Lets start with an easy one.

Do you think dual agency is right? I am very much apposed to it. I believe when I am hired to act as a persons real estate agent (a fiduciary relationship) my primary responsibility is to act solely in the best interest of that party. I don't think that responsibility should end if the opportunity to double my commission arises.

In the practice of law an attorney could never represent both sides of a lawsuit. In fact an entire law firm won't represent both sides of the same case.

Why are agents allowed to represent and in effect, take money from both sides of a transaction? For that matter why is a broker allowed to do this?

I sort of agree but I noticed most of my buyers come out because a listing I have... usually they don't care for the listing but want me to work with them otherwise.
If you feel strong about it and you find the right buyer refer them to somebody else and be honest with them...tell them you are representing the seller in this case and would like to refer them to another agent so they get a loyal representation as well. You'll still get the 25-30% referral fee and you'll be doing what you feel is fair. The buyer and the seller will probably respect that as well.

In the mid 90's I used to sell about 30% of my own listings and therefore did many dual agency transactions. I never had a problem with it and neither did the buyers and sellers.
Several states have done away with dual agency and replaced it either with transaction broker or facilitator or designated broker like in our state.
As more lawsuits arise out of dual agency contracts, the states RE commission and legislature will start looking at this conflict of interest and start changing it.
It’s just another progression in how the business of RE is done, I would not try to circumvent the RE laws because of personal moral or ethical beliefs, I leave that up to the RE commission.

I am absolutely against it. I don't think there is any possible way to stay unbiased to both parties at one time. I think it's a powder keg and a lawsuit waiting to happen.

We no longer have "dual agency" here, but we do have intermediary clauses in our listing contracts, either with appointments, or without. I prefer appointments, but it's not a requirement where I'm at now.

Taking a stand against dual agency is not a circumvention of the real estate law. Most governing bodies including real estate commissions are reactive and only work on changing what is broken after many consumers have been wronged and many complaints filed. Why not take a stand ahead of the real estate commission. Isn't that the ethical thing to do?

My feeling is that dual agency should be avoided at all costs, even if it means not making as much money on that transaction.

That is a personal choice you can make, but since it was the companies (C-21) policy at that time and legal, I was not willing to give away a large part of my business, especially since I or anyone else I dealt with never had a problem.

Well that's great that no one had a problem, but do you really think that both parties received there moneys worth? Did you represent them both as well as you would have if you had only represented one party? I don't see how you could have.

That is a personal choice you can make, but since it was the companies (C-21) policy at that time and legal, I was not willing to give away a large part of my business, especially since I or anyone else I dealt with never had a problem.

Absolutely!!! The level of satisfaction by the buyer and seller of how the transaction was handled by me, became even more important with the added responsibility of representing both sides. The level of fiduciary liability was also increased because of it (which keeps you on your toes).
Like I said, that was then, and this is now, and we don't have sub and dual egency any more.
What is your take on Designated Broker, given your concerns about dual agency?

I would suggest that your clients level of satisfaction had more to do with the fact that they like you. When you represent one client in a transaction don't you try and negotiate the best possible terms for that client? Isn't that part of the service you normally provide. How can you do that "representing both parties"?

I am not familiar with the term Designated Broker. In Illinois we use the term "Managing Broker" and "Designated Agent" A managing broker designates an agent to represent the brokerages client. Is your question about designated agency vs. sub agency?

Designated Broker.
Where the employing broker can have 2 agents (buyers agent and sellers agent) within the same company represent (agency) the buyer and seller on one property, without having revert to transaction broker relationship.
http://members.ppar.com/private/designated_brokerage.asp

I would replace the word "like" with "trust" and you would have had it right.

You are right, trust.

I have started to read the doc you provided a link to, very interesting. Your state real estate laws are very different from ours.

Thanks

The word is that we are one of the most progressive one license (broker only) state in the nation. We have full recognition agreements with 27 states (no exam required) and limited recognition with 9 states (state portion only).
My personal preference would be a one license nation, to where buyers and sellers can expect the same legal treatment and understand the buying and selling process to be the same throughout the nation.
Maybe next year, HA!

That would be a great thing, having a national code. I wont hold my breath though.

Not a big fan of "nationalized" anything.....gets much too cumbersome.

