Category Archives: Dual Agency

California Supreme Court to hear dual agency case

California Supreme Court to hear dual agency case For release: September 1, 2016 Dual agency in real estate transactions case to be heard by California Supreme Court  LOS ANGELES (Sept. 1)

 

– The California Supreme Court will hear oral arguments Sept. 7 in a case, Horiike v. Coldwell Banker, that is being closely followed by the real estate industry, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said. “At its core, the Horiike case is an issue of a buyer not reading all of the information that was presented to him, but Horiike is trying to turn a normal disclosure case into an agency case,” said C.A.R. President Pat “Ziggy” Zicarelli. “Some groups may believe that dual agency should be outlawed and want to use this case for that premise or as a stepping stone to that end.” In the case, a homebuyer, Hiroshi Horiike purchased a mansion in Malibu, Calif., and worked with a Beverly Hills, Coldwell Banker real estate licensee. The property was listed by a Coldwell Banker licensee in another office. Horiike complained he was misled about the property’s square footage. The issue is complex, however.  The City of Malibu includes some outdoor living areas in determining square footage, which impacts whether the property may be expanded. Most square footage measurements do not include outdoor living areas in square footage. These facts were fully disclosed, but apparently the buyer never read the information. Horiike sued the seller’s licensee, Chris Cortazzo, stating that Cortazzo and Coldwell Banker breached their fiduciary duty and failed to advise him to hire a third party to verify the actual square footage.  He did not sue the Beverly Hills licensee with whom he was working. The law has always required disclosure of known material facts about a property for sale.

C.A.R. provides many tools and forms to assist in making the transaction transparent as it relates to known material facts. As to duties not involving disclosure, most consumers would not expect a seller’s licensee to duplicate the same tasks and duties of a buyer’s licensee in the same transaction or to be held responsible if they were not done properly.      In the 2012 jury trial, the jury fully exonerated the seller’s licensee, Cortazzo, and Coldwell Banker on the buyer’s claims for negligent misrepresentation, intentional misrepresentation and concealment.  In other words, after many days of trial and examination of the evidence, the jury felt the information was properly disclosed. Before the jury trial, since the judge ruled that the seller’s licensee, Cortazzo, did not owe a fiduciary duty to Horiike, there was no breach of a duty attributable to Coldwell Banker. An appellate court overturned the trial court ruling. Coldwell Banker appealed to the California Supreme Court.

California law has allowed brokers to represent both parties with their informed consent since well before the 1980s. California even has a specific form to accomplish this. Such consent has been required for many decades and continues to give choice to consumers. However, just because a brokerage represents both buyer and seller in a transaction that should not automatically mean that each individual licensee owes a fiduciary duty to both parties. “There are many different real estate brokerage models, and the law allows consumers to choose between a big or small firm; and those firms that are exclusive to buyers, exclusive to sellers, or represent both,” Zicarelli said. “Narrowing the business model for a competitive advantage for one model would limit that choice. And the reality is, at the outset no buyer knows for sure what property they will buy, and no seller knows for sure who the eventual buyer will be.  Therefore, a real estate licensee never knows if there’s going to be a dual agency at the time a listing is taken or when a buyer begins looking for a property.

If the eventual consequence resulting from this case is that brokerage dual agency is prohibited, buyers will be restricted in the properties they can explore, and sellers will have a limited pool of buyers. Allowing all parties to explore buying or selling more properties on the market, not fewer, benefits the consumer.   Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Source: California Supreme Court to hear dual agency case

‘Double agent?’ A rift over how real estate is bought and sold reaches the California Supreme Court – The Orange County Register

‘Double agent?’ A rift over how real estate is bought and sold reaches the California Supreme Court May 1, 2016 Updated May 2, 2016 7:07 a.m.

