The Scottsdale Real Estate Files: Dual Agency and the Thundering Herd of Conventional Wisdom

Brevity is not my strong suit.  Apologies in advance to those who plowed all the way through this absurd thesis.

Paul - I have worked with a good number of buyers who wanted to purchase my listings, typically (as you mentioned here) as customers rather than clients. However, there have also been a few cases when I truly represented both sides of the deal, with all of the necessary disclosures, explanations, caveats, etc.  I think this line from your post sums it up best: Limited representation from a pro is of far more benefit than full representation from a schmuck.

I try to avoid it when possible, Jason, but the one that really gets me is the notion that I am somehow doing my client a favor by avoiding the listings of my approximately 1200 associates throughout the valley in the name of representing their best interests. 

Disclosure is the key - if I give both parties the same information and they are able to make an informed decision then my duty to both is covered.  I educate both parties on what I can and can't do if the situation for dual agency comes up.  It's also stated in our listing/marketing agreement.  It's something that does not come up too often but as professionals we should be able to handle the situation fairly to both parties.

I like it when I can read a post I agree with, as well as increase my gray matter and brain wrinkles. Thank you for sharing and making the world a more intelligent place.

P.S. I bet you will never get alzheimer's since you seem to exercise your brain so much.

In Georgia we can have designated dual agency for the situation where both agents work for the same brokerage.  With over 700 agents, sooner or later you end up in that situation.  I usually don't know the other agent so it really isn't any different than any other transaction.

Hi Paul,  Like many "Rainers I have represented both sides of a transaction ( as well as in-office listings ) and all ( knock on wood ) have gone smoothly.  Disclosure early in the process and again when entering a specific listing assures the buyer that everything is above board.  I also give them the option od another agent but this just seems to assure them of my neutrality.  Your point about the expediency of working back and forth with just one agent is indeed a significant advantage to both parties.  Those who feel they are not capable of acting fairly with both sides should simply opt out.

Paul - Exactly!  I have had to explain the concept to my agents many, many times.  As the broker, I technically represent every single client that our office has.  

"There can be advantages in addition to the well reported disadvantages"

Yes...at this point my head exploded ;-p

But seriously, you are correct the Broker of record is in a dual agency situation, at least where you live. In Texas, we allow it as intermediary and like you if the situation is amenable I do act as intermediary on sales of my listings. This is clearly explained and laid out in the listing agreement between my firm and the seller. In the long run it has to be an arms length transaction between the buyer and seller. My first intermediary sale (1996?) was with a Real Estate Attorney (my listing) and a buyer who I met at an open house. My attorney client said he did not care as long as he received what he wanted and the buyers agreed and everyone is happy. I do NOT do this all that often but if appropriate don't have a problem. I am however a full time Realtor and make every effort to give my clients and customers the best and most ethical service available. And I somehow managed to get by for 20 years without reading Shift or Millionaire Agent or any of that other drivel...

Okay, I thought I was wordy but I now yield, you rule and have so many more inside references that I am still laughing...the hole in Midland Texas?!

I'd do much better if I exercised those brain cells in my own life, Dawn.  Seems I expend all the good stuff during business hours ;)

Russell - I have managed to escape the inexorable tug of the Real Estate success by proxy literature, too.  If I have time left over at the end of a very long day, my reading of choice does not pertain to what I just spent the day doing.  Give me Michael Connelly or Douglas Preston over Rich Dad, Poor Dad.

That was a tough one to get through!  Nice brain work.  Our broker will not allow us to do dual agency. 

Paul, Hurrah.   I'm tired of hearing that dual agency is immediately tantamount to malfeasance, and the moral equivalent of knocking down old ladies to steal their handbags.  Like others above, none of us want to limit, on behalf of our clients, the opportunity to find the perfect home just because I, or my broker, have the listing/buyer that is a match.  I've had the situation referred to above where I was the listing agent and the buyer's agent, and pre-explained the potential situation of dual agency when completing the agency selection on the listing, and likewise with the buyer.  Further, as you know, here in AZ we have the "Consent for Limited Dual Agency" when this situation happens, which is a required informed, written consent!

What can go wrong? The same things as with any transaction, but in dual agency, if you are careful to explain the situation, watch what you say, and disclose, disclose, disclose...then you should be just fine.  The transaction mentioned above? Both attorneys, and comfortable with the concept.

The upside? Instantaneous communication between buyer/seller agent (it was me!) and ability to streamline the process for all.  All I had to remember?  Disclose, disclose, disclose.

Thanks for taking a somewhat contrarian position. I remember being alone arguing the benefits of limited dual agency, when I took the Agency module in the GRI curriculum.  Have great Holidays, Paul.

Don't forget, Hop on Pop, Where the Wild Things Are and many others for your little guys too! Oh..and thanks for not doing a post and ghost!

 I'm sorry but I don't buy it ! Anytime I'm forced to operate unable to use my entire skillset is at the risk of forfeiting any chance of future business +/or referrals. To default to a mere facilitator in a transaction reduces me to a very average and inexperienced agent. To watch people who trusted me,and GRACED me with an exclusive employment contract go without advice & counsel at crucial moments in the transaction completely goes against my mission statement. To not be able to gain the advantage for a trusted client by out negotiating another less competent(or committed) agent, goes against every definition of undivided loyalty I'm aware of ! To not be able to share my accumulated knowledge and crucial price counseling begs the question - just what is the consumer getting for 6%? No I'm afraid that watered down DUD agency is about one thing- $$$$$$$$$$$$$$$$$$$$$$$$$$. How can I increase my commission deposit slip at my clients expense ?! 7 states have outlawed dual(does rhyme with fool) agency !

Thank you for your dissenting opinion, Michael.  Needless to say, I think you missed a few key points, especially confusing representation with compensation (two agents from the same brokerage does not equate to one giant commission for either agent), but I thank you nonetheless.  I had a very succinct, and spot-on rebuke of your assertions in the que before I regretably lost it.  Not eager to retype the counterpoint, I'll simply assert you paint with much too wide of a paint brush and carry the tone of one who justifies his service through slobbering overpromise.  I apologize if that sounds harsh, but your comment struck me as a marketing piece for an "experienced, aggressive" personal injury attorney.

