I live in Maryland.

I found a house on the internet and called the listing agent to look at it. I liked the house. i didn't have my own agent so i ended up using the listing agent as my agent.

I didn't sign a buyer's agreement, but i did sign a Disclosure of Dual Agency form. There were no other agents involved.

The agent got a 4% commission on the transaction.

I always thought a dual agent was one person who represents both the buyer and the seller. Well, recently, i learned that a dual agent is "when the buyer's agent and the seller's agent both work for the same real estate company, and the buyer is interested in property listed by that company."

Did my agent do something wrong or unethical by acting as the only agent representing both the buyer and seller?

Thanks

If you did not sign a Buyers Agreement, than you are not going to be represented in this transaction. This agent has disclosed to you that there is a dual agency situation. (Broker doing both sides of the transaction)

It is important for you to understand that Dual Agency means that the broker (agent) will be responsible for the transaction. It has nothing to do with how the broker (agent)is representing each side.

This agent is representing the Seller, is the Seller's Broker to the Seller and has fuduciary duties to the Seller. Since you have not signed a Buyers Agreement, you the agent will be a Subagent to you and will not have any fuduciary duties to you.

"Did my agent do something wrong or unethical by acting as the only agent representing both the buyer and seller?"

The answer is no as long as the agent explained to you Agency Relationships.

------------------
If you are honest, you don't have to remember anything ... Mark Twain

Thanks for writing.

I guess i'm still confused because the paper i signed said:

State of Maryland Real Estate Commission
Consent for Dual Agency

When Dual Agency May Occur

The possibility of dual agency arises when:
-the buyer is interested in a property listed by a real estate company; and
-the seller's agent and the buyer's agent work for that same real estate company.

That is quoted from the paper i signed.

So it seems that according to Maryland, a dual agency relationship involves 2 agents. But in my transaction, there was only one agent.

The key term here is broker. A broker is the one person who is responsible for all the agent's within the office. Whether there is one agent or two agents handling both sides of the transaction, if the agent or agents are with the same real estate brokerage, dual agency will exist.

Jim,

Some additional clarification is needed, I think. You are referring to Consensual Dual Agency, I believe, where all agents within the same company represent all clients.

I work in a Designated Agency office in Iowa - the only clients I represent are MY sellers or MY buyers. If I sell a house listed by my company, I am NOT in dual agency. However, if my office were consensual dual, I would be. So for me, the only time I am in "dual agency" is when I am the listing agent AND have the buyer, at which point I am "fence sitting" and can neither advice nor advocate for either client. I do NOT represent the seller and "ignore" the buyer - I represent both, but by doing that this means I "fence sit". I must maintain confidentiality to both parties, so full disclosure (normally required) has to go. I cannot provide full disclosure to both sides and maintain confidentiality.

I think the original poster should call his agent and/or broker and ask if they are Consensual Dual, Designated Agency or Transaction Broker to get clarification.

Cheri, Realtor in Iowa

How dual agency works is dependant on jusidication. The scenario that Jim describes is the same here in British Columbia, Canada.

An agent/realtor works for a broker or agency usually as an independant contractor. The agreements are with the agency/broker represented by a realtor/agent in the transaction. Every transaction has two sides, listing and selling. Dual agency means both sides represented by the same agency/broker whether or not it is the same realtor.



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Jeffery Shields
RE/MAX Select Properties
Vancouver, BC
jefferyshields.com
jefferyshields@remax.net

I am not a lawyer and I am not giving legal advice. The information provided here is for information purposes only and should not be relied upon without seeking proper legal advice.

Yes, I agree it varies by jurisdiction. Our designated agency paperwork is very clear on how our dual agency works, and it is only when I personally have both the buyer and the seller (and I am an independent contractor, as are most agents). However, there are other companies in my city that are "consensual dual", and that is the situation you are describing with Jim and yourself in Canada.

I think it is very important for buyers and sellers to understand how the agency works with their particular agent and company.

Cheri, Realtor in Iowa

In states where dual agency is legal, the real estate agent will serve the needs of both parties fully, because good business practices and professional integrity require honesty and fairness. If a buyer and seller are both represented by the same agency, they will be asked to sign a dual agent contract acknowledging the affirmative obligations of the real estate agent...

LOL, someone in India posted the best answer to the OP's question.


"Did my agent do something wrong or unethical by acting as the only agent representing both the buyer and seller?"

No, as long as this is allowed under state law.

