you.

Apr 22, 2017 01:35 PM #166
Rainmaker
285,956
Larry Matthews
Hants Realty Limited - Halifax, NS
Larry Matthews AMP DAC

Canada is very rural and in many areas there are few Realtors(TM)  Hard to believe but true. We were historicly real estate brokers. Brokers are facilitators negotiating acceptable terms between buyers and sellers. The whole business world operates through brokers ie: stock brokers, produce brokers, lumber brokers, equipment brokers and so on and so on. My understanding is some years ago in California a group of lawyers filed a class action law suit againest a real estate board for buyers not having representation or agency the board was forced into bankruptcy and the industry across North America panicked reacting with Dual Agency which is an oxymoron because by law you can not have dual agency. By law the term agency denotes representation and again by law you can not represent two people. This whole mess was caused by terminology using Agent instead of Broker. Historicly we worked for the seller because the seller paid us. It was always buyer beware. Brokers always sold their own listings brokering the deal with the buyer and drawing up the contract. There was no representation we were brokers brokering the deal. Then along comes MLS and the impression given that we were agents the lawyers pounced on that impression/deception and we arrive at the mess we are in today. Common sense has left the business and we are where we are at today. If I'm an agent I should be paid for my time. Lawyers make on average $200 per hour or more for their time. They are effectively paid to fight not settle. As a broker i am paid nothing for my time but only paid if I make a deal and settle/close the deal.. This argument in my opinion is all nonsense and only continues to degrade our profession more and more in the eyes of consumers and promotes the rise of private sale companies. Here in Canada we have evolved to transaction brokerage but hear the same commentary as we all continue to destroy , erode and over regulate what once was a great business. The lawyers win again. 

Apr 23, 2017 06:48 AM #167
Rainmaker
80,765
Rick Fifer
Vintage Homes Realty - Tampa, FL
Broker/Owner, Vintage Homes Realty

I may be a bit late to the dance here but here goes. What we have in Florida is a transaction brokerage, the equivalent of dual agency.  Duties and responsibilities are defined accordingly. (Florida also has a non-rep agency as well).

It is a bit of a challenge to be fair to both, but I explain it to both sellers (when listing) and buyers (when interested in a listing I have).  Sometimes buyer's are not comfortable and I tell them I have not problem if they wish to bring in another agent.  Rather than painting with a broad brush about ethics, you might want to tone it down.  Over the past 12 years I have sold over 300 homes within about 2 miles of my home.  About 25% of them on average I have handled both sides. Frankly I discount the Seller's commission (what we have to put in our MLS as a Variable commission at the time of listing) because while handling both sides it is much easier that dealing with the incompetent, the lazy, or the prima dona--and yes there are a lot of them. I don't have to deal with the silly agent demanding that cosmetic items (defined in the contract as such) get repaired.

As to the ethics, well most people will clearly find me one of the more opinionated REALTORs but the one thing they don't question are my ethics and honesty.  If they could they would.  

Unless you are an attorney, what exactly is your "representation"?  You can give legal advice, you are there to either facilitate a buyer purchasing a home or facilitate a seller to sell their home/property.  Representation seems to be more about trying to puff yourself up to your customer in many cases and to turn negotiation into a win-lose proposition.  When I encounter the agent who is all about a win-lose approach, I say bring it on because I will do my damnedest to make sure my customer and I are on the win side.

I am perfectly capable of dealing with the ethics and limitations of working with both sides on a transaction because it is about helping them find a win-win to accomplish their respective objectives.  If you are unsure of your own ethical spine then you should stay away from working both sides (which apparently your state has done for you) but don't project that on to everyone else.

 

Apr 23, 2017 01:38 PM #168
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Rick Fifer the fact you don't know what the word "represent" means is kind of scary. On the one hand, you are telling me to tone down ethics but then in the next breath you are saying that all the co-brokes you deal with are incompetent, lazy, good for nothing agents? Come on man really?

The argument that agents make where they say there are so many sales would not be happening if it wasn't for "me" is kind of comical.

