There has been a lot of buzz on the Internet, and here at ActiveRain, about the 'evils' of dual agency. While some agents seem to have no issues with it, all you have to do is run a quick search on the subject and read some of the comments on blogs about it to see that many agents do. Now, it's hard to have a good discussion on dual agency over the Internet because the fact is dual agency means different things depending on what state you're in and the laws concerning it.
In NC, dual agency is created at the company level. This means that if I am the listing agent and a fellow Century 21 American Home agent has a buyer client (signed agreement) making an offer on it, we are BOTH considered dual agents in the transaction.
Many people have questioned how an agent can effectively "represent" two opposing clients via dual agency. A recent Charlotte Observer article, N.C. Realtors protesting part of rule on disclosure brings to light another issue with dual agency as well.
The article states that 3 of the state's largest area metro REALTOR® associations are actively protesting a 2008 rule that requires a buyer's agent to fully disclose the amount of compensation that they might receive if they sell a particular home. Full disclosure shouldn't be an issue, so why is it? Well, those companies that are making the biggest stink about it are pushing "in-house" sales. That's sales where the listing and selling agent work for the same company. They push these sales by offering bonuses to agents that sell in-house listings.
What I find most shocking in the article are comments from the leading agent(s) promoting this protest. "...the rule requires burdensome disclosures for potential "in-house" transactions..." and "We don't believe in-house compensation is a disclosure issue," Really? REALLY?
I find it hard to believe that an experienced agent, a person that has spent years in the business, truly believes that it shouldn't matter to a buyer if their agent (or agency) is getting a specific bonus or extra incentive to sell THAT home possibly over another property. I wish I could say I am shocked by that, but truthfully, I'm not. I can say that I am a bit ashamed to have to be associated with them, however remotely that may be.
What those supporting this protest are saying is that, as the disclosure laws stand, they are forced to disclose the 'seller's side' of the commission to the buyer and that the buyer should not be allowed to view that information. HELLO! Unless there are some pretty unusual circumstances, the seller usually 'pays' ALL the commission (and bonuses). There is no seller side and buyer side commission (and that's another post entirely).
Clearly, I'm not a big fan of dual agency, especially as it's defined in NC. I think that dual agency should legally be defined as ONE agent (vs the agency) acting as both listing and buyer's agent, and I think that dual agency should be illegal in the state. Would it stop bonuses and in-house sales? Probably not, but it would solve the issue of disclosure pretty fast. Your Thoughts?
True Real Estate - Osprey, FL
Dual agency is against the law in Florida. It should be everywhere in my opinion!
Feb 23, 2010 12:17 AM
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert
In Ohio, the office can practice "split agency" in office. If more than one agent are involved and are not on the same team, the split agency rule can apply.
That is what my market center does in Ohio
Feb 23, 2010 12:17 AM
RETIRED - Florence, OR
RETIRED
I'm not a fan of double ending. Its twice the money and a thousand times the liability.
Feb 23, 2010 12:19 AM
Retired - Seattle, WA
In WA we explain and allow for dual agency in the listing agreement. The agency is usually the dual agent but the agents are not, even if located in the same office, unless a listing agent sells his own property and for some unknown reason feels he has to represent the buyer. I think that is a lie to the buyer, or a disservice to the seller and I don't do it.
The system works well. There will always be those who work any system, and they should be weeded out.
Feb 23, 2010 12:24 AM
Retired - Seattle, WA
In WA we explain and allow for dual agency in the listing agreement. The agency is usually the dual agent but the agents are not, even if located in the same office, unless a listing agent sells his own property and for some unknown reason feels he has to represent the buyer. I think that is a lie to the buyer, or a disservice to the seller and I don't do it.
The system works well. There will always be those who work any system, and they should be weeded out.
Feb 23, 2010 12:24 AM
North Sky Realty LLC - Battle Creek, MI
REALTOR®, CRS, GRI
I always disclose to the buyer that I am representing the seller if I am writing an offer on one of my listings and have them sign a disclosure statement on this. My broker also makes us offer the buyer the option of having representation if they are not comfortable with this. In my office, we do not practice dual agency, although Michigan law allows for it.