This is probably the best explanation by Ann Joliet: (and your agent did everything right when disclosing dual agency to you)

Dual Agency
Understanding Dual Agency in Maryland

In Maryland, a single agent cannot represent both parties ( Buyer and Seller) - it's illegal. However, "Dual Agency" is permitted, but it is defined differently than in most other states.

In Maryland "Dual Agency" applies to the status of the "Broker". Dual Agency can only occur when a listing agent and a buyer's agent, who both work for the same broker, become involved in a single transaction together. The Broker becomes the "dual agent". The seller is still represented by the same seller's agent, and the purchaser is still represented by the same buyer's agent. Although neither of the agent's relationships with their clients change, in a dual agency arrangement, they are now formally classified as "Intra-Company Agents".

Example:

At Re/Max Realty Centre Inc., Betty Buffington is the Broker. If Ann Joliet, a licensed Realtor, lists your home, she would be your "Seller's Agent". If a buyer's agent working for Betty Buffington, presented a contract on Ann's listing, both agents would now be classified as "Intra-Company agents. Betty would become a the Dual Agent, since both agents are working under her Broker's license.

In a transaction when a Dual Agency situation occurs, each agent still represents their client in the same capacity as in any other transaction.


All Maryland Realtors maintain individual real estate sales licenses. Agents cannot practice real estate without being associated with a licensed Broker, who is registered in the state of Maryland.

"Dual Agency" must be disclosed to both buyer and seller and a special disclosure form accepting the "Dual Agency" arrangement must be approved and signed by all parties.

Click Here to review the disclosure form "Consent for Dual Agency"
http://www.move2olney.com/PDF_Files/Contract%20Forms/Consent%20for%20Dual%20Agency.pdf

Ah...but then you have the situation where Betty Buffington (THE Broker) is representing a Seller and now, also, will be representing the Buyer of this Seller's property - you now have Dual Agency.

And 2 very important points to remember from the Maryland Form " Consent for Dual Agency":
Important Considerations Before Making a Decision About Dual
Agency

1) A dual agent does not exclusively represent either the seller or buyer and there may be a conflict of interest because the interests of the seller and buyer may be different or adverse.

2) As a dual agent, the real estate company does not owe undivided loyalty to either the seller or buyer.

Dual Agency does have here in Minnesota as well. And you are exactly right, it is when the brokerage represents the seller and the buyer on the MLS listing.

I have found: depending upon the listing agent and the volume of listings that he or she carries, most high volume agents do not take their own "sign call" leads. They pass those to buyer agents.

Regardless, dual agency does happen and of course the real estate brokerage involved needs to make all of the proper disclosures accordingly.

Dual Agency - Dangerous Ground


Let’s assume that the buyer has consented to a dual agency relationship and is not happy with the way in which things are going and visits his lawyer.

The lawyer examines the documentation and might advise his client as follows:

1. Notwithstanding a consensual dual agency agreement, each agent has a fiduciary duty toward their principal.

2. That in order for the principal’s consent to be valid, they must have received full and timely disclosure, prior to giving their consent.

3. In order for the principal to make an informed decision, the disclosure must contain all the negative elements of a dual agency relationship, failing which, the disclosure may be deemed inadequate and not full disclosure as required and the consent to dual agency may be ruled invalid.

4. The preprinted standard form utilized by the buyer’s agent, wherein through either negligence or by design and without the express knowledge or consent of their principal, failed to remove or modify detrimental clauses contained therein benefiting the opposing party, and should be held accountable.

5. That the buyer’s agent breached their fiduciary duty to their principal.

6. That the buyer’s agent, either through negligence or by design, and without the principal’s express consent, utilized the standard preprinted Agreement of Purchase containing clauses that clearly beneficial to the opposing party and detrimental to their principal’s best interest.

One should think very carefully prior to stepping onto this slippery slope, as litigation can be both time consuming and expensive.

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

"THIS IS A BINDING CONTRACT. THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING."

The above statement is missing from the Maryland Form and should be added and read to every client. One page forms can't be all inclusive and I don't know if this is a mandatory form to be used by agents, but regardless, agents usually are not competent or authorized to write or remove protective clauses modifying contract forms for their clients.

Different Strokes for Different Folks

Locally and perhaps different than other jurisdiction the law of agency prevails and is supported both by case law and the courts

Locally, the courts have maintain their position that the law, in all respects, supercedes the wishes and/or dictates of a real estate organization and any other private organization.