Hiroshi Horiike, a Hong Kong multimillionaire, at his mansion in Malibu in 2014. In a lawsuit that could have major implications for many of the state’s real estate brokers and agents, Horiike said the size of his home was inflated when he bought it. J. EMILIO FLORES, NEW YORK TIMES FILE PHOTO By MARILYN KALFUS / STAFF WRITER

The Register asked real estate students at SaddlebackCollege to share their opinions on the issue of dual agents. We edited their responses for brevity: “How would it be possible to deliver the highest selling price for the seller and at the same time obtain lowest price for a buyer? This situation goes beyond legality and becomes a moral issue. As a broker/agent, are you willing to lower your morals just to make an extra buck?”  – Lisa Woodward “A real estate agent is bound by a strict code of laws, whether they are working for the buyer, the seller or both. With bank assessors typically involved – as well as a variety of special inspectors providing their opinions – there is little else to be feared from a dual agent.” – Scott Welker “I am put off by the fine line that a dual agency forces real estate agents to straddle. Real estate transactions by their nature are complicated, and the fiduciary duties throw one heck of a monkey wrench when it comes to not violating trust owed to both principals. So yes, I think maybe this should be a banned practice.” – Letty Maddox When Martin Welc asks his real estate classes at Saddleback College if one agent should represent both the buyer and the seller in a negotiation over a house, the students widely disagree. “We ask them: ‘Dual agent or double agent?’” said Welc, co-chairman of the college’s real estate program, in encouraging the students to play devil’s advocate. “We look at all of the pros and cons. We say, ‘Can this be done?’” It is done, but the controversy over its fairness to buyers and sellers goes beyond a homework assignment. Real estate agents, lawyers and consumer advocates all have opinions about it. Now a rift involving what’s known as “dual agency” has reached the California Supreme Court. Those on both sides of the argument know the high court’s decision in the case – pitting a Malibu homebuyer against brokerage Coldwell Banker – could shake up the industry. “There is a great deal of concern about this ruling in the California real estate community,” said Bob Hunt, a San Clemente agent and a director of the California Association of Realtors, of the appellate court’s conclusion. “It runs counter to the way – rightly or wrongly – that agents and brokers have thought things were.” A FINE LINE A dual agent must walk a fine line, careful not to favor the buyer or seller. There are details that cannot be shared – for example, the agent can’t tell the buyer the seller is frantic to unload the house because of a divorce or job change. Nor can the agent share with the seller how much the buyer privately said she’s willing to pay. Lee Stimmel, a San Francisco attorney who opposes double-ending deals, said the rules create a conflict of interest for the lone agent, who must serve two masters as a “superhuman.” But as Hunt and many other agents see it, a dual agent, privy to what’s motivating each side, is in a position to more swiftly and efficiently get a deal done. “Hiring a real estate salesperson is not the same as buying a burger,” the association says in court papers. “It is all about the relationship … The real estate salesperson is the equivalent of a therapist, a bartender, a friend.” In California and many other states, the law mandates that a broker must have a fiduciary responsibility to clients. But laws in about two dozen states have allowed agents to act as “facilitators” or “transaction brokers” without fiduciary loyalties, according to a report on Inman, a real estate industry site, titled “Buyer and Seller Beware: Your agent may not represent your best interests.”

Source: ‘Double agent?’ A rift over how real estate is bought and sold reaches the California Supreme Court – The Orange County Register

Why I Don’t Practice Dual Agency

Why I Don’t Practice Dual Agency BY RICH SCHIFFER Real Estate Agent October 05, 2006 09:24 PM by Rich Schiffer, Weichert Realtors