Don't do it and won't do it! My listings and sales - simple refer it out to an agent you trust to do a good job and collect payment for it. Dual agency has reared it's ugly ahead again for one of my agents. Her buyers are sellling down state and working under a dual agency sale and their respresentation is almost non existent! They are retired folk getting zero guidance. My agent is pulling her hair out at the lack of caring of these humans let alone the agency side.

Were you peeking into my drafts???...because I'm working on a dual agency post now, but I have a different opinion of it. 

First, everyone needs to remember that "dual agency" is defined differently in every state.  In Louisiana, it's the practice of one agent representing both sides.  If another agent in my brokerage brings a buyer to my listing, it's not considered dual agency - they are the designated agent of the purchaser. 

That said, I've done a couple of dual agency deals and absolutely hated it.  I did not feel like I was giving 100% to either side in the transaction and it made me uncomfortable enough to go in search of a buyer agent to team up with and to refer listing calls to.  Some would argue that this is still a bastardized form of dual agency, but we each stick to our own side of the table and haven't had a problem with it yet.

Connie - You wouldn't allow one of your agents to show and negotiate on the listing of another agent in your office then?  Not sure about your locale, but that is a subset of dual agency here.  As to refering the one party off to another agent, I have heard this sentiment bandied about before, but fail to see how that eliminates a conflict of interest.  Passing a client along to another agent, that you have an established relationship with, can raise just as many red flags even if the brokerage affiliation is clear.  If you truly want all parties to be arm's length, it would seem to me that the former agent should have no say in the choice of agents who replace him/her. 

I am currently a duel agent on one of my listings.  I equally like and respect my seller and my buyer. I still give advice to each party and remain neutral and loyal to them both.   Is this a little tough?  Sure it is. But I strongly believe that each and every transaction we complete, whether duel or not, needs to be a win win situation for all. 

If you are an ethical, honest Realtor, who truly wants the best for everyone no matter what the situation is, I think duel agency can be of great benefit to both parties.  

Lisa - I have yet to enter into a true, one agent dual agency transaction, because of the same feelings.  In cases where I have been the only agent involved, it was made clear that the buyer was a customer, not a client (we have required forms that disclose such).  Where it would get tricky is if a past client called me up to see one of my listings.  Haven't had that eventuality arise yet, surprisingly.

I agree with you Paul.  I've only done a couple of dual agency transactions in my career, but both ended up well.  I don't think it is the death trap that most agents seem to imply.  Thanks for the post and best of luck to you.

I don't understand why people think Dual Agency/Intermediary is hard.  If you educate your sellers from the start as well as educate your buyers from the start, it's an easy transaction, and I wish I had more of them.

Running scenarios by your sellers so they know how to react when an offer comes in, and explaining scenarios to your buyers before submitting offers lets you represent them by showing them their options before you're even in the situation.

The only people who don't know how to represent two people interested in the same property are people poorly educated about agency and how to do their job correctly.

I practice Exclusive Buyer Agency . . . and listings aren't the issue at all, and dual agency is never an issue either, ot for my brokerage. The compensation of "dual agency" that goes to the broker is the slipperly slope.  Doesn't matter what Agent A or Agent B might think, the Brokerage they both hang their license has two clients (a buyer and a seller) who are involved in one transaction.  Hmmm . . . sounds like conflict of interest for the BROKERAGE!  When the customers/clients/consumers realize this (and I don't think the majority of buyers/sellers understand the legal agency relationships that are created) they may have something to say about it.  There are quite a few agents that don't disclose, or even follow agency disclosure laws, IMHO and experience.

Paul , unless I've misread your post, I believe you are actually flip-flopping reality ! Conventional Wisdom is all FOR Dual Agency !!!! Nearly 90% of NAR's practicioners don't really WANT TO hear about conflicts of interest !!! They DO practice Dual Agency unapologetically ! It's only here on Active Rain that you have a more "learning based" group of practicioners, do you see it break at a 50-50 rate of opinion on Dual Agency ! I am out teaching in several states with hundreds of different companies represented and I'm very confident about  the 90-10 break in favor of dual agency ! It then appears that ARers are just a DIFFERENT breed of agents !

Oklahoma has no agency relationships. Rather than representation based on common law we have statue law where we are declared single party brokers or transactional brokers, and we cannot represent two parties in dual ageny. One agent can stay in single party while the opther steps back. It works better than dual agency with less legal and ethical risks.

Dual agency, single agency - either way the client/customer gets treated fairly, honestly and with respect.  Seller and buyer have the same goal in mind... to get the property transfered from one to the other, with the least amount of trouble.  A dual agent can certainly expedite things without an adversary in the mix. 

Paul,

I'm like a lot of the others in the sense it has never been a problem with proper education and exposure to the client.

I always tell my clients I will be fair and honorable to both parties, not divulging any information that would harm either.  I don't like to sell my own listings and usually refer it to someone else on my team.  Still the transaction is dual agency but I feel better not having both sides.

Paul, If I understand the tenor of the complaints to the idea of dual agency above, it's that loyalty and the delivering of one's expertise to one's client requires that the transaction be a win-lose.  We win, they lose! (Envision, if you will, the image of chest-beating, and the sounds of primal grunting) Short of that you're delivering less than your best, and shirking your fiduciary duty to your client(s).

B.S.!! I read above that in somes states two agents from the same office can act as individual agents without a conflict of interest. As the broker is the only legal entity in the transaction in Arizona, where both of us practice (and we are mere independent contractors) we observe the notion of imputed knowledge and dual agency automatically exists de facto. At least Arizona acknowledges the possiblity of the appearance of conflict-of-interest. 

Our delivery of top service is more than squeezing every dime out of the other side...it's about knowledge of homes, the market, the transaction, the neighborhood, the contract, the inspection process, and many, many more things that make us professional.

