How I made a lot of real estate agents mad at me.

By
Education & Training with Real Estate Expert Witness Support

Can you imagine a lawsuit where the attorney stands up and presents your case in court,  then moves to the other side of the courtroom and argues against your position while representing the person you are suing. Ridiculous, you say ..........but it happens every day in real estate sales.  I am continually bothered by the practice of “dual agency” in real estate sales.  A dual agency occurs when one agent represents both the buyer and the seller.  Or actually,  the same firm represents both parties.  The problem is the agent has an inherent conflict of interest.  When you are acting as an agent,  you have a legal duty to put the client’s interest above your own.  You are an advocate,  not a facilitator.  Rather than a passive bystander or some type coordinator,  making the transaction work,  you are supposed to be an advocate for your client.  So, if you are representing both the buyer and the seller,  you can’t advocate for both parties.  For example,  the seller wants the highest possible price,  while a buyer wants the lowest price. The seller wants no repairs,  while the buyer wants a perfect house,  etc, etc, etc.   In these case,  which client does the dual agent beat up in their negotiating?  In practice,  most agents try to mollify each side without really advocating for either one. 

 This might upset a lot of real estate agents but here is my 2 cents worth.  If you walk into an open house,  understand that that agent is representing the seller.  99% of the time,  a buyer is best served by finding another agent to represent them exclusively.

 

 
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Guy Berry

Email - guy@guyberry.com

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Comments (15)

Shaun Wren
AGENTFORLIFE - Lakeland, FL

Wow. a lot of people didn't want you to say that.

May 08, 2008 01:04 PM
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker
Guy, I wrote something similar recently (just not quite so pointed :)  encouraging buyers to have their own representation rather than just calling the name on the sign.  In LA, dual agency is when the same AGENT represents both side.  If another agent in my brokerage brings a buyer, it's not considered dual agency, although I know that lots of states are different.  I just can't wrap my head around trying to give 100% to two different parties in the same transaction.
May 08, 2008 01:12 PM
Mott Marvin Kornicki
Waterway Realtors® • Notary Public & Apostille - Sunny Isles, FL
Miami Notary & Apostille 786-229-7999

We represent "The Transaction" - often we are in a position of dual agency and we deal with it accordingly. Absolutely, there is potential for a conflict of interest and the possibility of being exposed to a lawsuit.

DISCLOSURE IS KEY!

May 08, 2008 01:12 PM
Shaun Wren
AGENTFORLIFE - Lakeland, FL

How can you on one hand negotiate the best buying price and selling price both?

May 08, 2008 01:16 PM
Melissa Schnieders
Melissa Schnieders Photography - Wichita, KS
I can't play for two teams at once and I don't want to be the referee.  Yep, I use the Football analogy to explain agency to the clients.  PS I like your photos - it's different and eye catching!
May 08, 2008 01:19 PM
JoEllen Stranger-Thorsen
Eustis, FL
Lake County, FL

Welcome to AR Guy! Way to jump in with both feet...

Actually, even though Florida is a "transaction broker" state and it is how we operate I agree with you, one side of the transaction has to suffer in some way. (Unless you get the dream real estate deal where the buyer buys at the sellers asking price with no contingencies and the seller makes the needed repairs because he feels like it and vacates the spotless home two days before closing.)

May 08, 2008 01:20 PM
Lorrie Ann Thomas
One Realty Group Edge - The Sanders Team - Woodstock, GA
In our state of Georgia, I beleive it is called "designated agency" when two agents within the same company are representing both parties of one transaction.   Instead of ever practicing dual agency I just disclose the unrepresented party that I am representing the seller and they are unrepresented. Then if they request represenation I can always ask one of the agents within my office if they would like to represent them, and that would be considered "designated agency". 
May 08, 2008 01:25 PM
Julie Chapman
DR Horton - Ormond Beach, FL
New Homes Sales Ormond, New Smyrna, Daytona Be

In Georgia, we can designate agents within a firm - one represents the buyer and one the seller and conduct themselves as if they are working for different firms while negotiating......it works......actual dual agency (one agent representing buyer and seller is legal in Georgia but not recommended and I do not allow my staff to perform dual agency.) 

I like you because if you think it you are not afraid to share it.....that is what AR is all about......welcome to Active Rain......you have found your "own voice" and I like it......

May 08, 2008 01:27 PM
Ron Parise
LocateHomes.com - Cape Coral, FL
First of all i agree with you. A buyer should always call me rather than the name on the sign (unless of course its my sign)..seriously it is always better for each party to have their own representation, but I dont feel your analogy to the courtroom holds up. in a courtroom one party will emerge the winner and the other will be the loser. In a real eatate transaction both parties are winners. Again, its probably better that each party have their own agent but I dont see that dual agency has to be a bad thing. If everyone walks away from the table happy ...thats a good thing
May 08, 2008 01:35 PM
Paula Swayne
Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA
Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Guy!