I have a personal policy of never representing both sides of the same transaction. I do not practice dual agency. Definition: (per Pennsylvania Association of Realtors’ Glossary of Real Estate Terms) Dual Agency: A business relationship where the licensee, with written agreement from both parties, works for both the seller and the buyer in the same transaction. Dual agency will limit some of the duties owed to both parties. Dual agents cannot take any action that is adverse or detrimental to either the buyer or the seller in the transaction. For more details, see the explanation given in the Consumer Notice. Many realtors ask me why I chose this policy, thereby limiting my income to only one side of the equation. Here’s why: My job, as I see it, is to represent the interests of the person I am working for throughout all phases of the transaction, especially the negotiation phase. When an agent represents both sides, he has access to confidential information on both sides of the negotiation, and cannot, in my opinion, do a proper job representing the interests of the two parties involved. The agent ends up representing his own interests, in practical terms. I think of it like a boxing match. Each boxer has a trainer in his corner to guide him between rounds. If each boxer was represented by the same trainer, and he gave advice to each boxer between rounds, which one is getting the best advice? Which one is the trainer really trying to help win? The trainer benefits no matter who wins.  Does he really care if the advice he renders is good advice? It is for these reasons that I have chosen to not practice dual agency. It may cut down on my income opportunities a bit, but I believe I will make up for it with repeat business from clients that know they got the most honest, dedicated level of service possible.

Source: Why I Don’t Practice Dual Agency

Dual Agency Conflicts- Connecticut

“In dual agency, the agent represents two parties in the same transaction. Dual agency requires equal loyalty to two different principals at the same time – a high burden that means neither principal has the full, undivided loyalty of the agent. Dual agency arises, for example, when a real estate broker is the agent of both the seller and the buyer. The broker’s sales associates as agents of the broker, also have fiduciary or statutory responsibilities to the same principals.  The challenge is to fulfill these fiduciary obligations to one principal without compromising the interests of the other.  While practical methods of ensuring fairness and equal representation may exist, it should be noted that a dual agent can never fully represent either party’s interests because the duty of undivided loyalty cannot be shown to both principals at the same time.  Similarly, it is impossible to maintain both confidentiality and full disclosure to parties whose interests are in opposition.

Because of the risks inherent in dual agency – ranging from conflicts of interest to outright abuse of trust — the practice is illegal in some states.  In those states where dual agency is permitted, all parties must consent to the arrangement, usually (and always preferably) in writing.”  – Modern Real Estate Practice 19th Edition Dearborn Real Estate Education

Local Agents and Brokers Laughed At Me, when I said I was going to exclusively represent buyers. But then NBC put me on TV for free through out the tri-state area and Woman’s Day Magazine recommended to home buyers across the country to call me…I smiled and laughed alot!

“Sellers Trust is founded on one simple principal, make a promise and keep it.”  – Steve Schappert.  The big advantage to agents is the ability to stand above the crowd, by doing the right thing and making more money by specializing.  Regardless of your market your competition is typically hundreds, if not thousands of other agents.  You can be the expert and take a stand in your community.

How a Dual Agent Affects Sale Prices – WSJ

How a Dual Agent Affects Sale Prices

Having an agent represent both buyer and seller can either raise or reduce the final selling price, depending on the timing of the transaction

By SANETTE TANAKA

Jan. 23, 2014 9:02 p.m. ET

Would you trust a dual agent?

Dual agency occurs when the same brokerage firm—and sometimes the same real-estate agent—represents both the buyer and the seller in the same transaction. Dual agency can increase or reduce a house’s sale price, depending on the timing, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va., who studied dual agency in home sales.

Dual-agency sales that occur in the first 30 days of the listing contract sell for roughly an 18% premium because agents may be able to more efficiently match the property with the right buyer if they search within their own network, Prof. Waller says.

Over time, that information advantage diminishes as other agents learn more about the seller and property, says Raymond Brastow, professor of economics at Longwood University, who co-wrote the study. By the end of the listing contract, the agent’s priority is getting the property sold before the contract expires. Dual-agency sales during the last 30 days of the listing contract sell for roughly a 6% discount, or $9,300 less. Overall, a dual-agency representation reduces sale prices by about 1.7%, according to the study.

Real-estate agents have a lot to gain from dual agency. The seller typically pays 5% to 6% of the sale price as commission, which is split between the buyer’s agent and seller’s agent. Thus, agents have an incentive to represent both sides of the transaction and earn the entire commission, Prof. Waller says.

