A client mentioned to me recently that I really needed to talk about dual agency on the blog, as his perception was that people really didn't understand it all that well. An interesting point, for a couple of reasons: one, his perception of Joe Public was completely right, and two, he was a client and understood the idea of Agency when it comes to real estate better than some REALTORS. I was impressed, said thank you and proceeded to not get around to it. Nice guy, huh? But I've thought about his comment a number of times since then and he's right - the public doesn't understand what agency is when it comes to real estate transactions, and that's because as REALTORS we're not doing a good enough job of explaining it. So here it is ... Agency 101, focusing specifically on dual agency, in 503 words or less.
In an ideal real estate transaction there should be four parties – the buyer, the buyer’s agent, the seller, and the seller’s agent. A crowded room for sure, but important nonetheless. Often times as agents representing the seller, we receive calls or emails on our listings from potential buyers who are not working with an agent and who want to see our listing, or perhaps even write an offer. As agents working for the seller, how can we do that and still represent the buyer? It’s called Dual Agency, and it’s dangerous – like running with scissors. So don’t do it.
Let’s call an agent working with a buyer a Buyer’s Agent, and an agent working with a seller a Seller’s Agent.. When a Seller’s Agent writes an offer on their own listing, they are acting as a Disclosed Dual Agent. The Agent must remain impartial to both Sally Seller and Barry Buyer, and must not disclose information that would harm one party’s position and benefit the other party. The RVAR contract we use goes into further, saying that “The Agent agrees not to disclose (a) to Buyer information about what price Seller will accept other than the Listing Price, or (b) to Seller information about what price Buyer will pay other than any written offered price.” Meanwhile, Sally Seller and Barry Buyer understand that they now have the responsibility of making their own decisions as to what terms are to be included in any Agreement between them. That’s one of the sticky parts for me – how can I accurately represent my client, Sally Seller, if I can’t provide her any assistance with strategy? How am I providing her value?
In my opinion I’m not. My position on dual agency is that it’s not a position Agents need to put themselves in, and that Sally and Barry should stress not to be a part of as well. It could be argued that an agent working in a dual role is required to be even more attentive to details, taking even greater care in finessing the minutia of details that happen in a real estate transaction. That might be true, but I’m not willing to give up representation just to make a little more money. Which is why my Team uses a different approach – we agree to represent both sides separately, with one agent representing Sally and one agent representing Barry. It’s called Designated Agency, and it works quite well because it allows each Agent to effectively and confidently represent their own side in the transaction. Each side is equally represented, and everyone’s happy.
It’s been said that Dual Agency requires Agents to compromise on their fiduciary obligations, and I completely agree. If we’re willing to compromise on that obligation, which is one of the core tenets of the Code of Ethics, then what else are we willing to compromise on? And are you really willing to work with an Agent who’s willing to set that obligation aside? I’d suggest you run, quickly.
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Full disclosure – I have represented both sides in a transaction once in the four years that I’ve been a REALTOR, and I don’t know that anyone else on my Team has ever done it. The situation was unique – the home was not listed but was going to be, the buyers literally stood on the front porch of the home, peeking in the windows and begging me to call the owners, and I already had an established relationship with the buyers. The timing was right, the buyers and sellers were friendly, and I took a chance to make it work. But the risk that I would fail to work equally with both sides was very great, and I can tell you that it was a decision not taken likely. In the future I would act differently, but was fortunate that all worked out well and that we made some new friends in the process. It could have been much, much different. Thanks to Ryan for the push to finally get this on paper, hope it’s been helpful.
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