How Do Northern Virginia Realtors® Reconcile Dual Agency Against the Realtor® Code of Ethics?

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Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

How Do Northern Virginia Realtors® Reconcile Dual Agency Against the Realtor® Code of Ethics?

I spent my morning in a class on the subject of agency and changes to the dual agency statutes in the Commonwealth of Virginia.  This is a subject that really fires me up.  I honestly have no idea how any Realtor® licensed in Virginia can think they are truly representing the best interests of their clients, over their own financial best interests to earn two commissions, if they are practicing dual agency by the letter of the law.

By the Realtor® Code of Ethics, Realtors® are bound to "protect and promote the interest of their clients.  This obligation to THE CLIENT is primary." 

Seems simple enough.  So what would protecting and promoting the interest of a client be?  Would it include advising them to acceptable terms and price, as compared to market comparables, when a Buyer is writing an offer on a home?  Would it include a Seller on what a fair counteroffer to a Buyer's offer would be?  To me, it sure seems so.  Then again, I am pretty up front with my Buyers and Sellers as to what my duties as their agent include when they list and buy property with me.

When entering into a dual agency relationship, that agency relationship that was created when they hired me, where I would be obligated by the Code of Ethics to promote and protect the best interests of my client, is severely compromised in the interest of me "representing" both parties. 

According to our state statute, real estate agents conducting dual agency, are "unable to advise either party as to the terms, offers or counteroffers.........The licensee cannot advise a buyer client as to the suitability of the property, it's condition (other than to make any disclosures as required by law of any licensee representing a seller) and cannot advise either party as to repairs of the property to make or request."  The law goes on to state that, "The licensee will be acting without knowledge of the client's needs, clients experience in the market, or clients experience in handling real estate transactions." 

The only exception to this lack of knowledge and not giving advice is any information exchanged PRIOR TO THE COMMENCEMENT OF THE DUAL REPRESENTATION.  Once that dual representation comes into effect, what you really have is something that resembles, in my own opinion, non-agency where neither party is represented by an agent.  The agent can not further advise either party.

So who's best interest is at heart when dual representation is conducted?  Is it really the buyer or seller?  Or the Realtor® who gets to collect two commissions for not giving advice? 

Oh, and by the way, when asking the attorney what exactly is changing in Virginia's dual agency laws in July 2012, the answer was simply the written disclosure that spells out what we can't do as agents in dual representation.  Those limitations exist now, the clients just aren't being disclosed about it in writing.

If you are looking for true buyer or seller representation in your next Northern Virginia real estate transaction, let me know.  I wouldn't touch dual agency with someone else's real estate license, let alone my own.

Chris Ann Cleland, Associate Broker-Licensed in Virginia, Long & Foster REALTOR®

703-402-0037, ChrisAnn@LNF.com, www.NVARealEstate.net, www.SellingBraemar.com

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Kate Elim 10/20/2011 03:14 PM
  2. Susan Haughton 10/21/2011 10:19 AM
Topic:
Real Estate General Information
Location:
Virginia Prince William County
Groups:
ETHICS and the REALTOR
VIRGINIA
Art of Professional Salesmanship
America's Best Agents
Bartender, Make it a Double
Tags:
northern virginia listing agent
dual agency in northern virginia
buyer agent in northern virginia

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John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
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Hi Chris Ann

Albuquerque and the NM area is allowed to represent both parties.  However when this personally happens to me I normally have another office agent take the other end so we keep things nice and clean.  It can get very sticky, very quickly.

Very interesting and debatable post.


Best regards from the Q

Oct 20, 2011 10:47 AM #1
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Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
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Dual agency (beyond working for the same agency) is not something I have ever ventured into. I just do not see how both parties can be represented properly.

Oct 20, 2011 12:50 PM #2
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

John:  I'm sure we'll hear from both sides.  I refer out any buyers I have that fall in love with any of my listings...and they know that up front and they know why.  It's in their own best interest.  I'm not the only great Realtor® in the area. 

Ellie:  Same here.  In fact, it sounds a lot like non-agency. The list of what you can't do for a client in dual agency is much, much longer than the list of things you CAN do.

Oct 20, 2011 02:32 PM #3
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Peter Pfann @ eXp Realty Pfanntastic Properties in Victoria, Since 1986.
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Hi Chris Ann,

Right on

Eventually we will all be single agents under the umbrella of the company we are with, as the entire dual agency issue will eventually blow up in our face.

 

Oct 20, 2011 02:40 PM #4
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Peter & Linda:  I'm waiting for dual agency to be outlawed.  I get the designated agency deal especially with large brokerages that have multiple branches and thousands of agents. 

Oct 20, 2011 02:43 PM #5
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Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Chris Ann, in New York we have to disclose dual agency and really explain it. Most do not and we all know why. If the agent can get both sides, then it's good for them. Every single one of my homeowners and buyers always say no to Dual Agency when I explain it. Dual Agency is never a good thing. My Broker advises us to stay away from it. All I know is if someone hires me to represent them, then that is the way it should stay.

Oct 20, 2011 02:47 PM #6
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land a

Hi Chris...Bravo!