That may also mean an agent might encourage sellers to accept a lower price for a home to get the double commission, says Prof. Brastow. “You have the interest of the buyer, the seller and the agent, and it’s unlikely all three will coincide, especially in respect to price. They can’t,” he adds.

Prof. Waller and Prof. Brastow examined 12,549 transactions between January 2000 and June 2009 in a central Virginia multiple-listing service. They analyzed which transactions were dual agency or non-dual agency and looked at effects on sale price and time on the market. The study, “Dual Agency Representation: Incentive Conflicts or Efficiencies?” was published in the Journal of Real Estate Research in June 2013.

Many states allow true dual-agency relationships, in which the agent represents, and has a fiduciary duty to, both the buyer and seller. Some states, however, have modified versions of dual agency, such as letting transaction agents act only as deal facilitators, says Ilona Bray, real-estate editor for Nolo, a publisher of consumer legal guides in Berkeley, Calif.

In general, Ms. Bray warns against dual agency. “A buyer and a seller are in very different parts of the transactions. Their interests are different,” he says.

But some agents say dual agency is more efficient and effective. Sometimes they will accept a lower commission from the seller. Also, both sides benefit from having one point of contact, says Jud Henderson of Callaway Henderson Sotheby’s International Realty in Princeton, N.J., who was a dual agent in three transactions last year. “It can work to disarm the process, cut out the politics and just focus on the terms of the transaction,” he says.

Last May, he received two offers for a $1.995 million listing from one of his buyers and another agent’s buyer. The seller ended up selling the property for just under the asking price to Mr. Henderson’s buyer.

via How a Dual Agent Affects Sale Prices – WSJ.

Will I Make More Money if My Listing Agent Also Represents the Buyer? – Research Center | Redfin

by Glenn Kelman | February 14, 2012

A surprising number of U.S. listings – about 1 in 10 — are sold by a real estate agent who also represents the buyer. How, we wondered, does this work out for the seller who originally hired the real estate agent?

Dual Agency Costs the Seller $4,789 On Average

To answer that question, Redfin’s real estate analyst Tim Ellis dug up every sale from January 1, 2011 – December 1, 2011 across 22 counties in nine different states — over 230,000 records in all. The results were remarkably consistent:

In every county we measured, the discount off list price was much larger when the seller’s agent also represented the buyer.

The average discount off list price was worse by 1.6 points with dual-agency sales, which is the industry term for a transaction where the listing agent represents both sides:

 

DiscountDualAgency

For a $300,000 home, dual agency cost the seller $4,789. The consistency across all 22 counties surprised us almost as much as the magnitude of the disparity in outcomes:

County Dual Agency
Avg. Sale to List Ratio
Different Agents
Avg. Sale to List Ratio
Difference Difference in Dollars for $300,000 Home Percent of Sales
That Were Dual Agency
Arlington County 96.5% 97.9% -1.4% -$4,161 8.1%
Baltimore City County 92.2% 94.3% -2.1% -$6,171 14.9%
Clark County (Nevada) 95.9% 98.1% -2.2% -$6,561 5.2%
Cook County 92.4% 94.8% -2.4% -$7,113 8.0%
Denver County 96.2% 96.6% -0.5% -$1,414 10.4%
District of Columbia 96.7% 97.7% -1.0% -$2,942 10.4%
Fairfax City County 97.4% 98.1% -0.7% -$2,187 5.3%
Fairfax County 96.9% 98.1% -1.2% -$3,553 6.6%
Fulton County 93.6% 94.7% -1.1% -$3,397 7.5%
King County 96.0% 97.1% -1.1% -$3,426 6.2%
Los Angeles County 97.1% 98.0% -0.9% -$2,674 12.6%
Maricopa County 95.0% 97.4% -2.4% -$7,285 7.1%
Multnomah County 95.0% 97.1% -2.1% -$6,175 5.8%
Orange County 96.7% 97.5% -0.7% -$2,233 12.7%
Queens County 92.8% 93.7% -0.9% -$2,768 34.5%
Sacramento County 96.9% 98.2% -1.3% -$3,781 8.5%
San Diego County 95.9% 97.4% -1.4% -$4,280 9.3%
San Francisco County 97.3% 99.1% -1.7% -$5,178 9.4%
San Mateo County 96.5% 98.2% -1.7% -$4,956 8.7%
Suffolk County, MA 95.6% 96.4% -0.8% -$2,486 13.3%
Travis County 95.1% 96.5% -1.4% -$4,248 4.9%
Philadelphia (Market) 91.2% 94.7% -3.5% -$10,608 13.1%
Average: 95.6% 97.2% -1.6% -$4,789 8.9%