Feb 23, 2010 12:48 AM
Hickory, NC
Bill - Florida has the transaction broker, where nobody is represented. While it solves any issues with dual agency, I think that it creates it's own problems. Since we don't have it, I can't speak from experience, since we don't have anything like that, just as an outside observer looking in.
Joe - Interested to hear more about "split" agency. In NC, we can practice 'designated' agency, which is a different agent represents each party in the deal 'exclusively' Still, since dual agency is created at the AGENY level in NC, that's just another form of dual agency.
Rob - you can receive both ends of the commission and NOT be a dual agent. If you're the listing agent, you simply don't contract with the buyer to be their agent, too. Still, I agree, the potential liability is very high in a dual agency situation.
Glenn - Interesting. I'm not following how the agency is considered 'dual' but the agents themselves aren't, but I'd like to hear more how that lays out. Thanks.
Feb 23, 2010 12:51 AM
Independent Real Estate Agent - Moncton, NB
100% representation means NEVER DUAL AGENCY !
Roger - I'm confused - In the North Carolina real estate license legislation there are travel agents, escrow agents, and managing agents for time shares - but no mention real estate agents.
However there are brokers-in-charge, brokers, and provisional brokers in the real estate legislation.
Don't you have to divulge to consumers how you are licensed by the state?
Feb 23, 2010 12:53 AM
Hickory, NC
Michael, in NC, that disclosure is required up front (or is supposed to be). We have a 'Working with Real Estate Agents' brochure that explains each agency type. I too try to avoid dual agency when possible. Still, sometimes it's created simply because my buyer is interested in one of my company's (though not my) listings. In NC, you then become a dual agent if that happens. Makes it more difficult to avoid.
Feb 23, 2010 12:55 AM
Hickory, NC
How real estate agents are licensed in NC is pretty simple now, Larry. We are all licensed as Brokers. There are no 'sales agents' anymore. Just goes to show you how different various states (and countries) use terms.
In NC, a Provisional Broker is a licensed agent that has met all the initial requirements to work in the field BUT has not completed the final 90 hrs to obtain a Full Broker's License. They have 3 years to do so, and during that time they MUST work under a Broker-in-Charge. This was formally the "sales agent" level, though at that time you didn't have to continue you training.
A Full Broker is an agent that has finished the entire course work required to become a fully certified NC real estate broker.
A Broker-in-Charge is a Full Broker, who has had at least 2 full time years in the business and they are the managing broker of a company.
Feb 23, 2010 01:02 AM
Independent Real Estate Agent - Moncton, NB
100% representation means NEVER DUAL AGENCY !
But the legislation does not say that a Broker is an Agent.
93A-2. Definitions and exceptions. (a) A real estate broker within the meaning of this Chapter
is any person, partnership, corporation, limited liability
company, association, or other business entity who
for a compensation or valuable consideration or promise
thereof lists or offers to list, sells or off ers to sell, buys
or off ers to buy, auctions or off ers to auction (specifi cally
not including a mere crier of sales), or negotiates the
purchase or sale or exchange of real estate, or who leases
or offers to lease, or who sells or offers to sell leases of
whatever character, or rents or offers to rent any real estate
or the improvement thereon, for others.
Feb 23, 2010 01:13 AM
Hickory, NC
Larry, that's because NC does not have real estate agents anymore. All we have are real estate brokers. I'm using the term agent because that's still the "standard" of someone who helps people sell real estate in most places.
Feb 23, 2010 01:28 AM
Yadkinville, NC
Seems that everyone would be for full disclosure. It is self defeating for the folks that don't want it. But we knew that already.
Feb 23, 2010 02:58 AM
Hickory, NC
Dale, you'd think that a reasonably intelligent person would assume that making an argument against something like full disclosure would raise a few eyebrows or so. All you have to do is read the comments on that article to see that agents aren't exactly considered in the best of light as it stands. No need in adding gas to the flames.
Feb 23, 2010 05:23 AM
Coldwell Banker Residential Brokerage - ABR - SRES - Alexandria, VA
Northern Virginia Real Estate
When I started in real estate, I made up my mind very quickly that there was no way I could represent both buyer and seller and maintain what I considered an position of integrity. That decision has served me well.
Michael
Feb 24, 2010 12:50 PM
Comments(15)