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Designated Agency IS Dual Agency

By
Real Estate Agent with Hollish Hill Group, JPAR Stellar Living

Designated Agency is Dual Agency

If you're thinking about buying a home in Maryland, you might want to do a little research before selecting your real estate agency. In particular, you should check to see whether the agency you are considering provides service to its clients as a dual agency, designated agency or single agency relationship. Sounds confusing, but it's quite simple. 

Dual Agency is when a single person or company is representing the buyer and the seller in a single transaction. Although this is not illegal in Maryland, many people see it as a bad idea. Why? When a brokerage takes a seller client, they promise to work hard to get them the highest price for their property. When a brokerage represents a buyer client, they promise to work to get them the lowest price on a property. How can one company make these conflicting promises? They have to disclose to both parties that they are going to be doing business as a dual agency and may not be able to keep their promises. They will try and be impartial with both clients.

Designated Agency is a form of dual agency where the company selects one agent to represent the buyer and another agent to represent the seller. Because it is a form of dual agency, it must be disclosed to the buyer and seller. In Maryland, this is a legal form of agency and gives the clients the feeling that they have their own agent. 

Can you imagine a law firm utilizing such practices? Do you think one firm would represent a husband and a wife in a divorce? 

Single Agency is when a company decides that they will only represent sellers or buyers exclusively. There are listing companies that only list properties and there are exclusive buyer agencies that only represent buyers and never sellers. If you are looking to buy a home in Maryland, Buyer's Edge is a single agency that only represents buyers, never sellers, so there is never the conflict of interest that exists for in a dual agency transaction. 

Just say no to dual agency

Designated Agency is Dual Agency 

Let's give you a few examples that might arise and see what might happen.

1) The morning of settlement, you conduct a walk-through inspection and notice a sewer leak has backed sewage into the basement of the recently refinished basement of the property. The seller needs the funds from this sale to move forward with the purchase of their new home. The buyer does not want to settle and take ownership of the property because they want the seller to return the property to the condition that it was before the leak and is afraid the seller will not do anything once they are no longer the owner. Who do you want on your side? The agent who represents you? Or the one who works for both you and the seller? 

2) At the settlement table, the title company shows the buyer the boundary line survey of the property showing that the shed the buyers liked so much is actually half on a neighbor's property. The seller wants to go ahead with settlement. The buyer wants the seller to move the shed completely onto one property. Who do you want on your side? The agent who represents you? Or the one who works for both you and the seller?

3) You have just completed an inspection of the property and it appears that the house needs a lot of repairs, including extensive roof repairs. The seller doesn't think the roof needs to be replaced, but your inspector does. The seller is sure he can find an expert that says it is fine. Who do you want hashing this out for you? An agent who is working for you, the buyer? Or an agent who is working for a broker representing both sides?

You have a Choice. Which will you choose?

Solution: Exclusive Buyer Agency

If you are looking for an agent who will look out for your interests, speak with an exclusive buyer's agent. Buyer’s Edge is Metropolitan Washington's Premier Exclusive Buyer Brokerage Firm, providing full representation to home buyers in Maryland, Northern Virginia and the District of Columbia since 1992. As Vice President and Associate Broker, I have been at the Buyer's Edge since 2001 and have helped buyers find the best homes, at the lowest prices and best terms for them. I represent people and not properties. See what my clients have to say about me and then give me a call to get started

Other Blog Posts by Dana: Why Would Anyone Want Dual Agency?

Posted by

______________________________________________________________________

Dana Hollish Hill
REALTOR * Broker * Coach 
JPAR Stellar Living
800 S Frederick Ave, Suite 200, Gaithersburg, MD 20877
office 301.944.9070  
cell  202.271.5301
web danahill.jpar.com

Comments (10)

Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

A great explanation of what's what . . . great Dana.  You really explained real estate agency well!!

Oct 08, 2013 04:30 AM
Jon Boyd
Home Buyer's Agent of Ann Arbor - Ann Arbor, MI
Ann Arbor Real Estate Buyers Agent

Dana,

Great food for thought here.

In our market here in Ann Arbor sometimes the designated "buyer's agent" is actually an assistant of the listing agent. When consumers understand that person is supposed to negotiate against their own boss, the person who signs their paycheck, they immediately understand.