But then, I'm a pretty staunch supporter of states rights.

I'll trade in my US National Passport for a Texas one.
Having lived in N.Y., CA, N.M., TX, LA, AK, AZ, CO, I really would have appreciated a National Drivers License.

I'm sure it would be every bit as efficient, organized, and responsive as: the IRS, Social Security, Homeland Security, Medicare, the War on Drugs, the War on Poverty, No Child Left Behind and all the rest.

I too have a US passport, but I just don't think I want the feds in real estate. Everything they touch seems to turn into one big, expensive wreck.....not to mention they'd find a way to add a few more taxes into the mix to fund all of their pet projects for their friends.

No thanks, but I do find your viewpoint interesting.

Don't forget the Armed Forces! Imagine none of these Departments would exist (War on Poverty, No Child Left Behind don’t qualify as such), would we be better off with or without them, or should each state take care of these issues themselves?
As to RE licenses, as I mentioned earlier, I can practice in 27 states without retaking any exams today, why not just add another 25 and we have the US and part of Canada covered? To get this far did not involve the Feds. just co-operation between states.

Politics is for another forum; but states do have the right to have (or not have) reciprocal agreements as they see fit. I would just hate to see any federal body pre-empt (sp?) that right.

I agree.

Duel Agency - Is considered by the courts as a conflict of interest and illegal irregaardless of what the real estate industry choses to call it. Real Estate then renamed it "Consentual Duel Agency" in that it was what all the parties to a transaction wanted and "consented" to in writing, thus giving it legal standing, or so they believed. Many lawsuits against duel agents have been settled quietly by insurance companies in order not to establish case law and to refrain from encouraging other consumers who may consider filing a lawsuit on the same grounds. The plaintiff's counsel is usually always successful is showing that the agent made "inadequate disclosure" of "negative and material facts" and therefore the "consent" was invalid.

I think if it was illegal, agents would not be able to do it.
I'm not saying it was/is the best way of doing business, but when I did it years ago, it was the only way. As long as it was disclosed it was legal in our state.

It's me again. I agree. Dual Agency is wrong. You can't work for two masters and do what you are supposed to for both. However the market reality is that buyers come to the listing agent to see the property and ultimately buy the property.

The regulators accross Canada are in the process of changing the nature of dual agency that would basically allow the agent with his clients consent to become a transaction facilitator.

What I do know is...Dual agency makes me very nervous because it is a conflict of interest.

www.teamjohnston.com

Duel Agency - Invalid disclosure - Agents fail to disclose all the "Negative Features" of Duel Agency and therefore the parties do not receive "Full Disclosure". The solution is a prepared Duel Agency Disclosure Document with all the "good, bad and ugly" details, with the option to obtain " Independent legal advice" (which may be waived) and have all the parties acknowledge receipt of their copy and your home free as the courts normally believe the parties made an informed decision, given their written consent, and consequently have no case against the agent.

Is the first sentence of every one of our contracts.

As an agent I’d advise not to expand the disclosure on your own, with your own verbiage. The possibility of not getting it right will increase your liability. These were the required disclosures:
This relationship involves the following limitations:
· The Agent will deal with the Buyer and the Seller impartially.
· The Agent will have a duty of disclosure to both the Buyer and the Seller except that;
· The Agent will not disclose that the Buyer is willing to pay a price or agree to terms other than those contained in the Offer, or that the Seller is willing to accept a price or terms other than those contained in the Listing;
· The Agent will not disclose the motivation of the Buyer or the Seller to sell unless authorized by the Buyer or the Seller;
· The Agent will not disclose personal information about either the Buyer or the Seller unless authorized in writing;
· The Agent will disclose to the Buyer the defects about the physical condition of the Property known to the Agent.

What is written on paper and what happens in real life are two different things.

And really, what is the point of having an agent that acts impartially? Would you want your attorney or accountant acting impartially to you? Or would you rather pay them to act in your best interest?

The incentive for "disclosed dual agency" is clearly heavily in favor of the agent making an extra buck. I fail to see any benefit to the buyer or seller to accept dual agency when the agent is going to take both sides of the commission. THE BEST, the buyer and seller can hope for is to be treated impartially. Where is the incentive for them?