Apparently some feel that they cannot be ethical if asked to serve both sides.  I feel sorry for those agents, because when push comes to shove, they probably would have ethical issues on a one-sided transaction too.

Sure there is a potential for abuse when representing both sides. Sure there are unscrupulous, dishonest agents out there who have, or would take advantage of this situation. That is true for these folks in any transactional situation.  But to condemn the option of dual agency because of the bad apples?  We sink to the lowest common denominator.  Clearly, dual agency is not for the dishonest or ethically-challenged agent.

Honest, trained, professional agents can deliver excellent service during a dual agency transaction. Yes, we must sit on priviledged information we know of the "other side"...which, frankly is rare anyway...how often do you obtain the other side's "secrets" when negotiating? Sure, everyone has learned something they shouldn't have from the poor agent, but as a rule, it's rare. (so save your e-mails, please)

As I stated above (#12) I have handled dual agency transactions, one where I was the single agent, and several with other agents in my brokerage.  I gave all parties excellent service (their words, not mine)  I have maintain excellent relations with all parties of all of those transactions, and have had subsequent business from four of them. The key is to be honest. 

I worry about those agents who give dramatic dissertations of the evils of dual agency.  Too much temptation to cross a line? Hiding behind the claim of less than their best service makes me wonder what their best service is....dumpster diving or computer hacking?

Interesting. In Massachusetts disclosed duel agency is now at an agent level and not a company level. So each individual can represent their respective clients fully.

This is something that seems is always being debated. If it was really not a good thing you think they might have changed the laws on it.

In my perfect world, there would be listing brokerages representing only sellers and selling brokerages representing only buyers.

Not going to happen in my lifetime. 

Dual agency?  I just don't have the ability to call myself a "representative" for both sides in a real estate transaction.  Either / Or / but not both.  I just don't have the stomach for it. 

Fact is, 95% of the buyers or sellers believe that the licensee with whom they are working is "their agent".  No matter how well we disclose.  The consumer simply doesn't have the facts or historical basis with which to grasp the concept of dual agency. 

So, Single Agency works for me.  If I list a property for one of my buyers, which is about the only way I manage to find myself with a listing, I try my best to sell it and ususally do quite quickly through ubiquitous Internet activity and/or heavily advertised open house activity, that buyer will be a customer.  That is fine with the buyer.  They just want the house.

I also sell my share of FSBOs.  No question about whom I represent there.  None of this "one time showing listing" stuff for me.  All I need from the owner is "permission to show property" and I disclose my Buyer's Agency status from the first face to face.  I don't ask for any fee guarantee.  I know how to build that into the contract. 

Paul,

All of my transactions are as a transaction broker, I have never worked under agency law.  It had already been abolished when I became licensed in Oklahoma. 

I have had testimony letters from both buyers and sellers on the same transaction describing how happy they were that I had been their broker.

Each sentence, each form, everything done has to be thought about but in the end I am glad that I did not learn to do business any other way.

Michael Perry - I very much disagree.  While many agents may have no problem with the concept of dual agency when amongst their peers, its defamation as a practice is loud and long in the public forum.  My theory?  Some agents overhype their negotiation skills as a justification for their hiring.  Seems that the loudest barking comes from those who elbow their way into the sightlines of consumers by yammering on and on about their absolutely unique skill set that makes them a vital component of any Real Estate transaction within the tri-state area.  Those that brand themselves this way have no room for diplomacy, or even reasonable adherence to any other form of advocacy.  If that's your thing, more power to you.  Even though I find such loud trumpeting of one's revolutionary techniques to often be a case of insecurity (thou doth protest too much) in justifying their fee and securing business through a reputation built on service rather than rhetoric, at least there can be no confusion in where said Doberman stands.  It is possible for agents to market themselves into a corner.

Michael O'Donnell - Simply a magnificent rebuke.  I would have been better served to let you write this post for me.  Every transaction is unique, and some situations are actually improved rather than hindered by a dual agency role.  It is not my preferred method of representation, but a nuanced one in which I can perform effectively when the need arises.  The bluster of strict one-sided advocacy is all too often just that: bluster, by those who seek employment by telling anyone who will listen that they are the toughest damn negotiator in the land.  Some situations require a mallet, but some require a feather duster.  Apparently mnay of us have never attempted to broker a truce between warring friends.  Same concept.  I won't tell Bob that Steve's wife is having an affair, and I definitely won't tell Steve that his wife's cooking is superb.

Lenn - My worldview on dual agency is somewhat similar to this:  I'm am not pro-abortion, but I support a woman's right to make her own decisions. 

I really just went there, didn't I?  Yikes.  For those keeping score at home, Paul just called dual agency an abortion.  "When you need a professional handling your Real Estate forceps, don't just go to any dark alley brokerage ..."

P.S.  Here's a good read:  E&O Issues Regarding Dual Agency

Starts off with:  "A dual agency transaction is the biggest area of E&O exposure for real estate brokers and carries the greatest risk."

Does an agent ever fully represent the seller's or buyer's interest?  How many agents represent their own interests first?  I think that if you believe true agency exists then it is not a very far leap to believe true dual agency can exist.   I agree with you that our responsibilites are closer to that of an attorney than a "Buyer Beware" salesman.

Carla - Naturally.  As the only broker involved in the transaction, it only follows that liability doubles up under such occasions.  As to disclosure, I suppose it depends on the state as well as the brokerage.  It is very explicit here, and I don't get a check if the proper disclosures are not made and acknowledged in writing by all parties.  That, of course, is just the minimum standard of care.  Good agents far exceed that basic criterion in educating their clients.  I disagree with the notion that laypersons are incapable of understanding agency relationships.  If anything, I think some agents are simply incapable of properly explaining it (and thus start with the "good" and "bad" rhetoric in defense of their own ignorance and/or ineptitude).