It is refreshing to know that there are others that do not believe that Dual Agency is agency at all.  It is nothing.  There are so many things that can and often do come up where our client needs us.  Not just to fill out forms but to advise them.  You mentioned offers and counter offers.  Absolutely.  If you haven't discussed the need for home and radon inspections to the buyers prior to doing dual agency should mean that you can't advise them to do that now.  That would work against the interests of your seller.  There are so many other conflicts.

What is frustrating is that many dual agents insist that they are doing the buyers and sellers a favor as they can get the deal done with fewer problems and if there are any problems they can solve them best alone.  No way!.

The one big reason for dual agency is a larger commission.

Guess you can tell this is a hot issue for me also.  Suggested!

Kate

P.S.  I admit to having done this twice in the last dozen years and regret both times not because of problems but simply because I should not have done it.

Oct 20, 2011 03:08 PM #7
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Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I have never practiced disclosed dual agency.  When I practiced law, this was one of the big areas where brokers ended up in litigation.  Actually, if you look at the preamble to the Realtor code of eithics, they recommend "exclusive" represenation...  As for what happened over the years, I'll just take the 5th.

Oct 20, 2011 03:20 PM #8
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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Chris Ann - I never could wrap my tiny little brain around dual agency. It looks like a lawsuit waiting to happen, as well as a bunch of dissatisfied clients. It's now illegal in Colorado - we have transaction brokerage instead, which is basically "no agency", better known as facilitation. I'm much happier with one side of the deal and knowing whom I represent.

Oct 20, 2011 05:23 PM #9
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Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Chris Ann,

I'm sorry.  I can't even handle the title at 10:30 pm PST.  (I'm an early riser and fast fader.) I'll come back tomorrow, fully rested, and garner another 25 points with a real comment.  I need a simpler 25 points right now.

Oct 20, 2011 06:34 PM #10
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Jackie:  I'll tell you, if I ever start my own Brokerage, there will never be any dual agency allowed. 

Kate:  It really is no agency at all.  And I think, beyond the commission, CONTROL is the primary reason to do it.  Somehow agents think they have more control if they "represent" both parties.  Clearly, all you are doing in VA is passing papers back and forth.  How do you exert your "control" when you can't give advice.  Again, agents who do this are really more about satisfying themselves.

Joan:  It's amazing that NAR stands behind dual agency at all.

Dick:  I've been faced with the situation of dual agency on a handful of occasions.  Always best for the client, in my opinion, to refer them to a top notch agent who can truly represent their best interests.

Lloyd:  You're welcome back anytime.

Oct 21, 2011 03:09 AM #11
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Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Chris Ann,

O.K. Now I'm as bright-eyed and bushy-tailed as I get.

I can't imagine a VA buyer or seller opting for dual agent once they understand the limitations dual agency imposes on the agent.  Neither principal will get full representation.

CA Dual Agency is not as restrictive as VA. Here's what CA Agency Disclosure says: "In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the Seller or the BuyerIn representing both Seller and Buyer, the agent may not, without the express permission of the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered."

That's less restrictive.   However, like Virginia's former disclosure, perhaps there is more that's just not explicit, but I don't think so.

I've always avoided dual agency because I don't need the stress.  I've been a dual agent ~7 times in 35 years, and 4 of those times were representing lenders on junked REOs during the RTC days.  Lenders just wanted their destroyed property sold and had their attorneys watching out for them.  Prior to 1986 both agents had a fiduciary to the seller only, but I still avoided working both ends. 

 

Oct 21, 2011 06:28 AM #12
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Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Well, unlike Lloyd, I'm a late night person, so you'd think I'd be getting my second wind about now, but it has been a tough week and well, I am tired.  LOL   At any rate, I agree with you 100% - dual agency is, in fact, nothing. 

Oct 21, 2011 10:14 AM #13
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Lloyd:  Dual agency is much less specific in California.  No wonder I hate it so much given Virginia's law.

Susan:  Nothing but a bigger, fatter paycheck for the agent.

Oct 21, 2011 10:36 AM #14
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Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Good for VA to address this openingly.  Great points.  And I love how you quote "representing" . . . just how can ONE agent "represent" TWO parties?!?  We have similiar wording in our Agency Disclosure . . . here we call it "Disclosed Limited Representation" and the word "represents/representation" is used.  It's a wrong word IMHO.  And why would anyone want a "Limited" anything . . . especially a real estate agent?!?  Good post, good for VA and worthy of a suggest1

Oct 22, 2011 07:24 AM #15
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Carla:  Thanks!  I honestly don't know what good this agency does anyone but the agent.

Oct 22, 2011 08:02 AM #16
Anonymous
Mary

I am about to put my house on the market in NoVA, and did a google search to understand dual agency and what is happening in VA.  Your posting and the subsequent comments by realtors nationwide have been invaluable to me.  I've interviewed three agents, and the first one told me about the "change" in dual agency law (although from what you say it's change in the way it has to be disclosed, it doesn't ban dual agency).  The second and third didn't seem to be aware of any change at all, and the third offered me a commission discount if he was the only agent in the transaction.  Now that I understand dual agency, that third offer isn't looking so attractive.  Thanks!

Jun 05, 2012 05:56 AM #17
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Mary:  And if you'd like to interview a fourth agent, I'd love to apply for the job.

Jun 05, 2012 06:01 AM #18
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