Greed, Fraud, Dishonesty or Putting the Agent’s Interest Above the Client’s
I read a featured post today regarding “Agents Double-ending on a transaction, good or alarming?” What I found to be alarming is that Dual Agency is being equated to “Double-ending” and is not in the best interest of the clients. I also found some of the comments to be quite alarming.
I will preface my remarks here by saying I can only speak to the Dual Agency laws here in Virginia and not to other State’s rules and regulations regarding Dual Agency where applicable. I have taught numerous Continuing Education classes on the subject of Agency and I believe Agency is the most misunderstood subject dealing with an agent’s (licensee’s) duties and responsibilities to their client(s).
A dual agent has an agency relationship under brokerage agreements with the clients. The decision to go into a dual agency brokerage relationship is not made by the agent, but by the parties involved in the transaction. Once all parties are duly informed of the agent’s responsibilities and agree to full disclosure of these responsibilities is there a dual agency relationship.
Here is an often misunderstood characterization of Dual Agency by agents. The agent does not represent both parties to the transaction, but must act as an Independent Contractor and not act as an Agent. Note: The terms Independent Contractor and Agent are in the context of Agency law and do not refer to independent contractor status under IRS rules and regulations or a real estate licensee. Under full disclosure the parties to the transaction must acknowledge in writing and understand the following (Quoted from Virginia Code § 54.1-2139):
- That following the commencement of dual agency or representation, the licensee cannot advise either party as to the terms to offer or accept in any offer or counteroffer; however, the licensee may have advised one party as to such terms prior to the commencement of dual agency or representation;
- That the licensee cannot advise the buyer client as to the suitability of the property, its condition (other than to make any disclosures as required by law of any licensee representing a seller), and cannot advise either party as to what repairs of the property to make or request;
- That the licensee cannot advise either party in any dispute that arises relating to the transaction;
- That the licensee may be acting without knowledge of the client’s needs, client’s knowledge of the market, or client’s capabilities in dealing with the intricacies of real estate transactions; and
- That either party may engage another licensee at additional cost to represent their respective interests.
Once the parties agree in writing to these provisions only then is a Dual Agency relationship established. Greed, fraud, dishonesty or putting the agent’s interest above the client’s by the agent is only perpetuated by other agents who fear Dual Agency or misunderstand the laws of Agency. It is solely the client’s decision to enter into or not enter into a Dual Agency relationship. I’m sure sellers and buyers aren’t forced under duress into signing a Dual Agency disclosure just so an agent can get paid for both sides of the transaction or to commit fraud.
Before making uninformed opinions about the professionalism of agents who are involved in Dual Agency situations where applicable, we should become familiar with the real estate laws within our State regarding the laws of Agency. Maybe we should pay better attention in the next Continuing Education class we attend.
©2015 Michael’s Commercial LLC, All Rights Reserved – Greed, Fraud, Dishonesty or Putting the Agent’s Interest Above the Client’s – January 5, 2015