All:  I have often wondered if opening one's own boutique brokerage is the way to circumvent most dual agency scenarios, and it likely is.  The question then becomes, is that a good thing or a bad thing?  If doing so is really for the benefit of the client, it must be weighed against the loss of synergy and in-house networking that helps produce a different advantage for the client.  I can't tell you how many buyers I have gotten in to see properties listed by fellow colleagues before they were scheduled to hit the MLS, or how many buyers were brought to me on upcoming listings I've touted at formal office meetings and informal water cooler sessions.  In protecting our clients from the evils of dual agency within a single brokerage, we also risk missing the transaction entirely.  In which case is the greater harm done?  Feel free to discuss.

Paul,

I've been dual many, many times including where I personally represent both sides.  More important than my own opinion is that of my clients. Not once has anyone (including the attorneys representing each party) expressed anything less than full satisfaction.

That said, if things get sticky - perhaps on post-inspection negotiations - the lawyers are glad to jump in when asked. I realize not all areas use attorneys but perhaps it helps with dual agency.

Irene - Tell Santa I want a Red Ryder carbine-action, two hundred shot Range Model air rifle with a compass in the stock and a thing which tells time ;)

Cracking up at comment #16 and as far as #40...NO, you will just put your EYE out!

Baby Jessica? Wow, what a memory from Midland, TX Paul. I'm fine with dual agency as long as you play by the rules.

Thanks Everyone...enjoyed the discussion. 

I'm too new to real estate sales to have an opinion yet, but I'm leaning towards Lenn's dream of "listing brokerages representing only sellers and selling brokerages representing only buyers." 

Loved the phrase: "the inexorable tug of the Real Estate success by proxy literature..."

Barbara - Obi Wan has taught you well.  When in doubt, agree with Lenn.

Gary - It's been a while since I was able to fit in a solid baby-in-a-well reference.  Year's winding down, needed it for the quota.

Russell - Grinch!

Quoting Michael O'Donnell (#30):

Apparently some feel that they cannot be ethical if asked to serve both sides. I feel sorry for those agents, because when push comes to shove, they probably would have ethical issues on a one-sided transaction too.

If someone doesn't feel comfortable with a particular way of doing business, why would that equate to questions about their ethics?  I never want to give a client the opportunity to look back and even have a moments hesitation about whether or not I was completely on their side, working to serve their best interests, whether as a buyer or a seller.  This is a personal choice I've made because I feel very strongly that every consumer deserves their own representation. 

After guiding clients through a dual agency transaction (which they were all happy with), I walked away feeling like I was working with one hand tied behind my back.  Could it have been that I was personally too close to both of the parties, who were both (according to Michael) those rare clients that were completely open and honest with me?  Possibly.  But I never wanted to feel like that again, thus my decision to not practice dual agency.  I'd like to believe it's because I'm ethical, rather than having my professional acumen called into question.

I'm sure there are many agents who can skillfully guide their clients through these transactions, I just don't want to be one of them.

Lisa Heindel from the top ropes, ladies and gentlemen!  Can't help respecting the agent who knows exactly what she is and is not comfortable with in terms of service.  I don't really like being the lone agent in the transaction, even if only one party is my client.  The customer still looks to you for answers at times, even while knowing you cannot provide them.  That said, there are circumstances in which I will enter into dual agency, and then only with the explicit consent of my client(s).  As I've said several times, the most frequent occasion is selling the listing of a fellow Realty Executive agent, or vice versa.  Our brokerage represents both, even though we each deal directly with our own clients.  In practice, there is really very little difference to the service provided.  I don't have access to the other side's confidential info, and vice versa, and we negotiate in standard fashion.  Far more detrimental to the needs of my clients to skip such properties simply because the agents hang their shingles at the same shop.  In my case, our brokerage is so large, that it is usually someone from another branch that I have never met and couldn't pick out of a photo lineup.

I have done a few dual-agency sales and never had a problem, but I have seen some get ugly after closing. My present company does not allow them, so problem solved. I now have to refer them to another agent.

Personally, I think D.A. should be illegal, but I'm glad it's not because I represent both sides about 1/4 of the time.  It's because of my advertising!   Regardless, I think a lot of agents do not handle it correctly. 

And yes Mike... it is about the $$$$$$$$$$$.  But not from this transactions.  It's the money from all the future transactions I will get from both clients who walk away happy with the way I handled the ENTIRE TRANSACTION.  How about this... Both parties do have the same interest...A smooth successful transaction that was fair.  A transaction where nobody is embarrassed to see the other party or agent in the supermarket a month after closing. 

I have never been known to resist an invitation to "discuss".

You wrote:  "I can't tell you how many buyers I have gotten in to see properties listed by fellow colleagues before they were scheduled to hit the MLS, or how many buyers were brought to me on upcoming listings I've touted at formal office meetings and informal water cooler sessions."

Therein lies one of the inherent risks of Dual Agency.  The property is exposed to consumers via a small circle of in-house agent contacts, thereby limiting the greatest exposure of the seller/owner's property to the general home buying population.

By exposing the "pre-listing" to an exclusive group, which most listing companies do, they are also attempting to close the sale before the seller's property has had the opportunity to be exposed to the general home buying public.  Good for the agents in that company, of course.  However, without exposure to the general home buying public, the "highest and best" offer may be missed. 

There is great value in exposing a new listing to the greatest number of potential home buyers.  Otherwise, why even have an MLS?

One of the techniques used by agents soliciting listings, whether new leads, expireds or FSBOs is "We are a large company and it is likely that one of our agents is already working with a buyer for whom your property could be perfect". 

It works because the average seller doesn't understand the value of the MLS and the average agent wants the potential listing client to believe that the agents in their company all have a covey of home buyers just waiting for the right listing to come along. 

The MLS is the great equalizer that, if used properly, gives all sellers an equal opportunity to reach the best buyer for their property while also giving all buyers an opportunity to find the best property for their needs. 

GEEZ!  I shoulda posted this!!