Many brokers treat dual agency as a choice the buyer makes, at his own risk, assuming the seller would never have reason to complain about how a buyer is represented. But in fact the damage done is to the original client of the dual agent, the seller.

Is the Difference Because Dual Agency is More Common Among Foreclosures? Nope.
We wondered if the results were correlated with distressed sales, since banks seemed less likely to notice dual agency than a typical home-seller.

But it turns out the prevalence of dual agency is actually higher among traditional home-sellers, not banks. And the outcomes were the same: both traditional home-sellers and banks got significantly worse prices when the buyer did not have his own agent.

Is Dual Agency Even Legal? Mostly, Yes

Concern for the seller is why at least eight states have attempted to outlaw dual agency.

In Alaska, an agent can act as a Neutral Licensee, providing a limited set of services to buyer and seller without representing either side. In Colorado, an agent who starts off as an agent for the seller can meet a buyer and become, with the seller’s permission, a Transaction Broker. A Transaction Broker carries out the deal on behalf of both parties but with  no fiduciary obligations to either side.

Florida, Kansas, Oklahoma also allow Transaction Brokers. Texas allows an agent to act as an intermediary between buyer and seller, not fully representing either, and Vermont allows Limited Agency, in which the agent represents both parties but with very narrow responsibilities to either.

In Maryland, one agent cannot represent both parties, but an agent can represent the seller while still collecting the commission reserved for the buyer’s agent, so long as he doesn’t provide the buyer any advice. In Maryland in particular, it is the seller who loses at the negotiating table in these situations, more than 2% on average of the total home value.

So all of these arrangements are not, regardless of what you call them, usually in the seller’s best interests. The official responsibilities of a transaction broker, neutral licensee, or limited agent differ from the original duties of an agent, but no one else performs the essential duty of the seller’s agent, which is to sell the house for the best possible terms.

For this analysis, we considered any transaction an example of dual agency if the Multiple Listing Service used by agents to record transactions listed the same agent as representing buyer and seller. In a separate analysis, we’ll take up designated agency, in which buyer and seller are represented by two different agents working at the same brokerage.

But Don’t You Also Save Money by Paying Only One Agent? Yep (But Not Enough)
But wait! Is dual agency all bad?

The advantage of one agent bringing together both sides is, of course, efficiency, since you avoid having to pay two agents. Some listing agents will collect the full commission normally due the buyer’s agent as well as their own listing commission, eliminating any efficiencies or savings.

But some will refund a portion of the fee offered to a buyer’s agent. A seller can save 1% or even 1.5% of the total value of the home in commissions; in an extreme case this is almost worth as much as the 1.6% a seller will on average give up at the negotiating table.

But if you’re the seller, the commission savings probably isn’t worth worrying about a conflict of interest with your agent. Even if you get a good price, you’ll need that agent’s advocacy beyond the initial negotiation: when the inspection turns up problems the buyer wants you to fix, or when you need an extra two weeks to move out.

If your agent also has a relationship with the buyer, and a stake in your working with that buyer over others, it becomes harder for the agent to function as an impartial guide to the deal best for you. It may be harder for you to feel like someone’s really watching out for you and you alone.

This is why almost no real estate agent would argue that dual agency or its equivalent is better for the home-seller; the only debate is about the extent to which it does or does not damage the seller.

