Dual Agency Should Be Banned in All States

By
Real Estate Agent with RE/MAX Executive Realty 91362

 

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:

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  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
995,861
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Dennis J. Zisa if you read the comments carefully there is no confusion on what is being discussed. Agents are not confusing dual agency with a buyer going to the listing agent and the agent remaining a sellers agent.

These are two very different things. While this arrangement sucks for the buyer at least they know where they stand.

Clearly, with dual agency many buyers and sellers don't know where they stand because so many agents don't know what they can and can't do.

There is also a good percentage of agents who explain it in a way that doesn't sound so bad for them when that is not the case.

Like I mentioned previously people that aren't in the business can be sold anything when not explained well.

I don't know of any buyer or seller when informed that an agent can't do any of the same duties an exclusive buyer's agent or exclusive seller's agent would says OK that's great where do I sign up.

 

Apr 20, 2017 06:25 PM #157
Rainer
2,725
Wes Brooks
Finding New Neighbors - Clarkston, MI
Real Estate Associate Broker / Notary

As a full time Associate Broker with over 40 years in the housing industry, I have seen many cases where Dual Agency is the only way a transaction could close.  A true professional that understands agency and how to perform their duties should be able to work as a Dual Agent.  However, with that said, I know many agents (expecially rookies) that should never attempt it.

Apr 20, 2017 09:28 PM #158
Rainmaker
365,407
Miriam Bernstein, CRS
New Orleans Property Lady, LLC - New Orleans, LA
New Orleans and Surrounding Suburbs Real Estate

How about we discuss what is best for the buyer's and seller's not that an experienced agent should be able to work as a dual agent..that would seem to be the problem - it is about the consumer, not the experience, ethcis or anything else about the agent.  A "true" professional? what is that....

Apr 21, 2017 03:19 AM #159
Rainer
51,811
Eva B. Liland with Century 21 Doug Anderson
Century 21 Doug Anderson - Lancaster, CA
Selling Your Home in Today's Market

Sometimes I have closed deals, being a representative to both sides, earning a double commission. Believe me, it is not easy walking that double line, doing what is best for both parties.

Apr 21, 2017 05:05 AM #160
Rainer
1,150
Marvin Shelley
Marvin Shelley, Broker - Fayetteville, AR
Rural property only
Bill - In condemning dual agency, I think the critics believe that it is A-OK for the listing agent to post the listing on the MLS and sit back on their butts and wait for another agent to sell it? I have found that that is the way most agents - especially big franchises - operate. Is that fair to the seller, when the list agent has many other avenues to advertise the listing?
 
Try explaining that to a seller at the listing appointment. Agents have a very difficult time being honest about most everything.
 
So, agent says, "Mister/Mrs. Seller, I am going to post on the MLS and hope someone else sells your place, because I will not be selling it. I am not going to post it on third party web sites, nor on Craigslist, nor any where else" Try being honest with sellers for a change and tell them the whole truth.
 
And, who does the agent represent at the open house? Are your agents truthful with sellers and tell them, "I probably will not sell your home at the open house, but I will probably get my claws in some buyers and sell them another place". 
 
 
So, Bill, As long you are holier than thou, do you insist that your agents are honest with sellers about all the things the agent will NOT do?
Apr 21, 2017 05:36 AM #161
Rainmaker
112,492
Victoria C.B. Trees
Crater Lake Realty, Inc. - Chiloquin, OR
Principal Broker

Wow.  I don't guess I'd want to try to do business in your state, if you can't even submit a CMA to a prospective buyer, if you've done one for the seller.  The proof of that pudding is with the appraiser, so if you refuse to offer such information to someone and they offer more than the CMA came up with, isn't that a dereliction of duty?

Yes, there are unethical PEOPLE everywhere, whether or not it's a dual agency situation.  To blanket state that these are unethical transactions insults every one of us who have successfully helped clients get a FAIR deal.  

Real estate sales should never be the kind of adversarial situation for which most law suits are brought.  If they turn out that way, you can bet the next call is to an attorney!  

On a final note, I have closed numerous transactions that had some tricky obstacles to overcome.  Had there been an agent on the other side as obviously ravenous to make the killer deal as you(r state) is, they would not have closed and there would be a lot of much less happy people today. 

Apr 21, 2017 12:32 PM #162
Rainmaker
511,271
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

162 comments so far, and I don't think that anyone has claimed that a dual agent can give a higher level of representation or assistance than a non-dual agent.  Interesting, isn't it?

Apr 21, 2017 12:40 PM #163
Rainer
4,788
Alice Billman
Seal Beach, CA
Seal Beach Expert

I often work as an on-site property manager/leasing agent.  When a prospective tenant walks in to my office, I negotiate a lease on behalf of the building owner, write it, and have the tenant sign.  Clearly a dual agency - BUT - I have no idea how to make this situation "legit"    

I don't disagree that dual agency is a problem, however, in situations like this, it seems to be the only way to do it.

Comments or suggestions?

Alice

Apr 21, 2017 07:22 PM #164
Rainmaker
995,861
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
995,861
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
282,632
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
80,659
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
995,861
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
80,659
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
995,861
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
80,659
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
995,861
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
132,458
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
995,861
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
3,162,978
Praful Thakkar
Keller Williams 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
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