My broker does not allow dual agency, period.  And I would not do it even if he did.  My business is about 50/50 listing and buyer agency.  All of my buyer brokerage contracts specify that I will not be their agent if they choose one of my listings.  So how do we work this?

As soon as they settle on one of my listed properties, we review their options - they can continue as my customer - in which case I will create the contracts, review them with them, and do everything except help them think through the terms of their offer.  Alternately, I can connect them with another realtor who can help them analyze what their offer should be.  I have a few trusted realtors who know the market well and will offer terrific service when asked - and I give them 25% of the buy side commission for the limited service of assisting with the contract negotiations.

If they choose to continue with me, they sign an agency disclosure that says they understand I am not representing them.

Not the point: bet you got a "A" in all your english comp classes! Great post!

Dual agency is a conflict of interest, clear and simple.  In my area it is traditional for both parties to also be represented by lawyers, but we seem to be, more and more, a minority in this.

I am especially concerned when the dual agent is representing a developer, and much more so because many of these new construction developments are including, in the sales contract, a clause prohibiting of any home inspection.

How can an agent claim to represent the seller and the buyer and put a clause like this in the contract.

Just a lowly home inspector's opinion.

Come on people.  When you list a house, you're being hired to sell the house.  Do what you are paid to do.  Your first activity on your list of "to do's" is to go through your list of buyers to see if you have someone who might want to buy it.  Don't sit back like some kind of wuss and wait for some other Realtor to do your job for you.  Here in Toronto, dual agency is as common as overcooked hamburgers and the subsequent problems associated with it are few and far between.  If the agent in question is a sleeze, the problems will exist regardless of the agency relationship. 

Paul - I had a few listings where when signing the listing agreement, the seller would tell me they definitely do not wand Dual Agency - they heard about it - then after a while, they'd express that they would love it I am the one who also brought the buyer because they feel I would be fair to both.  In those listing, I never ended up representing both sides, but I find that a huge compliment. 

I think the bottom line, to me, is; are both sellers and buyers fully aware of the representation? are they getting what they want and if they are happy with what they get? 

Sometimes, the best solution might not be the highest price for the seller, or the lowest price for the buyer.  The best soltuion is the solution that meet everybody's needs and more.  In our business, we serve the people and that is a very complicated matter.

That's something to keep in mind when deciding whether a dual agency is right or not!

This brings out a lot of interesting thoughts, the nice thing about a post like this, is that it allows us to look at things from different perspectives. 

Personally, I am fine with dual agency, I'll hand folks a pile of disclosures to sign about it, but other than that, we're ok. 
Jim points out something that I will second, the volume of business one can receive from the good word of mouth received from the clients served is far more valuable than just the individual transaction. 

One more thing.....I remember the agent who found a house for a family member in 1972.  The MLS, if you want to call it that, was pathetic and unreliable and he told me later, "most of the good houses were never listed there".  That was the "old school" way of selling houses.  The house the relative bought wasn't even for sale.  The agent remembered a conversation he had had with the seller a few months before and he simply made a call and put the two parties together and voila, a deal was consumated.  Or how about the agent from rural Saskatchewan who sells over 120 houses/farms/lots a year and not one ever gets listed and he acts as a dual agent in most of these sales?  Just sell the darn house. 

"Matter of fact, I have yet to encounter the client that has instructed me to do so after an initial discussion of the limitations in representation that can crop up in such circumstances. Finding the house or the buyer is first and foremost. Concerns over representational nuance is secondary."

Paul, I've had more problems with single agency transactions than dual agency.  Hummm

Steve

For the last 20 years [ever since buyer agency come to be a real thing in South Carolina] I have seen and heard various agents across the State and the Nation go down this street of "Dual Agency" some with the idea and some against the idea.

In my experiences with more than 800 transactions many of my closings have been in the dual agency mode.  I personally have no problem with it- it does come down to a couple of things.

1- Follow the rules of disclosure 2- have conviction in what you so as to actually follow the rules no matter how tempting it may become to do otherwise

I find that if I do the thorough job listing the property there are legal ways to prepare a seller so that when dual agency becomes the fact they know what to do and feel easy doing it. Also, when doing my buyer interviews I explain how things can go with prices and offers and what they should do- a strategy if you will; when the dual agency comes to be a fact for them they already know what to do and how to respond to various situations.  Frankly, in today's market buyers and sellers are not 100% trusting of agents and therefore do not tell many things that could be used against them in a transaction.

QUESTION TO ASK YOURSELF:  How strong is my moral fiber? And do I feel I am accountable to not only the clients, buy and seller, but also accountable for my actions to a level which supersedes the BIC.  If you feel strong and are serious about keeping between the lines of correctness then you can do dual agency with no hesitation.

If you do not have a belief system which keeps you on the path in a dual agency, then you will stray from it in an exclusive agency mode as well.  It is your nature. Asking your clients WHAT they will allow you to disclose that is not of a material nature and having those things written and signed also makes it easier to serve both clients well, and after all- one wishes to buy and another wishes to sell. Let it happen.

No matter how much we try to educate the sellers on how homes are REALLY sold, they all still expect you to bring them a buyer. Try telling all of your prospective sellers on the listing appointment that you can't actually sell their home yourself and see how many listings you get.

I will read pages and pages more if you just continue to quote Princess Bride  :)  ...thanks for the reality check. 

The reason sellers list their property with an agent is so that the agent will sell it. It is ok to put a sign in front of the house with your information. It is ok to place an ad with your information.  It is ok to put the house on the internet with your information.  The posters against dual agency are suggesting I do not answer the phone, respond to emails, hold open houses or show the property and actually try a sell the home.    

Paul, While I thoroughly enjoyed your post and all the great commentary, I can't help but wonder why no one else has mentioned your creative insertion of "The Princess Bride" reference...?  One of my all-time favorites! 

I am a bit surprised by some of my fellow Texas agents.  If you are licensed in Texas dual agency should not even be a part of your lexicon.

In 2005 the state legislature changed the real estate license act to read if you are going to represent both parties in a transaction you must act as an intermiary.  See section 1101.561(b).