Locally, a real estate agent has a fiduciary duty under the law of agency to follow all lawful instructions of their principal and act in the best interest of their principal, otherwise they can be prosecuted by the regulatory authorities and sued by their principal in civil court for a breach of their fiduciary duty.

Locally, preprinted standard form contracts and other related documents may not be suitable in all instances or according to the express instructions of a knowledgeable principal and therefore the agent is compelled by law to modify the standard form through the appropriate additions and/or deletions and basically modify the original preprinted document.

Locally, agents through their mandatory education and training are expected to be able to read, interpret and draft real estate contracts and other related real estate documents.

It is worth noting that locally most real estate organization coach their recommendation of the preprinted forms with a “disclaimer” stating that their recommendation are guidelines only and are not mandatory.

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

"Locally, preprinted standard form contracts and other related documents may not be suitable in all instances or according to the express instructions of a knowledgeable principal and therefore the agent is compelled by law to modify the standard form through the appropriate additions and/or deletions and basically modify the original preprinted document.
Locally, agents through their mandatory education and training are expected to be able to read, interpret and draft real estate contracts and other related real estate documents."

Locally, drafting real estate contracts vs. filling in a few blanks, would be called "practicing law".

I'm a notary/real estate and right of way agent here and having dealt with Canadian notaries recently showed me how different educational and other requirements can be from state to state or country to country between the same profession.

Not being confrontational-- but do you not draft counter-offers, addendums, add'l terms/conditions as part of your work?

Again, varies state to state.

Pike peak


The practice of law issue in this instance was resolved with the law society and because of our training and the long time practice of drafting the required real estate documentation, the provincial Ontario Real Estate Association succeeded in obtaining an exempion from the law society for real estate agents in this regard.

"Not being confrontational-- but do you not draft counter-offers, addendums, add'l terms/conditions as part of your work?

Again, varies state to state."

Counters, yes. Addendums, no, unless they have been approved by the Colorado Real Estate Commission, or have been written by an attorney for the real estate company. We can only use approved forms. (see below)

http://www.dora.state.co.us/real-estate/contracts/contracts2011.htm

p.s. many real estate companies here use addendums that were written by an attorney specifically for that company.

Okay, so you're writing counter-offers, and they become a part of the contract. So you're writing a part of the contract. And you're not an attorney. And I'll bet that if your client wants some add'l terms/conditions in the contract, you'll write them, too.

What do you do when one party wants to change the terms/conditions of agreed purchase contract? Something has happened that needs to be addressed and made a part of the contract. You can't have a form for everything that could come up, right? I guess you'd have to write an addendum yourself. Yes, Addendums are usually pre-printed, but ours contains all these blank lines so that the agent can write up what the client wants.

For many years agents have been using the "Realty Bluebook" to help them in phrasing contract terms, I still have a copy I used dated 1992, so yes, we write things in contracts but don't try to be too creative.

http://www.realtybluebook.com/

Dual Agency, as seen through the eyes of the Consumer Advocacy in American Real Estate group in their article titled " Dual Agency is the Ultimate "Bait and Switch"

Their article may be viewed at the following Website:

http://caare.org/content/dual-agency-ultimate-bait-and-switch

Note ..... that NAR may be in agreement with their views.

That was a nearly well-written article; but, I disagree with "to enable real estate brokerage firms to double in size and to unfairly collect double commissions" because it is the Listing Broker who will recieve ALL of the commission from the Seller if they find a buyer for the property. It is when the commission is offered in co-brokering to find a buyer that it is shared.

There are those of us who do 'reduce' the commission because it is a limiting position (at least I do). We give the Seller that 'choice' to accept or decline dual agency (at least I do).

But I'm all for outlawing it. But, what happens when the Listing Agent and the Selling Agent are under the same Broker - the Broker is always 'dual agent' - can't get away from it. Only alternative would be when one has a listing, no one in that LB's office can 'sell' it to a buyer. Put a damper on business indeed. Now you've got to 'refer' your buyer to an agent in a different office with an entirely different broker not related or affliated.

Look at all the lawyer’s in the world who are prohibited in most jurisdiction of becoming involved in “conflict of interest” situations with the imposition of a range of penalties for violators.

Lawyers are required to check their files for a possible of conflict of interest, prior to accepting the representation of a new client.

Most real estate organizations and most (but not all) of their agents don’t really care, they want the MONEY.

It's just one of the many distinctions between the ethics of the legal profession and that of the real estate profession.

The real estate industry clearly needs to IMPROVE.