Where Is Dual Agency Most Common?
What was most surprising to us was how often dual agency and its equivalent occurs. It isn’t just the occasional menage-a-trois: in Baltimore, the seller’s agent is listed as the buyer’s agent in 15% of all sales. In Queens, it’s 34%. Across the 22 counties we surveyed, it was 9%:

DualAgencyPrevalence2a

By contrast, among Redfin’s 10,000+ clients, dual agency or its equivalent has never happened. We also don’t allow dual agency among our partners.

How to Have Your Cake and Eat It Too
So what does this mean for you as a seller who isn’t using Redfin? Should you turn away a buyer, just because your agent also wants to represent him? Of course not, especially in an age when less than half of all listings sell.

If your agent meets a buyer, he can refer the buyer to another agent or — if you want to avoid paying two commissions – a lawyer, so that both sides have an advocate.

No agent would put a sale in jeopardy by refusing to refer the buyer to someone who can represent his interests. No buyer will hesitate to buy a house simply because the buyer has to get his own agent or attorney.

An even simpler solution is to head this issue off at the pass; the language allowing dual agency is optional in most listing agreements, so your agent can easily use a form that precludes dual agency.

You can also raise the issue in a listing consultation, asking how the agent will handle a situation in which he himself meets a buyer. In my experience, the best agents at traditional brokerages dislike dual agency, though attitudes also vary by market.

Regardless of the prevailing attitude among agents, at a time when 100,000 people will soon be signing listing agreements, one of the simplest ways to ensure you get the best terms is to ask that your agent is committed exclusively to you.

A Series on Data-Driven Best Practices for Home-Sellers

This essay is part of a series that takes a scientific approach to selling homes for more money, faster, with less risk. As listing agents ourselves, we use what we learn to help our clients make better decisions. We also share that with other agents and consumers.

Recently we’ve discussed what season to list your home (surprisingly, winter), which day of the week it should debut (Friday), and whether professional photography is worth it (absolutely).

This has turned out to be very handy information: the vast majority of listings come to market too late, in spring and summer; only 19% debut on a Friday; only 15% feature professional photography.

If there are other analyses you’d like to see us undertake, leave a request below and we’ll dig into it soon.

[Note: This post was updated to reflect a correction in our calculation of what percentage of sales were dual-agency in each market. The sale to list ratios were unaffected.]

via Will I Make More Money if My Listing Agent Also Represents the Buyer? – Research Center | Redfin.

Dual Agency | Realtor Magazine

Dual Agency

Duties in conflict

JULY 2003 | BY LYNN MADISON

Representing the buyer and the seller in the same transaction, also known as disclosed dual agency, gives you the flexibility to assist both parties and can reduce the adversarial atmosphere of negotiations. On the other hand, it means full representation isn’t available to either the buyer or seller. And because dual agency isn’t always fully understood by salespeople or consumers, it can lead to misunderstandings and liability.

Because of the potential for conflicts of interest inherent in the disclosed dual agency relationship, buyers and sellers must understand its implications and give their informed consent to the relationship.

For salespeople who practice dual agency, one of the biggest challenges is keeping price and motivation confidential on both sides of the transaction so that neither buyers nor sellers lose their bargaining position.

Disclosed dual agency is legal in most states. However, nondisclosure or improper handling of dual agency can result in substantial legal liability, such as the $200,000 settlement in a 2002 Alaska case in which the salesperson didn’t properly disclose a dual agency relationship (Columbus v. Mehner).

Even with proper disclosure, many dual agents find themselves in complex situations in which it’s difficult to know how best to serve both the buyer and the seller. Consider these familiar scenarios, and recommendations for dealing with them:

You attend the home inspection with your buyer and even though you let the inspector lead the way, you overhear the buyer saying things like, “That’s fine; I can take care of that myself” or, “No problem; my brother’s a carpenter.” The buyer and his attorney list those same items as repairs they want the seller to make, but you know the buyer probably doesn’t really need the repairs.