In Texas Dual Agency is illegal - but we call it intermediary  - the broker 'assigns' agents to represent the buyer and seller, while broker stays neutral - and there is full disclosure by both principles.  Actually the concept is simple, but the way it is defined will raise the eyebrows of any principle

I have to agree with Duncan and Matt (53 and 62).  The point of taking a listing is to sell the house.  Why put up flyers, advertise on the web, or even have a sign in the yard if you don't want to sell it?  Your job is to sell the house, not put it up on the MLS and hope that a buyer's agent brings the buyer.  How, if you are you truly telling yourself that you are working for the best interest of the seller if you don't work to bring a buyer to the table?

I think that one of the primary considerations should be whether dual agency compromises in any way one's ability to represent and champion the interests of either client.  For any agent worth the completion of a buyer's or listing contract, the answer is absolutely yes.  To suggest that dual agency is better because, without it, the other side is represented by a "schmuck" is absurd.  If you are negotiating with a schmuck, your chances of advocating for your 100% client are at least as good, and usually better, than if you are participating in corporate incest and not negotiating at all. 

Paul, I like your comment, "Some deals require a mallet, while others require a feather duster".  There are too many agents out there who feel their job is to "out-negotiate" (as one person said) the other "under-qualified" agent.  If you are going into a deal with this type of attitude, you are doomed for failure.  Remember, the clients are the ones negotiating.  You are simply there to guide them along the way.  I look at every transaction as trying to "line up the stars".  If some agents would just get out of the way and let the deal happen, we might all be better off.

We conduct mostly short sales in our company (especially as of late).  Representing both sides in a short sale transaction is much easier, as you are basically competing against a BPO and the Lender.  We've done several dual-agency short sales, and everyone has been very satisfied with the outcomes.

Paul: As a former Professor at Michigan State University, I only write in 50 Minute Style, so I thoroughly enjoyed and appreciated your "Lengthy Discourse" on Dueling!  Yes, I am an off-the-wall speaker and writer, so I doubly enjoyed your style of jumping hither and fro occasionally leaving reader in some dust or detachment.  Enuf of the compliment stuff, but great job!

I have done it twice this year and being one of those growing bunch of Agents who work overtime to be Professional, I gave some fairly conscious thought to how to handle both sides as though they were "singles".  To me the key is providing both sides with the same CMA at offering time, even encouraging them to sit with me to see that I am not eliminating "unfavorable" data.  Of course, they decline but know that I am honest by encouraging.  I also don't go running back to the seller as the buyer side is developed, as though I was a Buyer's Single. When the offer is transmitted, the CMA goes right along and if the seller is local, the discussion is face-to-face thorough.  I make comments to each side that aim to honor our fiduciary responsibility.  I try to envision the other side sitting there at the same time I comment, like at a Closing Table.  I don't claim to be 100% perfect in this mode, but I think I come close.  The buyer who actually posed questions about my relationship to the Seller (I had watched her home for a few years when she was away in the Cold North), later complimented the way that I handled their side and was glad that I was "their" REALTOR®.

It doesn't have to be "scary" as several commenters have expressed, if one changes their usual modus operand us and gives careful thought to the task of being fair to both sides and not going anywhere near some of those pressuring approaches that we hear about all to often.  Keep the thought squarely up front in the cranium that both sides are sitting in front of you, and doing/saying accordingly!

How did I do re: the 50 minutes...haven't heard the bell ring yet...but, then, I am 50% hard of hearing, or worse!  Cheers and keep writing at any length!

Couple of points to make as I read through the pile of comments that greeted me this morning:

On the notion that a disservice is being done to a seller by showing and/or selling the property to an in-house agent prior to its launch on the MLS, it is a fair point that full exposure through the MLS typically will garner the highest sales price.  However, some clients find appeal in a attracting a possible buyer before the masses are expected to descend on the house at large.  Price is not the only consideration when representating their needs fully.  Just depends on the situation and the client.  Further, clever listing agents can leverage the fact that the hom hasn't been properly exposed yet to increase the demand from the "preview" buyer.  "Better jump on it before the floodgates open," is a familiar sales pitch.  I tout the power of the MLS when taking a listing, but there are always extenuating circumstances which might make sale by another method a viable measure.

As to those who decry single agency because they feel it is their job to sell the house, rather than waiting for another agent to bring you a buyer, I think you misinterpret the objections to dual agency.  There can be a single agent in the transaction, but he/she is not obligated (at least in my state) to represent both parties.  One side can always be treated as an unrepresented customer, and allegiance given fully to one as the client.

Was wondering if there would be any pickups on my Princess Bride reference ;)

I personally don't agree with the practice of dual agency. It's too risky. I like to be facillitator, or intermediary. That way you work to get that transaction done, not to protect the best interest of buyer and seller which they both have totally different interests.

Hello Paul. GREAT article.  I actually got into a tug-of-war with another well known real estate blogger a few years ago over an article I posted on several of our blogs.  I think you and the "commentors" will enjoy the two following comments and a fun Dual Agency Video we put together last year.

Check out http://activerain.com/blogsview/880805/the-history-of-buyer-agency

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This article was republished and reprinted, with our permission, by Lorman Education Systems and used in their materials for a Continuing Legal Education seminar - "Real Estate Litigation in Arizona" - 9/14/07. Request to republish was by - Michael A. Fleishman - Butler & Associates, P.L.C.

Dual Agency, Practical or Impractical & What The Heck Is It, Anyway?     

A lot has been written and debated about the subject of Dual Agency. So, what the heck is the big deal?

Let's break it down. The assumption is that most people are aware that a real estate broker or salesperson ("Broker") is an agent with fiduciary duties to the party that the Broker represents. The reality and the problem is that most people do not know this. Now... most real estate agents should know this but unfortunately, many do not. You see, an "agency relationship" is most often created by express agreement, I.E. a listing agreement and/or a buyer broker agreement. Normally, both documents clearly outline the fiduciary relationship and duties of the real estate agent. However, an agency relationship can be legally implied by the parties' "agent's" actions. Regardless of whether the agency relationship is express or implied, the agency relationship imposes on a Broker the fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting.

