Dual Agency Risk

By
Real Estate Agent with Avery-Hess Realtors

Recently I was in a class where our instructor was explaining duel agency.  He has thirty years in the business.  He informed us that he never engages in duel agency due to the risk of a law suit. I respect his judgement and do not engage in due agency myself. 

Just a few months ago a property was listed and sold by the same realtor.  The house was listed in the 600's so the big commission was tempting.  The problem is that this house was overpriced to start with, it needed twenty thousand in repairs, it was built by the owner with low grade materials. Several realestate agents were interviewed, including myself and refused to list it for the price the seller had requested.  Of course the sellers found a realtor who would list it for the price he wanted.   The buyers were from out of town, needed to find a house quickly, and were un-informed about the area and the current market.  They didn't understand that they needed to be represented by an agent working for them, not the sellers. Since they had a large down payment, the appraisal was not a problem.

I am familiar with this property, I am discussed with the selling agent.  Taking advantage of clients is hurting our business.  I would much rather get a referral fee than a commission if it was to the benefit of the client.  It makes me sad that we have agents in our business who care little about how the public feels about our business.

 

 

Comments (1)

JOHN HOLST
MetroStar® Realtors® Chesterfield Relocation™ - Chesterfield, MO

I am writing a White Paper and a Book on why Dual Agency should be eliminated.  Please provide any lawsuit information or other horror stories on how the clients' best interests were compromised or diluted.

There are multiple forces in the works: 1. In Congress, with fault being discovered that many buyers were not properly represented that added hot sauce to the housing melt-down, 2. With Errors & Omissions insurance carriers seeing that in 50% of all lawsuits agency is brought in as an allegation, see new Standards of Practice coming soon, 3. Well funded consumer advocacy groups (as in the 1993 Edina lawsuit that cost $18 Mil) are preparing to file multiple class action lawsuits in early 2010 against all the major players for inherent conflict of interest on dual agency and double-dipping brokers trying to "represent" both sides of a transaction, 4. The courts are getting tired of issuing warnings, eliminate dual agency or else.

It has been ten years since the real serious shot over the bow from Oklahoma:

In the case of SNIDER v. OKLAHOMA REAL ESTATE COMMISSION, June 1, 1999 the Oklahoma Supreme Court said: "Sellers' agents and dual agents do not and cannot by law give a buyer the same degree of loyalty as an agent who acts on behalf of a buyer. Sellers' agents owe their allegiance to the seller. Dual agency invites a conflict of interest. A buyer who relies on the seller's agent or on dual agency does not receive the same degree of legal protection as that afforded by an agent acting solely on behalf of the buyer".

Professionally, I find the concept of dual agency as completely indefensible and should be eliminated along with the perverse ways to thread the needle with transaction brokerage, designated agents, and disclosed dual agency.

There is no way that you can deliver a true informed consent from a Seller that is no longer going to have full fiduciary level of representation when somebody in the office is now going to be representing the buyer.

Just like the Veterinarian's Office; Cats go in one door and Dogs go in another:

Step 1. Need for only an Exclusive Buyer's Broker to represent the BuyerMake sure that the agent / broker that represents you gives you the highest level of representation possible, full fiduciary duty to only represent your interests as a Buyer and not the Seller. Engage an agent that will pledge in writing to exclusively represent only your interests. Say NO to: dual agents, designated agents, transaction agents and seller's agents. The Seller usually in 95% of the deals will fund the fees (just a normal real estate commission) to pay for this Exclusive Buyer's Broker to only represent the Buyer.

 Step 2. Need for only an Exclusive Seller's Broker to represent the SellerMake sure that the agent / broker that represents you gives you the highest level of representation possible, full fiduciary duty to only represent your interests as a Seller. Engage an agent that will pledge in writing to exclusively represent only your interests.

 PLEASE GIVE ME YOUR BEST VIEWPOINTS AND COMMENTS

Dec 06, 2009 10:42 AM