Recommendation: Although the buyer may be using the repairs as a negotiating ploy, as a dual agent you really have no choice but to relay the buyer’s repair demands to the seller.

You receive an offer from a buyer client on your own listing. When you present it to your seller, he asks about the other buyers who looked at the property in the last few days: “Please call all their agents to see if their buyers are interested.” The seller won’t move forward with the offer until you do. Your buyer really wants this house and has asked you to let him know if there are any other offers. Yet the seller has instructed you not to tell the buyer if another offer comes in for fear it will cause him to walk away.

Recommendation: The savvy dual agent can head off this type of situation by learning early on how the seller wants to handle multiple offers. Then, make sure to inform your buyer of the seller’s plan for addressing multiple buyers up front, before the buyer makes an offer.

You have two sets of buyers interested in your listing. You sign an agency agreement with the first set but refer the second set of buyers to another agent. The buyers you referred say they don’t want to work with another agent because they feel the first buyers would have a negotiating advantage working with you.

Recommendation: You may hate to lose both sides of the sale, but the best alternative is to refer both buyers to other salespeople and represent only the seller in the transaction.

Protect yourself

The only sure way to avoid conflicts arising from disclosed dual agency is to not practice this form of agency. However, there are steps you can take to protect yourself and lessen potential conflicts.

Do:

Give buyers information about the property.

Disclose all material defects.

Help the buyers compare financing alternatives.

Provide information on comparable properties so that both parties may make educated decisions on the price.

Don’t:

Disclose confidential information about either client without permission.

Recommend or suggest a price to either party. Do a comparative market analysis and let the parties decide for themselves.

Disclose the lowest price the seller will take for the property or the seller’s financial position without permission.

Disclose the highest price the buyer will pay for the property or the buyer’s financial position without permission. (May not apply in Arizona. Check with your local counsel.)

Following these simple rules won’t guarantee that you’ll never get caught in a disagreement between buyers and sellers in a disclosed dual agency relationship. But it’ll give you the protection of knowing you did your utmost to serve both parties fairly.

via Dual Agency | Realtor Magazine.

Working With a Dual Agency: What You Need to Know | Fox Business

Working With a Dual Agency: What You Need to Know

By Donna FuscaldoPublished June 12, 2013FOXBusiness

REUTERS

With a housing market favoring sellers, buyers are resorting to different tactics to get their offer accepted.

Home sales and prices have been on a steady increase over the last few months as the market remains on a stable path of recovery, but low inventory in some markets have created stiff competition—with some areas reporting bidding wars.

To help compete, some buyers are incentivizing agents by offering them the opportunity to represent them as well as the seller. Under these circumstances, dual agents get the full commission as both buyer and seller.

“One of the best ways to convince the listing agent to take a somewhat- less qualified offer is to let them represent you and give them the commission as well,” says Eric Tan, a RedFin listing agent in Los Angeles. “A lot of buyers are catching on to this.”

In certain real estate markets around the country, inventory is tight and houses are selling above market price. On top of that, foreign investors are jumping into the market and making all-cash offers. If buyers can lure the real estate agent into their corner, experts say the commission potential could help them win a home—even if they don’t have the best offer.

While it could work in winning a home, working with a dual agent or agency may not always be in the best interest of both the buyer and the seller. After all, if the real estate broker is representing both the buyer and the seller, each party will never fully know whose corner the agent is actually in.

“In very rare circumstance the dual agency makes sense,” says Tan. “We’ve done a lot of market research and according to the data, on average you lose about $5,000 in the sale of a home when you use a dual agency.”  Even though buyers are losing money, RedFin’s survey, which was conducted last year, found that one in 10 homes in the U.S. are sold by a dual real estate agency.

Although real estate agents are required by law to disclose if they represent both the buyer and the seller, but often that disclosure isn’t so black and white. Every state has its own laws regarding dual agencies according to John Murphy, a realtor in Plymouth, Minn., and that buyers and sellers will often run into dual agencies when dealing with big brokerage firms.