In King County, Washington State, in Busk v. Hoard, 396 P.2d 171 (1964 Wash. 1964)., the King County Supreme Court held that: "...The concept of agency is one of law. Its existence depends upon factual elements that enable a determination, as to whether an agency relationship existed, to be made from all the peculiar circumstances of the particular case. No one fact, seized from its setting, should be regarded as conclusive or controlling under any and all circumstances..."

So, what is "fiduciary duty"? First let's define what the Realtor's Code of Ethics says of Fiduciary Duty.

· Standard of Practice 11-2

The obligations of the Code of Ethics in respect of real estate disciplines other than appraisal shall be interpreted and applied in accordance with the standards of competence and practice which clients and the public reasonably require to protect their rights and interests considering the complexity of the transaction, the availability of expert assistance, and, where the REALTOR® is an agent or subagent, the obligations of a fiduciary. (Adopted 1/95)

Ok... so what the heck does that all mean? For me, perhaps the best definition of "fiduciary" was found on the Internet at www.websiteupgrades.ca/glossary/free/F.shtml:

Here Fiduciary is defined as:

"A person charged by law and equity with a higher duty of care for another person. A person who, as a result of a relationship with another person, is required by law to place the other person's interests equal to or ahead of his own in all dealings involving that other person. The relationship is often created when the other person approaches the fiduciary to use the fiduciary's special skills and knowledge, for a fee, to benefit the other person."

I think this definition best describes what we do as Realtors and/or real estate agents. We either represent the best interests of a client, buyer or seller or we take some subservient roll. By subservient roll, I do not mean to imply that our services are any less valuable, only that our services take on a different face.

Consider the agent acting as an advocate/fiduciary for a buyer or seller. For our example, we'll assume that our real estate agent is involved with a buyer who wishes to purchase a particular piece of real estate listed by the agent's brokerage, we'll call them Dual Agency Inc. The agent will, first discuss with the seller, that the potential for an offer from a buyer who has been working with the agent in search of a piece of real estate to purchase. Not until the seller agrees to the potential of limited disclosed dual agency, should the agent present the offer to the seller and not until the buyer has agreed to the potential of limited disclosed dual agency, should the agent prepare the offer for the buyer.

It is also extremely important to remember that, here in Arizona, we are blessed... or cursed... with the privilege and responsibility of being able to write contract language to a transaction. Arizona is the ONLY state in the US that empowers licensed real estate agents with this component within the real estate transaction. This right is entrusted under Article 26 of the Arizona Constitution wherein Article 26 reads:

"1. Powers of real estate broker or salesman

Section 1. Any person holding a valid license as a real estate broker or a real estate salesman regularly issued by the Arizona State Real Estate Department when acting in such capacity as broker or salesman for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, preliminary purchase agreements and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale."

Ok, so why is this important? Because Article 26 sets the foundation for how real estate agents engage the public.  We have an inherent duty to understand our craft. If we engage a consumer in a transaction, we have an obligation to lay out all of the nuances of the transaction, all of the nuances and peculiarities of each document that becomes an integrated part of the transaction. Our duty is not only to help negotiate the transaction, but more importantly, our
duty is to help the consumer fully understand their duties to the transaction.

Too many folks, real estate agents and the public, place way too much emphasis on the negotiations of a transaction rather than the complexities of the transaction. Any monkey on a chain can fill in a contract form, it's not rocket science. And, while we, as an industry are heralded as learned negotiators, we are all too often dismissed for our knowledge of the intricacies of keeping a transaction together. It is this Realtor's opinion that we are not paid the big bucks for our slight of tongue or negotiating strategy; we are, or should be, paid the big bucks for making sure that the transaction makes it to the finish line. We are entrusted with an overwhelming responsibility to fully understand and explain the meaning of the contract, the meaning of each form to the contract, the ins-and-outs of surveys, disclosure of waste water treatment requirements, the ability to dissect the potential pot-holes in a transaction and how to navigate around or through them and to explain the particular responsibility of each party to the transaction. We have an obligation to the parties to help them complete the transaction with as little inconvenience as possible. The particulars of who "gets the best deal", buyer or seller, is an arguable point if the transaction never closes!

In no way is Dual Agency an obstacle to these duties! Just because one party or the other loses the edge of gaining an advantage of 'covert knowledge gained' about the other side, has little bearing on the real estate agent's responsibility to deal fairly and honestly with both the buyer and seller in a Dual Agency transaction or any transaction!

Article 26 of the Arizona Constitution places Arizona Real Estate Professionals on a playing field that is far more different than any real estate agent in any other part of the United States. Moreover an excerpt from the AAR-On-Line publication March 2006 written by Michelle Lind, General Council to the Arizona Association of Realtors read:

How Article 26 Affects a Licensee's Legal Obligations

Few court cases have interpreted the provisions of Article 26. However, in Morely v. J. Pagel Realty & Insurance, 27 Ariz. App. 62, 550 P.2d 1104 (1976), the Court of Appeals states:

Having achieved, by virtue of [Article 26 Section 1 of the Arizona Constitution], the right to prepare any and all instruments incident to the sale of real property, including promissory notes, real estate brokers and salesmen also bear the responsibility and duty of explaining to the persons involved the implications of these documents. Failure to do so may constitute real estate malpractice.

Id. at 66. In a subsequent case, Olson v. Neale, 116 Ariz. 522, 570 P.2d 209 (App. 1977), the court states:

[A]rticle 26 § 1 of the Arizona constitution . . . authorizes brokers and salesmen to engage in limited law practice involving real property transactions. If a broker can practice law in the area of real property
sales, it is reasonable to hold him to a full understanding of the implications and ramifications
of the Statute of Frauds.
Id. at 525.
These cases, and subsequent clarifications by the Arizona courts, indicate that Article 26 imposes a duty upon brokers and salespersons to give competent advice to their clients and to understand the legal implications of the documents they prepare.