Designated agency is just dual agency.

Oct 09, 2013 01:35 AM
Victoria Ray Henderson
HomeBuyer Brokerage - Washington, DC
Washington DC Real Estate

Excellent straight forward blog Dana! Home Buyer's need to know who is representing them in the deal and your information gives a great explanation. Thanks!

Oct 09, 2013 08:39 PM
Dana Hollish Hill
Hollish Hill Group, JPAR Stellar Living - Bethesda, MD
REALTOR * Broker * Coach
Carla and Victoria - Thanks for your kind words. Jon - it works a little differently in Maryland. The broker is not supposed to be a designated agent, but it certainly an issue with teams and with small brokerages.
Oct 10, 2013 12:39 AM
Donna Lewis Stiles Tampa, St. Pete Beach FL
Realty Experts - Redington Shores, FL
Your Guide to Beach Home Living

Hi Dana,

Your agency blog is very informative.  Personally, I would not try and represent both buyer and seller ... and when you explain the situation correctly, most buyers want their own representation.

However, this has made my job very difficut ... as I work in a brokerage where 90% of the listings in my area are held by agents in our office ... so when I explain duel agency to buyers .... most understand and head to a competitive office :(

Oct 10, 2013 02:13 AM
Dana Hollish Hill
Hollish Hill Group, JPAR Stellar Living - Bethesda, MD
REALTOR * Broker * Coach
Donna - That is an interesting problem to have. I can see why agents would be motivated to gloss over the dual agency disclosure in that market, but I"m proud of teh buyers who understood it and took action. There are many agents in offices like yours who focus on listings and let the buyers go elsewhere.
Oct 11, 2013 10:27 PM
Michael Marshall
Buyer's Resource Realty Services - Columbus, OH
Buyer Agent (Columbus, Ohio)

A very good article.  Right to the point, concise and very simple to understand.

Oct 15, 2013 04:25 AM
Larry Riggs
Century 21 Redwood - Frederick, MD
GRI, SRS Your Frederick County Specialist

Dana,

     I have to take exception to some of your statements. I am an ethics instructor and teach both NAR and Maryland code of ethics. 

Dual Agency is when a single person or company is representing the buyer and the seller in a single transaction. In Maryland a single person can never represent both buyer and seller. For example a company of one can never practice dual agency.

In your examples numbered "1" and "2" the situation occurs after contract. According to Maryland law agency ends at the contract. Therefore in those two situations the agent is no longer reperesenting the buyer or seller but is bound by the letter of the law and the letter of the contract. In the third scenario the agent regardless of their role can advise the client of their options but then must obey the client's instructions. 

I'm sure it wasn't your intention but you seem to imply that an intra-company agent is going violate the law and code of ethics and not properly represent their client. That frankly hasn't been my experience.

Oct 15, 2013 08:59 AM
Dana Hollish Hill
Hollish Hill Group, JPAR Stellar Living - Bethesda, MD
REALTOR * Broker * Coach

Thanks Michael - I appreciate your kind words. 

Larry - The definition of Dual Agency is the same everywhere. You are corrrect that in Maryland we have a form of dual agency called Designated Agency that is in place to prevent a single agent from representing both the buyer and seller in a single transaction. 

However, agency does not end at the contract. It ends at the completion of the representation. We are contracted as agents to represent our clients until the deal is done. Sometimes that is at settlement. Sometimes it is at the end of a rent-back period. Sometimes it ends after a settlement does not occur and a contract is voided. 

I do not imply that anyone would violate the code of ethics. I simply state that when one company is representing the buyer and seller, even through designated agents, there is a conflict of interest. With single agencies, that conflict does not exist.  

 

 

 

Oct 16, 2013 03:26 AM
Larry Riggs
Century 21 Redwood - Frederick, MD
GRI, SRS Your Frederick County Specialist

Dana,

    Actually agency does legally end at the contract. That comes directly from Al Monshower who wrote the law and also feel free to check with Chuck Kasky, attorney for the Maryland Association of Realtors.

    Although some are not in favor of current agency law, if the parties are acting according to the law there is no conflict of interest. Agency law is very specific in how it must be applied. Feel free to check out what I have written on the MAR hotline. 

Oct 17, 2013 06:58 PM