I agree!!!

All the talk about raising the bar is just blah blah blah.

Excellent analogy. The real estate industry deals with frank conflict of interest by saying in dual agency, we "sit on the fence". What good then, are we to anybody? Representation demands aggressivity and tenacity on behalf of the client. A sports agent doesn't work for the owners AND the player, does he? He doesn't "sit on the fence". Who the heck would hire him to get a deal for themselves if he was "sitting on the fence"?

I've never been able to come to terms with all the "gray" areas in our profession. All the "maybe", "possibly", "it depends" answers we get to our questions about agency.
Smoke and mirrors.

Many states, like mine, prohibit dual agency.
Just because another broker in the same office brings a buyer, does not create an ethical dilemma for me, most of the time I don't even know or have spoken to the broker. Many brokers form their own companies under the umbrella of a larger company.
Also, we have assigned "designated brokers" that will not cause an ethical problem to represent a buyer or seller where the listing is in the same company.

Dual Agent & Dual Agency

It has been suggested that, whereas, the real estate industry in various jurisdictions have intentionally chosen, in the economic self-interest of some of their members, the position of “wilful blindness” a legal term (sometimes called ignorance of law, willful ignorance or contrived ignorance) with respect to “dual agency” and the obvious “conflict of interest” dilemma,

The choice of "wilful blindness" in this regard is believed to be an unfavourable reflection upon the integrity of the majority of true real estate professionals, who successfully maintain their ethical standards of practice and endeavour to enhance the reputation of their profession on a daily basis.

Wilful blindness is a legal term. as was defined in the Enron scandal where it was stated "that if there is knowledge that you could have had and should have had, but chose not to have, you are still responsible."

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

Dual agency can present a lot of conflicts and I try to avoid it like the plague. The only exception is seasoned investors on my REO listings.

But plenty of sellers expect that their listing agent will bring the buyer to the closing table, so they tacitly approve dual agency even before it is formally presented. And plenty of buyers think they have to contact the listing agent to make an offer. So who is to blame?

I love dual agency. It makes the listing broker look great. you just need to know how to do if effectively.

shana - You confuse me. Other times, you seem to throw the real estate Bible at other topics and yet here you're all for dual agency. I only did dual one time - for a friend who was selling and it was the most difficult thing because truly the 'agency representation' went right out the window with the seller and the buyer I represented.

PA Roadkill's remark about buyers thinking they have to use the listing agent. I don't think it's that so much as they 'think' they'll have a better edge using the listing agent in order to purchase the property - particularly in a hot market. Even if an agent did a variable commission on dual agency, the seller wins inasfar as not paying the full commission; but, buyers have this idea that b/c of the 'possible' commission savings (and this is not always the case either), that the seller will choose their offer b/c the seller is saving money from the commission. I'd rather see a higher offer come to my seller versus saving a few bucks on commission. Agents walk on very thin ice when they now can't counsel their seller nor the buyer - so agency representation just went out the window.

Think about the fact that if agency representation goes out the window in the future, r.e. agents will be middlemen. How is it best to save money - get rid of the middlemen - particularly if they offer no value. Sellers and buyers don't get value with dual agency in negotiations.

no, agency law is well established, it will not go away. It is not true that a dual agent cannot counsel both clients. In fact, the dual agent/broker MUST counsel both clients. It is a fine line to walk, but that is where the broker's skill in disclosure and negotiation is paramount. If you don't understand the legal nuances, don't try it.

I fully understand the legal nuances, and, I more so understand the real estate board ramifications if they don't agree with an agent's point of view during an investigation. If you haven't read any past violations via your real estate board, start reading.

Let's get serious about agency representation - those 'fiduciary duties' an agent has - duties an agent MUST provide even if that agent NEVER gets paid.

How would anyone feel if they were being sued, they hired a lawyer only to find out the complainant was also being represented in the case by the same attorney? Do you feel you're going to have an attorney who is fully on your side, seeking out every piece of evidence to clear you? How are you going to feel when that attorney says, "I'm sorry, I can't discuss that part of the case because I also represent the complainant."

Heaven help us if defense attorneys are also allowed to be prosecutors in the same case; but, they'll never be permitted because their real professionals. Dual agency isn't professional, dual agency's bottom line is an agent's greed.

A buyer client and the agent would both be best served if the agent referred that buyer to another agent (with a referral fee of course). So an agent doesn't 'lose' their client, the agreement CAN state that the referral applies to only that particular property.