The vision I have some super Realtor who puts on their superhero suit in the morning because they are going to save the day for all the buyers and sellers who want be subjected to another lousy agent. LMAO.

This has nothing to do with win-lose as you say. You can't represent anyone as a dual agent - is that so hard for you to understand or are you blinded by your own states system that you can't look at anything else?

You are in the minority - most states don't work like yours.

Apr 23, 2017 02:08 PM #169
Rainmaker
80,765
Rick Fifer
Vintage Homes Realty - Tampa, FL
Broker/Owner, Vintage Homes Realty

Oh I understand the word but it was you that made it analogous to an attorney-client relationship. And please don't put words in my mouth.  Since I said about 25% deals I handled both sides, that means about 75% were co-broked. Many of those REALTORs are wonderful on transactions.  BUT yes there are a few (never said all) that frankly I dread seeing their names because it will be all drama. But I do what needs to be done to get those deals done just the same.

I wasn't keen on the idea at first. I certainly see pitfalls but you can't devise a perfect mousetrap.  I see people that abuse it.  I can't spend my time on that, my time is spent working with my customers.  Those with poor ethics bounce from place to place and hopefully eventually go away.

Frankly I have other issues that I wish could get dealt with by our RE Commission but we have a very broad public records law compared to most states.

Apr 23, 2017 02:27 PM #170
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Rick Fifer the word represent in the context I used it in is a rather simple one. You are an advocate for that person or in their corner. This does not exist with dual agency. Sorry but this is a really simple concept.

It is real estate agents who don't want to see it go away that make it seem difficult.

When it is explained in plain english to a buyer or seller they never want it and rightfully so.

I will again go back to Alan's comment that sums it up so well:

"The only one who wins in dual agency is the agent.  If consumers truly understood the dynamics behind dual agency, they would never agree to allow it.  Unfortunately, they don't understand and the one who's explaining it to them is the agent who will benefit from them saying yes to it."

Apr 23, 2017 02:32 PM #171
Rainmaker
80,765
Rick Fifer
Vintage Homes Realty - Tampa, FL
Broker/Owner, Vintage Homes Realty

no point arguing it. I have literally explained that I can't give them advice on offers or counters. That I can't tell the seller that a buyer can pay more than offered or that a seller will accept less than listed. I tell each this means we go back and forth a few more times. And yes some do accept that; and my percentage is very high by industry norms but it isn't because I have thrown anyone under the bus.  I also tell both that offers and counter offers are not always just about the money but also about other terms and to think outside that box.  As I said in my first comment, some aren't comfortable and bring in another agent: in a few cases I've given them a name or two to reach out to. But I have seen listing agents throw their sellers under the bus to get a co-broke by saying to other agents the seller will take less! Is that representation?  like I said, no perfect mousetrap.

Apr 23, 2017 02:55 PM #172
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Rick Fifer at least you explain it. Clearly, many agents don't or explain it in a way that buyers and sellers don't see a problem with it.

Apr 23, 2017 03:00 PM #173
Rainer
133,533
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

Ihave represented both seller and buyer in the same deal a few times.  I remind them of our INTERMEDIARY clause in our INFORMATION ABOUT BROKERAGE SERVICES. A REALTOR will do best to think about who they represent and not the paycheck like so many. I don't advise anyone, I show them the numbers and the seller knows his bottom number and the buyer knows his highest and best. I don't find it difficult and as long as one is an ethical and totally honest and fair you don't have to divulge confidential information.

Apr 23, 2017 03:31 PM #174
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

That's the one of the problems Theresa Akin. You can't advise anyone - one of the major reasons a consumer hires an agent - their expertise.

Apr 23, 2017 03:36 PM #175
Ambassador
3,283,063
Praful Thakkar
eXp Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Bill Gassett - with so many comments favoring your thought, I dare to say anything here.

Though I'd say,  there is something known as 'balancing act' which helps an agent to 'master' the dual agency.

Yes, I agree, the agent wins (double) in this case, at the same time, you can make a total win-win for all parties - and yes, it can happen.