At my brokerage, in the rare instances we have a dual agency transaction, the co-op commission is split between the brokerage, seller and buyer.

Duel Agency Again - Not without risks - can you imagine responding under gruelling cross-examination about each and every clause in an "Offer" that you drafted? i.e Did you use the "standard preprinted form"? If so, What clauses did you add or omit to add to the "Offer"? Describe for us what your purpose was in each instance for adding or omitting that particular clause? (the attorney has a long list of clauses) Describe for us to whose benefit or detriment did that particular clause relate? No matter how the agent answers, he will be cast as someone without creditability motivated by his own personal greed and the plaintiff's attorney will attempt to show that the agent did in fact favour one party to detriment of the other... A "No Win Situation" costing the agent time, money and a lot of stress.

That's why our state went to this:
http://members.ppar.com/private/designated_brokerage.asp

I will only do Single Agency - That does NOT mean that I will not write on my own listings, that only means that the Buyer WILL NOT have any representation and I would never do that to a 1st time home buyer or an inexperienced buyer. I tell them that they need to have a Broker to represent them. On a FSBO if I have a buyer for their property I negotiate my commission to be paid by the Seller but I redundantly make it clear verbally and in writing that I am only representing the Buyer even though they are paying my fee.
I believe when a Broker (In Oregon all Agents are now Brokers and there are no Agents. There are Brokers, Principal Brokers and Principal Brokers/Managers (The Broker Broker) ) represents both parties (the Sellers and the Buyers) that Broker is actually representing the commission and not either party - (I know I am going to get a lot of &#$% for that but I truly believe it). How can a Broker represent each party 100% - It cannot be done!

Everyone misusing the word Duel for Dual gave me quite a chuckle!

How true... dual agency is a "duel" between masters!

Scott

Well said.

Now let me ask you a tough question. When you are the listing agent and you bring in a unrepresented buyer, does your client benefit from the situation?

That's Canadian speak. How do you say it in Alabama? :p

My seller would be a happy camper.
Personally I don't represent either party when I have the seller and buyer on my own listing, I revert to a transaction broker and just handle the paperwork.

Of course they benefit. I am only representing the Seller therefore any and every thing conveyed to me by the Buyers is conveyed to the Sellers. Say the home is listed at $150,000 and the Buyer tells me that he/she wants to make an offer at $145,000 to see if the Seller will take it but he/she would pay the $150,000 if not. The sales agreement is written for the $145,000 per the Buyers request but it will be countered at the $150,000. Because of this very situation is why I will NOT do it with 1st Time Home Buyers or inexperienced Buyers. I only do it when the Buyer is experienced ie: Investor etc. I wouldn’t be able to sleep at night if I did. Actually the reverse is what usually happens when I represent a Buyer and the Seller is a FSBO. They state that they want $150,000 but after agreeing to a single party and they pay my fee BUT in total agreement that I only represent the Buyer (Redundantly). They are the ones that end up costing themselves money. I don’t know what it is but as soon as they sign the one party fee agreement they will start talking and end up stating that they would take a $145,000 for the property. I comp the home and it is usually worth more than what they are asking for it. (And FSBOs don’t want Broker help). My fiduciary responsibility is to my Buyer not the Seller. The last FSBO home I sold the comps came in at $196,000, the appraisal came in at $196,000 and my Buyers purchased it for $182,000 AND the Sellers paid my fee. Where did the FSBO save being a FSBO. Oh and the buyers also got the frig -
If you are asking if they benefit on the commission - They may or may not. It depends on each individual situation.

Almost everything I do is dual agency. But then, 90% of my business is REOs, and the banks don't listen to me as their list agent anyways. I'm just a paperwork flunky.

Realty Freak - The Designated Broker in Illinois is the Managing Broker. The state defines the managing broker as the Designated Broker since many companies have more than one Broker/owner.

We also are a Designated Agency State. The Broker may have one agent represent the seller and another agent in the same company represent the buyer. It is only when the same designated agent represents the buyer & seller that Dual Agency comes into play.

Dual Agency is risky, but at times necessary - to say one would never be one is naive. Here is a real situation:

You have been working with Betsy Buyer for several weeks looking at homes - she has informed you if a home that meets all of her needs comes on the market in a certain neighborhood she would overpay just to live there. You represent her as a buyer's agent.