A couple of extra bucks just isn't worth the pain it may cause you later. Sing about all your broker skills in disclosure and negotiations you want, but I know it can be one miniscule little item that an agent didn't think was very important that may bring that agent to their knees.

the California Courts have ruled that dual agency is okay...at least California's definition of dual agency. that's good enough for me.

"How would anyone feel if they were being sued, they hired a lawyer only to find out the complainant was also being represented in the case by the same attorney? Do you feel you're going to have an attorney who is fully on your side, seeking out every piece of evidence to clear you? How are you going to feel when that attorney says, "I'm sorry, I can't discuss that part of the case because I also represent the complainant."



well, that ain't gonna happen, because lawyers are required by law to avoid conflicts of interest, and NOT represent opposing parties to a complaint. the lawyer CANNOT do it, it's moot. that lawyer will be disciplined or disbarred in short order.

There is an old saying "Don't believe a thing you hear and only half of what you see"

Which takes me back to the time when the whole of organized real estate believed that everyone worked for the seller, and that all selling agents were all subagents of the listing broker and therefore they too also worked for the seller.

Agents were forced to accept that as fact, or face charges before the local Professional Standards Committee.

But, they were wrong and the courts said they were wrong, so organized real estate set about the task of working around the law of agency rather than complying.

The courts are not opposed to is what is deemed "consensual dual agency" where all of the parties, after receiving full the and timely disclosure of all the positive and negative elements of dual agency, then the parties are supposedly in a position to make an informed decision, and to give their express consent, if they so desire.

Unfortunately, some agents fail to mention in their disclosure any of the negative elements involved in a dual agency relationship.

You can counsel the parties. What you cannot do is give either one an "edge" that is based on information that's confidential. In single agency anything you find out about the other side that's helpful to yours, you would reveal. But not in dual agency. But try this on-- You're the listing agent and you KNOW that the seller is soooooo close to having to sell short. You get a buyer. Now, maybe in a few weeks, the seller will have to list the property as a short sale or risk losing it. So, in a few weeks, the buyer might be able to save some $$. BUT, you can't reveal that to the buyer in dual agency. So, later the buyer finds out. Anybody can get sued.

Old Dual Agency Disclosure Script

When the law of agency and buyers agency first began, many sales representatives didn't like the law of agency and didn't like buyer's agents and resisted the change by initially making their verbal disclosures in the following or similiar fashion.

Mr & Mrs Buyer you don’t want or need me or anyone else as a buyer’s agent and I will tell you why ..... If you were to engage MY SERVICES or the services of anyone as a BUYER’S AGENT ... they MIGHT have to charge you six, seven or as much as eight thousand dollars on the purchase of a home, whereas if you sign this “dual agency agreement” the SELLER PAYS FOR EVERYTHING and you get my services for FREE.

And it Worked .... the Buyers signed

Now, would this appear to be misrepresentation to a judge and if so, would it be innocent or fraudulent misrepresentation ?

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

I have read all the posts here which all are very informative both pro and con. As a newbie to the real estate agent world I have a question.

Other than the possibility of making more money what advantage is it for an agent to be a "dual agent"? Is there any other advantage?

I may be wrong but I agree with PA Roadkill that I would want to avoid them like the plague.

I wrote one possible answer elsewhere just this morning:

I like these because there's only One Cook in the Kitchen:

I don't have to carry someone else's ill-equipped Agent across the Finish Line.

But Vermont now dis-allows Dual Agency . . . . the closest thing we have is to become a Transaction Broker, or what our law technically refers to as a "Limited Agent" meaning not being an advocate for either side; and just attending to the ministerial aspects of the Transaction . . . . not much more than being a "wet noodle".

I'd much prefer to just represent one side of the transaction and let the other side acknowledge that they are going un-represented; but will always be treated fairly PLUS they'll have their own Attorney (if we ever get that far).

When dual agency was permissible in my state, I did about 30% of all of my transactions (25-50 p/year) as a dual agent. I never had a problem. The sellers were pleased that my marketing sold their property , my broker was pleased because we were double ending the transactions, making more money, I/ we (my wife and I worked together) was pleased to have an easier transaction, without the interference of another agent.
As far as agency goes, I will perform according to what the sellers and buyers want and what the law dictates and allows, not what I personally might interpret as ethical or not. Real estate laws change every year and I'm flexible enough to change with them.

