Outlawing Dual Agency?

As I was surfing the web this post on outlawing dual agency got my attention. The author is apparently a real estate agent in Seattle Washington and he relates the story of his cousin’s ordeal.

Trevor (the author) attempts to clarify which type of dual agency should be outlawed. He believes that 2 different agents in the same company each representing a buyer and seller is fine. It is when one agent represents both buyer and seller that there is a problem.

To begin the first instance is dual agency, however more specifically designated agency.

The story that turned Trevor into a non-believer involves an on site agent who wrote up a contract for Trevor’s cousin. Now apparently the contract was very “seller sided” with no inspection contingencies and very liberal finance contingencies. Added to that the fact that the agent pushed the cousin towards the builders “preferred lender” which happened to be the agent’s husband. Oh and the agent had the cousin sign about being told about different forms of agency, however these agencies were not explained.

Here are the issues I see with this.

Foremost is the “Working With Real Estate Agents” lacking presentation. This is not an isolated incident. In North Carolina this is the number 1 most received complaint to the Real Estate Commission that buyers and sellers were not fully aware of who the agent represented in the transaction.

Fact- The agent should have clearly explained each form of agency that exists when working with a real estate professional.

With respect to the contingencies in the contract the two the author cited are pretty standard to all pre-approved real estate contracts in most states.

Fact - In a dual agency situation where the same agent represents the buyer and seller the only way to handle it is just to act as the go between with NO COUNSELING to either side. The agent should have filled out the contract with the standard contingencies just as they would have for any other buyer not in a dual agency relationship.

The cousin was referred to the builders “preferred lender” so agent could receive additional bonuses.

Fact - There is absolutely nothing wrong with an agent receiving commissions or bonuses as the buyer agent, seller agent or even acting as the lender (if licensed to do so.) The truth is the majority of buyers could care less what you make and the seller doesn’t care where the money comes from…AS LONG AS YOU DISCLOSE EVERYTHING TO EVERYONE. This agent seems to have not provided full disclosure to the cousin.

Personally I believe this is not a case of a dual agency problem, it is a case of an agent acting out of greed, non-disclosure and doing a disservice to both the buyer and the seller.

If one were to believe the author’s stance that dual agency should be outlawed then another huge situation arises. That situation is that if you cannot act as a dual agent then you legally CANNOT SHOW ANY HOMES THAT ARE LISTED with your company. Now if you are a small operation this may be no big deal. On the other hand if you are one of the larger franchisers with 400+ agents this could put a huge amount of qualified homes out of the reach of your well qualified buyer.

Bottom line is as a real estate professional you must always be honest and disclose everything no matter how minor you may feel it to be.

When you bought or sold a home was agency explained to you?

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Here are some current conversations on dual agency from the sphere:

Agency- Dual or No Dual? - By the way, OK-yes it (dual agency) is usually referred to to as Limited Representation in today’s more popular descriptive term. But for now, I’ll use continue to use “dual agency” in this discussion. …

Dual Agency: Using the Seller’s Agent as Your Buyer’s Agent - I would not undertake dual agency myself. If I do find a buyer for one of my listings, I’ll refer them to someone else for negotiations, or at least get them to sign that I am representing the seller, not them. Everyone in the industry …

What consumers should know about agency - Some of these conversations have revealed some mis-information about dual agency. Dual agency happens only when an agent, or the agents broker, or more than one of the brokers agents are working on behalf of that broker and representing …

Is Dual Agency in the public’s best interest? Part 1 of 2 - Realtors practice dual agency all the time - successfully. Never had I had someone remark how much they appreciated their agent representing both sides. I have been told numerous times by clients how they perceived their agent in a …

Florida rules require full disclosure of dual agency - The Florida Department of Agriculture and Consumer Services on Friday released finalized rules and regulations designed to stop deceptive practices and promote transparency at horse sales in Florida. Read More……(read more)

Bad Words!! Dual Agency!! Bad! - Active Rain has had so many articles based upon dual agency recently. Dual Agency comes in many different packages. Arguments ensue about how the agent will divulge information to the other client and all this is illegal, immoral, …

What Is All This Talk About ‘Dual Agency?’ - Definition of Dual Agency: A situation where one Broker represents both the Buyer and the Seller. Although legal in Arizona, provided it is fully disclosed and consented to by all parties, it is also of questionable ethics – at best! …

Real Estate Attorneys LOVE Dual-Agency Cases ~ LOVE Them - Recently while holding Open Houses, some “customers” asked if I would represent “both buyer and seller” (dual-agency) and if so, would they “get a good deal?” Usually, I ask them to finish viewing the home, first. …

Understanding Real Estate Agency [4.] - Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the …

Why LP doesn’t practice dual agency… - Per Tennessee Law: “Dual agency” refers to a situation in which the licensee has agreements to provide services as an agent to more than one (1) party in a specific transaction and in which the interests of such parties are adverse. …

The Single-agent Dual Agency debate is revitalized at VARBuzz - As a listing agent, how can I promise to do the best job possible for the seller, who hired me to protect his interest and sell his home for the best price and terms, then turn around under dual agency where I cannot give him any advice …

Stepping up to the plate - Single Agent Dual Agency - On first contact with each seller or buyer I explain agency with emphasis on Single Agent Dual Agency. I let them know up front that my firm cannot offer Dual Designated Agency. I send them home with information on Agency to read. …

Is Dual Agency in the Public’s best interest? Part 2 of 2 - If we quickly look at some possible alternatives to dual agency we may learn something about, not only the feasibility of its removal but also about what truly stands in the way of change. Please keep in mind that designated agency …

Has DUAL AGENCY Run It’s Course? - Some states do not allow dual agency. Others do. Virginia is one that does. Is the trend towards doing away with this type of representation? In fact is dual agency a form of representation or does it really mean that neither the seller …

Dual Agency and Buyer’s Today - This buyer figured out that for him, he did not want to be involved in a dual agency situation when he finds a property he wants to buy. He wants his own agent and he wants access to information about the house and the comparables and …

Why I Don’t Practice Dual Agency - As a buyer or seller you may run into the concept of dual agency. That is basically where an agent “represents” both sides of a real estate transaction. Say my company has a listing. I also have a buyer under a Buyer Agency Agreement. …

The Truth About Dual Agency - I truly believe that Ilyce Glink is doing an injustice to dual agency in her opinion piece. Now, it was apparent that the real estate agent referenced in the opinion piece did not properly conduct a dual agency situation. …

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3 Responses to “Outlawing Dual Agency?

  • MyAvatars 0.2
    1
    Raleigh North Carolina Real Estate
    March 26th, 2008 04:44

    In my view, North carolina has lot of opportunity as far real estate is concerned. North carolina , the land which is historically and culturally rich.Its the best time to get hold of some real estate properties here in carolina. The real estate agent’s offices are always filled with people. Trust me , its the best time to buy property in north carolina.

    I really enjoyed info on your blog. Nice info there.

  • MyAvatars 0.2
    2
    Tom at hypothek
    September 16th, 2009 11:54

    First time, that I hear about dual agencies.

  • MyAvatars 0.2
    3
    Rent Office Space
    March 12th, 2011 20:27

    Seems very good and nice post on Real Estate agents, but its iteresting about dual agencies..

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