Your sister just called you because her husband just took a job out of state & they have to move quickly and will even take less for their home if they have to. Their house is perfect for Betsy Buyer in the exact neighborhood she wants.

Yes, you can refer Betsy or your sister to another agent for representation - but you are still a dual agent by default and MUST disclose this and act as one - even if one of them is now represented by another agent. No one is going to believe that you don't represent your sister's interest to some extent. You have worked with Betsy showing her homes; you represent her & minimally know some confidential information. You cannot turn around & tell your sister that Betsy will pay whatever she wants and you cannot tell Betsy your sister will take less for her house because they "have to move". You are a Dual Agent without ever intending to be one - you cannot tell the other party something very relevant to their individual situation that will either cost or save them money.

You could even substitute former client for “sister”. If you know confidential information about one party having previously represented them as their designated agent, you must still keep that information confidential - creating dual agency.

This is a real life situation where Dual Agency is unavoidable. I agree that we should try to avoid it. I advise my agents to do so. But I warn them to keep their eyes open; because when you least expect it you may end up being one.

Annette,
Freak is a Chicago agent so he is aware of RE rules in our state. Actually Designated broker and Managing Broker are not always the same. There is always a single Designated Broker for the company but if the company has several offices then each office will have a Managing Broker.

Your "real Dual Agency situation" is not factually correct under agency law. Once you refer either the sister or your buyer to another agent who either lists or becomes the buyers agent you now have No Agency relationship with that person, you may have disclosure issues but Not an Agency Relationship.

Using your example it is your sister who you have never had an agency relationship with unless you she signed the listing contract with you. You seem to be confusing Disclosure with agency.

I disagree, no one is a dual agent by default. It is an ugly practice to keep quiet when you have information that you refuse to disclose to benefit yourself for a quick sale.
Agents are "supposed" to be honest. But even I have kept "secrets" to get a deal for myself, although I knew if I disclosed certain information I would have lost a sale. When you go months without making a sale it is hard to be honest and not think of yourself, especially when you are desperate for any sale as I was...

Agent Scooks
To which post were you responding to?

YOU just said it!! act soley in the best interest of that party. What if a dual agency was in the best interest. What if you told you clients, I will not take the buyers agent portion of the commission. You are effectively not double ending and being that you are saving them money, working in their best interest.

Rick that is a good point that you make and not double ending the commission certainly does remove most if not all of the conflict of interest.

I think that most people overlook the importance of the terms other than price that go into a successful real estate transaction. To be sure, price usually ranks way at the top, but it is seldom the only issue.

In Illinois, a dual agent can not advise ethier party. A fiduciary that can not advise their client has very little value in my opinion.

So in IL they cannot advise, I am assuming they mean give recommendations during negotiations. Now, I would also assume that doesn't include giving people their options and conciquences of those options ( pros and cons ).

What I have found is by puting this terminology on an addendum and making both parties aware that you are essencially going to remove the advise part and just do the "here are your options" part, literally everyone understands how the relationship needs to be. 99% of people don't expect you to lie to the other party in a dual agency. They expect you to be honest and ethical.

If each party understands what it is you have explained to the other and the ramifications of those choices things go surprisingly smooth. Now you have two referrals instead of 1.
:p

Texas does not have dual agency.

I've worked as an intermediary before, where I basically facilitate a transaction. I've generally done these between parties that had already come together on something and just needed someone to assist with getting the transaction done....contracts; coordinating inspections, appraisals, etc. Everyone involved has to sign off on the proper disclosure forms.

I also sell quite a few of my own listings. I've always been clear to the prospective buyer(s) that I represent the seller(s); making sure to give them a copy of the state required disclosure. A huge number of buyers don't seem to care, they want me to go ahead and write the deal knowing that I represent the seller. I always offer to refer them to another agent that can represent them, few ever take me up on that offer....Must be a regional thing judging by some of the other posts here.

Nothing wrong with double-siding the deal so long as all parties are informed as to who represents whom....and all in writing.

You must be really proud of yourself....Please consider another profession.

Shame on you -
You obviously were not working for anyone other than your commission - Go away -