VA Broker

I AGREE

The Old Dual Agency Disclosure Script, that I referred to, was used by unscrupulous agents at a time when our 32 year old Real Estate and Business Brokers Act contained nothing about dual agency or agency law whatsoever and was clearly outdated.

The old Act was quickly replaced and contained many of the prohibitions and requirements as stated in your post.

Under the (New) Act we are now governed by the Real Estate Council of Ontario (“RECO”) the provincial regulators and their authority supercede all real estate board and association with regard to the investigation and prosecution of offenders of the Act. and through Hearings before their Administration Tribunal they can impose fines upon an individual of up to $50,000 and up to $250,000 upon a corporation as well as impose the suspencion or cancellation of a guilty offender licence .

Although RECO’s mandate is the protection of the consumer and the enforcement of the Act , their Administration Tribunals do not award monetary damages to the complainants, and they must file a civil lawsuit for monetary damages.

Where we may differ, is that in instances where we are deemed to be acting as the fiduciary agent of our principal, then our primary duty then lies not in selling or buying a property, but in preserving, protecting and furthering the interests of our principal.

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

Devil's Advocate - You state it so eloquently, it sounds beautiful! I'm just a meat and potatoes type person.

This following may be of interest to various parties who value their rights.

THE REAL ESTATE INDUSTRY vs. THE COMMON LAW OF AGENCY

THE LEGISLATOR’S CHOICE
To defend the rights of people under the common law of agency, that has served and protected consumer’s for 300 years, or to assist the anti-agency lobby in their strategic national effort to distance the public from them. The anti-agency lobbyist hope to do away with agency law and implement new forms of agency relationships such as designated agency, transactional agency, facilitation agency, consensual duel agency, etc. for the sole purpose of aiding the real estate industry in avoiding being held accountable for any acts and/or omission under current agency law and the ensuing liability as may be involved.

THE COMMON LAW
The Common Law of Agency, simply stated, is the sum total of all court decisions over the last 300 years or so regarding Agency law. It is the body of case law defining what “Agency” is. It is the most important public protections that exists in our culture.

THE QUESTION BEING DECIDED NATIONALLY
Should the real estate business be structured under that law so that it mandates that agents must serve their clients faithfully? Or should it be structured so that it caters to real estate firms by allowing the firms to steer the clients to “choices” that benefit the real estate firm momentarily, while eroding client protection under the common law?

THE MECHANISM OF ATTACK ON CLIENT’S RIGHTS
Agency law is being decimated in the legislatures of the nation, the attack empowered by the nation’s strongest business lobby, and enabled in part by the confusing nature of the proposed legislation, which is often specifically written to avoid being well understood by busy legislators. Agency law is being attacked because it protects client’s rights, and because it mandates that all actions by real estate firms be free of conflict of interest. Some powerful groups in real estate feel that distancing the public from the latitude to assert their rights is important to their profit margin. The attack is focused in the legislature, because the courts are more apt to understand the implications of making changes that erode protections under agency law, and are less likely to condone it. It is relatively easy (by comparison) to move anti-consumer law enshrouded in a smoke screen through an overburden legislature. They have limited time to attempt to decipher this issue. The judiciary has more time to think through the complex business relationships than does an overburden legislature. Therefore, the courts have a better opportunity to be more protective of the law of agency, and a better opportunity to be more consumer protective. They have the time to scrutinize the issues, they are harder to trick.

This is why those who attack agency law focus their efforts towards the legislature. By doing so they can overcome the authority of the court, by passing laws that abrogate the common law of agency. The strategy is to take small bites of the law year by year, so no major changes will be perceived.

THE REAL ESTATE PARADOX
Representation, requires conflict-free loyalty. This definition of representation is the basis of the value real estate firms can be said to add to a transaction. It is not possible to serve two masters well, nor to provide full loyalty to both sides in a transaction. However, real estate firms often claim to “represent” both sides in a transaction, collecting a double commission, for what amounts to providing neither side with true representation. (consensual duel agency)

AND WHAT IS “AGENCY”?
An agent represents the interest of the client, doing everything legally possible to promote the interest of the client. The agent does not allow himself to be put in a situation of compromised loyalty. He serves the client interest without allowing his own interest to interfere.

