I will NEVER show your home! Food for Thought....

Real Estate Agent with 3DX Real Estate

Fiduciary duties can be defined under two categories - The duty of loyalty and the duty of care.  We, as real estate agents and brokers, render services, either intentionally through a written document, or unintentionally through our actions, that impose these duties.

As agents and brokers, we work under specific fiduciary duties that include:

  • Loyalty
  • Obedience
  • Disclosure
  • Confidentiality
  • Reasonable care & diligence
  • Accounting

By the very nature of our business, an agent's duty of loyalty compels us to refuse any work that is contrary to or in conflict with the best interests of our principle.  Buyers and sellers have distinct, competing interests when selling or buying real estate. 

Mainly, the buyer wants to purchase the property for the least amount of money, the seller wants to sell for the highest amount of money - which is a huge difference in goals. 


While I completely understand the "pay-off" for agents and brokers who practice "dual agency" receiving both sides of the commission. I often wonder how this practice is agreed to by the "original" client or fiduciary, if in fact they are truly informed of the pitfalls and loss of benefits (i.e negotiations on their behalf (which is normally the main reason we are hired to "sell" a property in the first place), loyalty, and disclosure (a seller cannot be told by a dual agent that a buyer is willing to pay more for the property.).

While dual agency is allowed under law, it requires written disclosure before entering into such an arrangement, and informed consent. (Informed consent means they need to understand exactly what dual agency does and does not allow!)

Undisclosed dual agency is a violation of license law,  breach of an agents duty of loyalty, and is considered an act of fraud in many states.

I have always been of the belief that agents and brokers, buyers or sellers should avoid creating or consenting to any dual agency relationship. 

It appears that the only real benefactor of a dual agency relationship is the agent or broker who earns more money -

Case in point....

Back in the early 90's, when buyer and seller agency was a new concept, I listed a home for sale.  Not totally understanding or even thinking about the ramifications that could result in a "dual agency" situation, I received a sign call from a buyer to see the property.  I made the required agency disclosures to the sellers and buyers and showed the home.  The buyer's loved the house and wanted to write an offer.  I informed the sellers I would be writing an offer that evening. 

I met the buyers and wrote a cash offer - The offer almost $30,000 less than the asking price of the property, which we had priced to sell quickly - it was a good deal already - an easy sale.  During the meeting with the buyers, the husband said that they knew the property was worth the asking price but wanted to go in under asking.  If they countered, they were willing to come up in price - they really wanted this house.

What the buyers did not know was the sellers were making two house payments - one for the property I  listed and one on their "dream home" they built which had taken considerably longer to build and had run well over budget.  These folks needed to sell their home and quickly but for as much money as possible.

I met the sellers that evening to present the offer.  They asked me what they should counter.  I told them as a dual agent, I could not advise them on a counter offer price - they needed to make that decision themselves.  (They knew we had priced the home under value when we listed it for a quick sale.)

They wanted some time to discuss what they were going to do and they would call me.  Later that evening, I got a call from them - they were "afraid" to make a counter offer and lose the deal - they were accepting the contract as written! 

I felt a little sick to my stomach knowing the folks who hired me to market their home and to represent them ended up not being represented with one of the most important aspects of our job - their bottom line.  Sure, I sold the home, but I also knew what their situation was and I made double the money to NOT represent them!

I make it a point while explaining agency relationships to prospective clients that the person who hires someone to represent them should not agree to allow a "dual agency" relationship as a matter of general business practice for this very reason....






Comments (6)

Kim Sellers
Lake Arrowhead, CA Coldwell Banker - Lake Arrowhead, CA
Lake Arrowhead Realtor - BRE#01412099 - Lake Arrow

In California we are allowed to have dual agency, but it has to be disclosed.  I have represented both sides a few times and you have to keep the emotions out of it and represent both sides properly.  Full disclosure and a open forum to talk with the Seller and Buyer and come to a mutual agreement.  I am very straight forward with my clients and disclose everything.

Aug 11, 2010 03:58 AM
Karen Crowson
Coldwell Banker Residential Brokerage - Rancho Bernardo, CA
Your Agent for Change

Always an interesting topic.  I think there the distinction needs to be drawn clearly for the client.  RIght now I'm in two transactions with dual agency.  I represent the seller and another agent in my office (who I have never met -she and I both work from home offices), represents the buyer.  So our broker is a dual agent.  But each client has separate represention. 

I will always show a buyer one of my listings - I have an obligation to get my client's home maximum exposure.  I make it crystal clear to the potential buyers though.  If they want to buy this particular house and do not have an agent, I will not represent them. That has happened before, and I have referred them to another agent.  In some cases, the buyers do have an agent who is out of town and in a fast-moving market, they don't want to miss finding the right house.

Aug 11, 2010 04:06 AM
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

Dual agency is legal in California but it seems like such a conflict of interest to me personally that I will always involve another agent should the situation arise.

Aug 11, 2010 04:10 AM
Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

It's a situation I don't want to be in.....I'd rather be fighting for one party than trying to be fair straight down the middle and not really representing anyone.

Aug 11, 2010 04:12 AM
Steve Davis
Davis Coastal Properties - Carlsbad, CA
Carlsbad CA

I always tell the seller never to tell me what they might "go down to" in price. I always tell the buyer never to tell me how much higher they can go. It does not matter if I am being a dual agent or not. I give both an honest and full CMA for the property and the client - buyer or seller - makes an educated decision on the price they will offer or accept. The great thing about dual agency is that you are always working with a good agent!

Aug 11, 2010 04:13 AM
Mary Seidel
Syracuse Realty Group - Syracuse, NY
Associate Broker

Here in New York it is also legal. I do not feel comfortable with it and I explain to people that I will choose another agent from my firm to represent them. I know that many people do not follow the rules. How do I know that? It happened to me when I first moved to NY and that is why I am an agent today! I take my job seriously and am tired of the folks who are misinforming the public just to get the deal done. I can't tell you the number of times I have been told by a prospective client that they have never even seen the NY State Disclosure.

Aug 11, 2010 04:39 AM