Apr 23, 2017 10:25 PM #176
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Praful Thakkar when dual agency is practiced correctly a consumer is not a winner that is the whole point.

There is no such thing as a balancing act Praful. You can't favor one side one day and the other the next.

You must remain completely neutral, give no advice, offer no counseling, ect. The very reason why a buyer or seller would hire you.

When an agent understands the law it is hard to fathom your viewpoint.

Unless of course your clients just consider you a mindless paper pusher.

 

Apr 24, 2017 03:51 AM #177
Rainmaker
772,229
Jan Green
HomeSmart Elite Group,Scottsdale, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Obviously you've touched on a topic with lots of opinions and feedback!  I wasn't going to comment but figured I read your entire post so why not?!  I've never been a fan of dual agency either and have never fully represented both sides. Only once has a buyer knowingly bought a listing where I put it in writing I did not represent him, but represented the seller.  I asked if he wanted to hire an agent or if I could refer one to him and he declined, in writing.  The only glitch was when he forgot to turn on the utilities on the day of closing!  Other than that I fairly told him all of his options, even when the home did not appraise for full price.  He still opted to pay full price, in writing.  Full disclosure was key, but I am not a fan of this type of arrangement.  It's too risky for a buyer not to be represented.

Apr 25, 2017 10:00 AM #178
Rainmaker
846,102
Ryan Huggins - Thousand Oaks, CA
www.HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Yeah, full visibility, not having to wait for calls to be returned for status updates, not having to deal with incompetent agents... dual agency is horrible!  It takes an ability to compartmentalize to properly represent each party individually and fully in a dual agency transaction.  I've done a few of them and they have been some of my smoothest escrows.  Buyers were thrilled, sellers were thrilled.  Neither party EVER thought I didn't have their best interests at heart.

Apr 26, 2017 02:32 PM #179
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Ryan Huggins - Thousand Oaks, CA you are right there are a lot of incompetent agents.....especially the ones who don't know what you can and cannot do as a dual agent.

Like counsel a buyer or seller.....the very reason they hire us.

Oh wait.....many do that illegally in order to get the deal done.

Apr 26, 2017 02:47 PM #180
Ambassador
2,433,502
Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Baltimore, MD
Sell Your Home With Margaret Rome

Bill Gassett 

I have read both articles and all the comments and decided to write my own post. Thanks for the discussion.

Apr 26, 2017 09:06 PM #181
Rainer
18,425
Nick Schlekeway
Amherst Madison Legacy - Boise, ID
I seek to Add Value to my Client's Experience.

Good post Bill. I think Realtors who seek to "Walk the Tightrope" of dual agency are typically doing the client an injustice. In my experience, it is better to keep one client a customer with full disclosure OR assist them in finding another agent to negotiate on their behalf. 

NS

Apr 29, 2017 02:49 PM #182
Rainmaker
161,406
Kevin Vitali
EXIT Realty- Massachusetts Short Sales & Residential Sales - Tewksbury, MA
Helping Massachusetts Home Buyers and Home Sellers

Certainly a thought provoking topic with fun had by all.    I personally hate dual angency.   I avoid it at all cost. 

I am sure there are plenty of agents that can handle it legally and ethically.  I have read all of the comments and there are many that worry me.

"I have been practicing dual agency since before it was invented"

"I have no problem with dual agency, I just keep seperate files"

Im just paraphrasing a few of my favorite comments here.  There certainly are a few that shows a lack of understanding of what an agency  relationship means.

Personally,  if agents can't understand dual agency, how can a buyer or seller understand.  And as pointed out the person explaining dual agency has a vested interest.  Not quite sure how dual agency benefits the consumer in any way.

 

May 09, 2017 03:45 PM #183
Rainmaker
1,001,164
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Kevin Vitali clearly one of two things are happening. Lots of agents have no idea what they can and cannot do when they become a dual agent. Even worse some agents know exactly what they can do and choose not to follow the law.

It is agent-centric thinking at its finest.

May 09, 2017 05:04 PM #184
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