THE PUBLIC PAY FOR REPRESENTATION
In virtually every real estate transaction, the buyer and the seller both implicitly pay part of the commission. This is true, even in the most common situation, where the seller is said to have “paid the commission” from an accounting standpoint. Regardless of the accounting, from an economic standpoint, both parties financially contribute the commission, and always have. This is easily revealed by considering what would occur in a sale of a $100,000. house with a 6% commission. If at the day of closing both seller’s agent and buyer’s agent were to give back their commission, what would happen? The seller would say “Well, you were paying $106,000. I will accept that.” The buyer would reply “On the other hand, you were actually accepting $100,000., I will pay that.” Assuming people on the average equal negotiators, they would split the difference at $103,000.

So buyers and sellers both “pay” and always have. What is worth all the money? They pay for representation and have the right to full representation, if for no other reason, because they PAY for it.

WHY ARE REAL ESTATE PEOPLE “AGENTS”?
Real Estate Agents are expected to represent the “best interest” of their clients, without question, as lawyers are. The courts traditionally continue to see it that way, partly because real estate agents move very large assets, important to peoples lives, and letting themselves be influenced by anything other than the “best interest” of their clients is dangerous, and is NOT WHAT THE CLIENT IS PAYING FOR.

WHO IS THE “AGENT”
THE “AGENT” has always been the firm a client hires. Law firms do not represent both defendant and plaintiff, because of a conflict of interest is considered unavoidable. This has been historically true in real estate as well, although recently when this basic tenet of law is being attacked by the concept of “designated agency”. Designated agency abandons the concept of agency completely. It commits a single real estate firm, to do all in its power to maximize the interest of two parties who have conflicting interests.

THE “WORRY” OF RISING PUBLIC AWARENESS
As the public becomes more aware of the conflict of interest often practiced in real estate, under the name of consensual duel agency, designated agency, or transactional agency, the public is beginning to seek out real estate firms that practice true conflict-free agency. The only way to assure no conflict of interest, is for a firm to represent only one side in a transaction. In this situation, both buyer and seller get the full representation they pay for. While this is good for both buyer and seller, it means that large real estate firms, in order to avoid conflict, would need to represent only one side or the other. Half the commission.

HOW TO SOLVE THE PROBLEM OF THE PUBLIC EXPECTING MORE
If the public increasingly seeks the un-conflicted representation they pay for, this would weaken the hold many large real estate corporations have. So, the best way to avoid this, in their thinking, is to teach the public to expect less as being normal ... and to change the laws support that perception.

LAST BUT NOT LEAST
Under the common law of agency, all agents can be held liable for failing to live up to their obligations to their client and agents have been held liable for a breach of trust and have been required by law to make financial restitution to their client. The strong desire to avoid being held accountable under the law of agency and liable for any inappropriate acts committed by an agent, reinforces the efforts of both agents and their lobbyists, to change the law in order that they are NO LONGER LEGALLY CLASSIFIED AS AGENTS .

The Consumer Public is best served, when dealing with agents of any description, to insure that their agent will be acting in their best interest” and not as a consensual duel agent, facilitator, or some other devious title.

CONSUMER’S RETAINING AN AGENT ARE LEGALLY ENTITLED TO GET WHAT THEY ARE PAYING FOR.

• Undivided Loyalty ............................ to the principle

• Confidentiality ................................ of information, unless otherwise authorized by principle

• Full, Fair and timely disclosure........... of all facts as may be material to the principal’s interest

• Obedience ..................................... to principle’s lawful instructions

• Accounting .................................... for all funds

• Duty of care .................................. necessary skill in carrying out his undertaking

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

"This following may be of interest to various parties who value their rights."

When huge brokerages on the national and state level are calling the shots and influencing legislation to benefit themselves (and there are many wealthy legislators whose money flows from real estate, including brokerages), the common sense consumer protections outlined in the post fly out the window.

"Rights" get signed away via "disclosure"; i.e., if a consumer agrees to or gives consent to dual representation in which, "conflicts may arise", that's all that's required. Disclosure. The very word "conflicts" is interesting because it could cover a huge span of issues and situations. Does it allow for conflicts of interest? Possibly.

I agree that we're no longer agents in the true sense. Years ago the dual agency form was fairly straightforward. The broker represented the seller. I see nothing wrong with that. The seller is PAYING the broker to represent HIM.

All your posts seem to be an attempt to solicit negative attention to the industry and to those who may serve as a dual agent completedly within the ethical quidelines and regulations which govern each state's real estate practice.
Are you attempting to create a audience for class action to prevent the practice?
So it would appear.

I don't believe you're responding to me, are you?

But anyway, the question isn't whether YOU, I, or any other agents aren't abiding by their state's guidelines for dual agency, the question is whether those guidelines CAN actually be followed and still be called "agency". Essentially, agency is one-way; you can't represent two principals. So, via disclosure, "representation" vanishes.