The difference between your example in court and dual agency is that you are assuming both are adversarial...not necessarily the case.  We prefer to think that in real estate, unlike attorneys, we are creating a win-win situation.  When representing either a buyer or seller, unless given permission, we can't share confidential information.  What we can do is ask our clients what they want, advise them about what they want and then follow through.  You missed the big advantage of dual agency...the escrow is the smoothest possible!  The agent has control and communication is not an issue.  Dual agency is even easier if it is 2 agents working under one brokerage...they are working independently but under the same philosophy.  While I personally haven't done many, we quite often have them within our office.  They are a true delight and I am a big believer!

May 08, 2008 01:38 PM
Barbara Carter
C21 Alliance Realty Group - New Paltz, NY
Serving Your Real Estate Needs in the Hudson Valle

I for one was not mad- I think it is a great point. Our NY State agency disclosure lays it out pretty plainly- Actually I agree with it- If we are the agent for the seller, our client- we have a fiduciary duty to work in their best interest- if a buyer makes an offer through us they have no agent they are a customer. The thing that is often misunderstood is that any agent working in our office (for the same brokerage) is an agent for all our listings and we all owe fiduciary responcibility to the seller- the designated agency gets complicated and has to be closely monitored. It is up to the broker to assign designated agents. The thing that concerns me is the confidentiality factor- when the representaion comes from two agents in the same office.

In NY it is law that we discuss agency at the first substantial meeting and have an agency dislosure signed- If we show listings from our office and other offices we have to have two disclosures signed. In NY State agency and the agency disclosure is a serious topic.

May 08, 2008 01:52 PM
Paula Swayne
Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA
Realtor-Land Park, East Sac & Curtis Park -Dunniga
In California, agency, by law, is the first thing we have to have signed, dated and timed.  As Barbara said, it is taken very seriously.  I understand that  an agent representing a buyer within the same brokerage is a subagent of the listing agent. However, it doesn't pre-empt an honest and fairly dealt with buyer and seller represented either by the same agent or same brokerage.  I know it can be done, because our brokerage does it relatively often and all parties walk away happy and winners. No matter what the issue, doesn't it always come down to honesty and integrity?
May 08, 2008 02:18 PM
Bill Kennedy
Keller Williams Realty - Greenville, SC
Homes For Sale Greenville SC

Welcome to Active Rain!  This is a great forum. You'll soon be addicted with all the blogs and posts, and you'll find that it's  a great place to learn.  This is a great post to start with - it gets people thinking.

Have a wonderful time. I look forward to reading your future posts!

May 08, 2008 03:39 PM
Anonymous
Guy Berry

I knew this would offend some agents but if you read the posts, some still don't get it.  Yes, it is NOT a win/win case.  An agent has a legal duty to do everything they can do legally to get the best price and best terms for their client.  If that is true,  then you can't do that and still do it for the other side.  A good example would be to assume there is a roof problem  The buyers roofer says the roof has to be replaced.  The seller's roofer says it is old but still has some life.  How can the agent in a dual capacity, negotiate for his client ....which client??  I understand and appreciate that most agents in this position are honest but that is not the point.  If done correctly, Real estate is much more complicated than most of the public understands.  Several people mentioned that my lawsuit analogy did not work.  Well,  answer me this.  Assuming that the lawsuit was a divorce and the attorney represented both sides.  Would that be OK if the agent was neutral,  even if it meant that one of the parties didn't know their rights.  I don't think so and that is why I wrote this blog.  

 

Thanks for all those who answered.  Obviously, I hit a nerve.  

May 08, 2008 05:19 PM
#14
Anonymous
Paula Swayne
To resolve your roof analogy...if nothing is addressed in the contract about it, then the buyers have a choice...they can back out if the sellers refuse to do anything, they can split the cost of a new roof with the seller, they can accept the roof in it's present condition, or they can get a 2 year roof cert, knowing that they will have to replace it soon...all viable options that can be worked out with dual agency in place. What you are missing is it isn't about the agent...it's about the client. Just as in the roof analogy...what do the clients want? It's the same question to both buyer and seller and they get to choose which option they want. It IS a win-win situation if it is approached that way. I don't think you can use law suits or attorneys as an analogy - they are in a win-lose business.  By the by - I am not mad...I simply have a different take since we do it often and all parties feel as if they have won.
May 08, 2008 06:44 PM
#15