Greed, Fraud, Dishonesty or Putting the Agent’s Interest Above the Client’s

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Commercial Real Estate Agent
https://activerain.com/droplet/4tDJ

Greed, Fraud, Dishonesty or Putting the Agent’s Interest Above the Client’s

By Michael Setunsky

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):

  1. 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;
  2. 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;
  3. That the licensee cannot advise either party in any dispute that arises relating to the transaction;
  4. 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
  5. 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

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Rainer
23,833
Deb Kirschbaum
MB/Priority Properties, Inc. - Denver, CO

Dual Agency is not allowed in Colorado, rather we become a Transaction Agent, whereas we cannot offer advice, just make aware of the choices.  I've only had one double ended deal and frankly, I didn't like it.  I found it difficult to best serve both sides when they had issues to dispute.  Funny how it varies from state to state.  

May 23, 2015 07:36 AM #118
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Deb Kirschbaum This is one of the issues with Dual Agency. We do have an option to hand off the buyer to another agent under the broker.

May 23, 2015 11:18 PM #119
Rainmaker
85,743
Paul Howard
Paul Howard, Broker, Paul Howard Realty 856-488-8444 - Cherry Hill, NJ
Paul Howard Realty, 856-488-8444

Right.  Hand them off to a stranger they don't know who is supervised by the same broker you are.  

What could go wrong.

Find an agent that knows what they are doing and will do it and be loyal to the buyer from start to finish.  

May 23, 2015 11:22 PM #120
Rainmaker
4,039,891
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

We can do both sides of a transaction, but we must be a transaction broker for both sides.  

May 24, 2015 10:52 AM #121
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Joan Cox That is basically what we become. In reality both side are held arms length.

May 25, 2015 01:52 AM #122
Rainmaker
1,977,961
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

35 years in the business - thank you for your services. I would love to know how your business has changed over the years. As you ease on into retirment I think it's important to reflect on the past to the degree it can be insightful and enlightening to others. I'm sure you've seen a lot of ups and downs in the market and many, many changes over the years. I hope you get to enjoy the next chapter of your life doing things that make you happiest. You deserve it.

Aug 03, 2015 07:15 PM #123
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Patricia Feager, MBA, GRI, Cert Negotiations Expert, Military Relo Prof Thank you very much for your kind words. 

Aug 03, 2015 09:35 PM #124
Rainer
508,770
S. Leanne Paynter ☼ Broward County, FL
United Realty Group, Inc. - Davie, FL
Davie, Plantation, Cooper City & Weston Specialist

In Florida, by default we are transaction agents (we don't call it dual agent) unless we state otherwise.  I find that it's often very misunderstood by agents in other states with different laws.  I've never put one party's interest above another's when I've had both sides.  My sense of fairness would not allow it anyway.

Aug 04, 2015 05:03 AM #125
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

S. Leanne Paynter ☼ Broward County, FL I agree! The clients always have the final say so through disclosure.

Aug 04, 2015 06:26 AM #126
Rainmaker
1,977,961
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Dual agency is a concern of mine too. Right now I have a Lease on the market. I get lots of calls but I refer it out. However, I tell the callers, I'm already representing the Owner. Nearly every one will tell me, they didn't know and they thank me. 

Oct 01, 2015 08:26 PM #127
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Patricia Feager, MBA, GRI, Cert Negotiations Expert, Military Relo Prof I understand your concern. All parties have to understand exactly what they are getting and of course full disclosure.

Oct 01, 2015 10:03 PM #128
Ambassador
2,347,701
Fred Griffin presently on Leave of Absence
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

    Florida abolished "Dual Agency" some years ago.  They replaced it with "Transaction Brokerage".  

     The overwhelming majority of residential transactions today in Florida are done using Transaction Brokerage... but if the Buying and Selling Public truly understood what "Limited Confidentiality" means (that term is in the Statute), they would run away from Transaction Brokerage and get their own Agent!

Nov 01, 2015 12:30 AM #129
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Fred Griffin Dual Agency under another name. Either way it is limited representation.

Nov 01, 2015 01:00 AM #130
Rainmaker
1,535,919
Mike Cooper, GRI
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Michael, this is one area where I see a lot of confusion among agents. As long as all parties understand the dynamics of dual agencey, I've never had any problem with it. I acted as a dual agent 6 times this year. Each and every deal was smooth, and all sides got what they agreed to, and they were satisfied with the outcome.

Congratulations on hitting 1,000,000 points. 

Dec 17, 2015 09:22 AM #131
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Mike Cooper I agree, disclosure is the key to dual agency. I've done several throughout the years and never had a problem.

Thank you!

Dec 17, 2015 10:05 PM #132
Rainmaker
2,394,822
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

Your explanation is the best I have seen so far of what dual agency or Limited Agency means.  Not sure Indiana rules are the interpreted quite the same, but I will check.

Jul 24, 2016 01:00 AM #133
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Evelyn Johnston It will interesting to see if Indiana rules vary much. Thank you very much and thank you for the visit.

Jul 24, 2016 01:56 AM #134
Ambassador
3,982,176
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

We don't do dual agency but default to transaction broker. I will be teaching new licensees about it this weekend. Thanks for following my blog, Michael.

Jun 16, 2017 06:54 PM #135
Rainmaker
614,739
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Raleigh - Cary Triangle Real Estate 919-602-8489

Michael, Dual agency is allowed in NC. However, we need to think about what is best for our clients. Would you allow dual agency if you were buying or selling in another town? Would you advise your kids or parents to participate in dual agency? These are questions we need to ask ourselves. We also need to think about perception from the general public. 

Sep 17, 2017 07:31 AM #136
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Carla Freund There is a misconception about Dual Agency where it is legal. It has to be properly disclosed to all parties up front. Once with the seller at the listing appointment and secondly when a potential buyer is interested in the property. The seller can initially reject it and the buyer can also reject it. If both parties reject Dual Agency, there is a provision in my State to have the Broker assign another agent to represent the buyer. The buyer can also choose to decline representation which I would not recommend.

Keep in mind when you or another agent in your company sells one of your or another agent's listing, the Broker becomes a Dual Agent representing the interest of all parties.

As far as general public perception, it is our job to properly educate our prospective clients and in the end it is their choice. I don't really think the general public knows one way or the other. Education is key.

Sep 17, 2017 09:49 AM #137
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