But, inadvertently, we actually go back to the meaning of broker. A middle-man. A person who brings parties together to purchase an item a seller has offered him a commission to sell for him.

I like dual agency and practice it when given the chance and all parties agree.

Recently I had a seller who after signing the LA said, now go out there and sell it. Maybe you can earn both sides of the deal.

That's a fact Jack!

In my opinion, a lack of honesty and forthrightness leads to problems/conflicts in any type of agency or representation. Proceed above board as an 'honest broker' and things seem to work out.

Yes, I've had sellers say that also so you're not alone. My intent of any chance of dual agency is to refer the buyer to another brokerage (I have enough broker friends who will gladly accept) but only exclusively for my listing. I know the buyer is getting what they NEED and DESERVE and it's going to keep my butt much, much more out of hot water and a formal complaint to the r.e.board. Remember, the board is out there to protect the public, not you, but from you.

As I stated previously, sellers have the advantage because you've gone through all the comps with them, advised them on pricing, ran through various and numerous scenarios; but, the buyers who are on the other end of dual agency aren't going to get all that wonderful, deep-down hugs and kisses conversation, discussion and guidance. They're being shorted and I, certainly, as a buyer wouldn't want to be shorted and certainly can't afford to be shorted because a listing agent I met who has the house I would like to purchase wants BOTH sides of the commission. I'd want it referred outside of the brokerage because a listing agent cannot give me the same quality service that they gave the seller. If it were worded in the written agency disclosure "buyer understands fully that buyer will be shorted in deep-down hugs and kisses conversation, discussion and guidance" THEN buyers would get it, then they'd understand exactly HOW it's going to effect them.

I'll shout it from the highest rooftops that buyers will be and are being 'shorted' in dual agency.

Good post!

The seller, who's been getting hugs & kisses right up to the point where dual agency commences, also gets shorted. Suddenly his agent becomes a mummy. All that good advice and hand-holding and advocacy, strategies, stops dead. It has to. Quite a shock. Now you can't answer any of his questions about the buyers, their sincerity, who they are, how high you think they'll go, etc. All that good stuff is out the window. I just don't think that's right. You can't plan a strategy with your seller. You have to act like it's all by crystal ball. It's a shame.

What really galls me is that deals and bargains are becoming a no-no in our business. EVERYBODY must win!

Interesting Reading

Came accross an interesting article that is on point with this particular post and titled "When An Agent is not an Agent" an excerpt from a book written by author Ray Wilson and which is a four part article and can be read at the following website:


http://www.ired.com/buymyself/agency/990917.htm

Sounds like "sour grapes" to me. Agents must be making more money than he.
Every attorney I know choses transaction brokerage, without asking for a rebate. This guy equates providing "agency" with a "full commission", whatever that is.

Some days, I even have to ask what a commission is.

Is this poster just some kind of auto response machine that spits out information after latching on to a keyword or two? Holy Moses, is there a way to stop posts that obviously don't read the rest of the thread?

YES! Report it to the mods! We don't have time to hunt all these nutty posts down! If you report it that helps us find it.

Especially when it reflects what appears to be a complete mis-understanding of the subject, as it is practiced (or forbidden) in most U.S. Jurisdictions.

Mis-Information is worse than No Information !

Whoa. I don't get the point here. If both agents gave back their commission at the closing table, the seller would receive 100,000. That is the sale price and that is where the commission comes from. Unless the seller OWED 100,000, and then the seller would have to bring an additional 6,000 to the table.

Deepikasnv: Dual agency is arises in many ways:- A real estate broker employs two salespeople, One that who works for the buyer as a buyer's agent and other one that who works for the seller as a seller's agent.

~~~~~~~~~~

Actually, the broker holds the license of two independent contractors who would like to put a deal together and get paid. In my case, if I'm the listing agent, I could care less if the selling agent is from the same company as I.

Why would you want a dual agent when you can keep the 3% as the buyer?

The listing/dual agent has a contract to get paid x% if he brings a buyer to closing. Why would a seller not abide by the contract?

Insider, can you explain a bit further what you meant by that?

Presumably, the listing agent has a contract with the seller with terms/conditions (i.e. commission paid) which supersedes any subsequent offers. So how do you propose that 'you can keep the 3% as the buyer'?

I think he means as the buyer's agent but his brain went faster than his fingers could type.