“Real estate is a very entrepreneurial environment and is perfect for small brokers. There are many that are out there, but there also continues to be consolidation like we see in many other industries where the big brokers continue to get bigger and bigger,” says Murphy.  “It’s in the big broker environment where you run in to dual agency situations.”

Even in situations where the dual agent is disclosed, home buyers aren’t necessarily informed on what this means. Murphy says he sees a lot of dual listings with new construction sales since most buyers are so focused on purchasing a home and will make sacrifices.

In Minnesota, Murphy says dual agents would go from fully representing one party to having limits placed on the representation of both. For example, agents aren’t allowed to argue to benefit one party over the other. “It is like a boxing match where we would move from being the coach in the corner giving explicit guidance, direction and coaching to our boxing client to becoming the referee where we have to remain impartial, says Murphy. “ I don’t think real estate consumers fully understand this aspect of real estate.”

Going with a dual agent arrangement makes a lot of sense for buyers looking for an edge, but in a normal real estate market, critics advise homebuyers to avoid that situation if at all possible.

“In today’s market, where the dual agency method can get the property it’s tough to avoid the dual agency but it really does harm the system,” says Tan.  “You jeopardize the rights of the buyer and the seller. You’ll never know if you really got a good deal.”

via Working With a Dual Agency: What You Need to Know | Fox Business.

Why you should never agree to ‘dual-agency’ by a REALTOR

Why you should never agree to ‘dual-agency’ by a REALTOR

Posted on March 3, 2015 08:22 AM by Andy Pierobon

“Dual-agency” is when a REALTOR® or a broker is neutral in the sale and purchase of a home.  That means the REALTOR® represents neither the buyer nor the seller. I’m writing here to say up front why you should never, ever, agree to be represented by a dual agent, although it is legal in Virginia.

Quite simply “dual agency” is a conflict of interests (sic) for the buyer, seller and the REALTOR®.  I refuse to serve as a dual-agent because I feel strongly each party deserves and needs independent advice in what is one of the most important transactions of his/her life.   It’s part of my DNA to exclusively represent just one party in each transaction. Read on to understand why.

IMAGE CREDIT: Compass Commercial Real Estate, Bend, OR

Below are excerpts from the text of the “DISCLOSURE OF DUAL AGENCY OR DUAL REPRESENTATION  IN A RESIDENTIAL REAL ESTATE TRANSACTION” used in Northern Virginia. After reading them, ask yourself why, with the complex issues that may arise in the purchase or sale of your home, you would ever agree to be write a contract with someone who cannot advise you on what is in your best interest.

Here are excerpts of what you would be agreeing to by signing a form authorizing dual representation by your agent or broker:

“ … that the foregoing dual agent or dual representative may not disclose to either client any information that has been given to the dual agent or representative by the other client within the confidence and trust of the brokerage relationship except for that information which is otherwise required or permitted . . . to be disclosed” by the Code of Virginia.

 

“That following the commencement of dual agency or representation, the licensee (REALTOR) cannot advise either party as to the terms to offer or accept in any offer or counteroffer; ”

“ That the licensee cannot advise the buyer/tenant client as to the suitability of the property, its condition . . .and cannot advise either party as to what repairs of the property to make or request;”

“ That the license cannot advise either party in any dispute that arises relating to the transaction;”

“That the licensee may be acting without knowledge of the client’s needs, client’s knowledge of the market, or client’s capabilities in dealing with the intricacies of real estate transactions.”

Don’t assume that a broker or agent is obligated to represent your interests, and your interests alone, until you have carefully read the agreement(s) detailing which services are being provided to you.

A quick note about the transaction brokerages that have sprung with via the Web and Internet: they may have no fiduciary relationship to the buyer or seller. It’s not just ‘buyer beware,’ but ‘seller beware’ too – in the same transaction no less!

Whew! Enough of this legal stuff. Happy Home Selling and House Hunting!

via Why you should never agree to ‘dual-agency’ by a REALTOR.