So, where does this all lead with respect to Dual Agency? In this Realtor's opinion, simply stated, as an industry we have an obligation to be fair and honest with the public, the consumers of our services. We have a duty to be honest and upfront about how Agency Relationship works and what it means. There are numerous instances of case law, in Arizona and around the US that tell of tales of dubious dealings by agents, knowingly and unknowingly, mismanaging the public's expectations of these relationships. This is not a bi-product of Dual Agency, this is a bi-product of inexperience and incompetence by real estate practitioners who do not take the necessary steps to fully explain the fine distinction between advocacy and fiduciary VS fair and honest dealings with the public.

If we, as an industry, take a more responsible roll in explaining Dual Agency Representation VS Single Agency Representation, we will find that there will be many fewer complaints filed with the Arizona Department of Real Estate over this subject.

Yes, there are advantages for a buyer or seller to be represented by an exclusive agency relationship. For example, the ability to take advantage of misguided disclosure of the motivations by one side or the other can be valuable during the initial negotiations and throughout the transaction. But... if the buyer or seller has been properly schooled by his/her real estate agent, there is little chance of either side ever coming across such, foolishly disclosed, information.

Lori Klindera and "G-II" Varrato II are Realtors with Coldwell Banker Residential Brokerage, 3050 W. Agua Fria Freeway, Suite 110, Phoenix, AZ. 85027
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GREAT job Paul, GREAT job in deed!  We fully agree with everything you commented on with one exception.  You wrote:  "...Thus, even though, in practical terms, each side may appear to have the exclusive representation of their chosen agent, the same broker ultimately bears a fiduciary obligation to both principals in the transaction..."

Actually, "fiduciary obligations" are obliterated when dual agency is engaged, even by the deisgnated broker.

Dual Agency can be an effective and valuable tool, when deployed properly and with FULL disclosure to both parties.

Lori & G-II - Coldwell Banker Residential Brokerage - Phoenix, AZ

Nothing to add to the range of thoughful and interesting comments here, but what an outstanding post! Wyoming has just introduced "designated" agency, in which two agents from the same brokerage may represent buyer and seller. Truly the answer is in being an ethical agent to begin with - absent that, things will go sideways quickly no matter what the laws of agency say in your state.

#67 Mike Carlisle - If you read that to mean you are guaranteed to be stuck with a poor agent if you don't sign up for a dual agency relationship, you grossly misinterpreted the statement.  The importance is working with a professional who can adequately perform under any forms of agency than with one who cannot perform well under any circumstances.  That is hardly an advocacy position for everyone to run out and grab their nearest dual agent. 

Another theme I wanted to touch on again from some prior comments:  The whole notion of referring the buyer out to a trusted agent and collecting a 25% fee for them to negotiate against you doesn't smack folks as another conflict of interest?  If you are going to remove yourself from the equation as the buyer's agent, you should remove yourself completely.  Helping them choose their new advocate, and getting paid at closing for handpicking the representation does not strike me as removing yourself fully from the equation.  I'd suggest staying all the way in or getting all the way out.  You karate yes, or you karate no ...

Nice article.

I guess I have to work around the schmucckk theory more often than not in land sales.I get residential agents who really should not be attempting to sell land in the first place -so which is worse ?

I have always told sellers and buyers that I share the exact same information regarding price, how list price was determined etc.

Have a long line of satisfied clients , who were buyers and now owners when I was the listing agent.Sellers are also equally satisfied.

Paul,

The first thing I checked here is whether you permit reposting. I wish I had written this, but in due course I'll repost it.

This is something that should not be missed.

As a lawyer, I always thought that dual agency was just outright wrong! If a brokerage were to have asked for my opinion (but no one did), I would have said "outrule the practice, don't permit it).

However, you don't always have to act as an adversarial advocate to get a deal. Sometimes, the mediator or arbitrator role works just fine.

It's really about reaching an agreement bewteen the parties. If you know both sides, then you can often put a deal together as a dual agent that can't be done otherwise. There are many failed negotiations which would work, if only it were not for two adversaries with strong egos.

With proper disclosure and understanding, many sellers and buyers benefit.

To protect myself I actually have a 10 page letter that the prospect needs to take to their own lawyer first.

Brian

G-II Varrato II - Thank you for a very detailed comment.  I will go take a look at the blog to which you linked.

Since we are a team we seem to handle this issue better than some.  We just separate our duties between the sides.  We are always honest and straightforward and I would agree that we have had more trouble working with others than working with ourselves!  This is a great post (just a little long :-)  and apparently it's been awhile since I've seen The Princess Bride!

Paul I am inpressed with your logic and reasonableness.  Your blog was well written and for the most part I agree with your position.  However lets not ignore the fact that real estate agents are limited on what they can advise either the buyer or seller.  In fact the law in most states limites their expertise to matters associated with either marketing property or helping identify possible property for purchase.  In fact the documents of the various association of realtors state agents are not expert in any matter and advise the consumer to seek competent advice.

In our company we take care of this by providing and paying for the buyer to have an Attorney to represent their interest throughout the entire process including contract negotiation, contract drafting, due diligence and closing.  We also provide and pay for a structural engineeer, title examination, tax report and survey with each property.

In this way we keep agents doing what they are trained for and leave the other activities to those better trained and equiped to help the consumer.

Paul, as you so creatively finally got to the point, your post is well taken and understood. Disclosure,communication and commitment to one client is the only prevention of an unfortunate visit before the local real estate board.

While I have a taken the stance of not doing dual agency, I am still committed to selling my clients home. That does not mean that I have to be the one to write a customers offer. Referring it to someone else is still the best protection of a possible conflict of interest. Even a customer expects certain advice like should I have an appraisal,should I have a home inspection. If you can't answer that question that should raise concerns in the customers mind, but how thoroughly we explain why we can't is what gets us in trouble.  We are very diligent at presenting a buyers agency agreement to a new buyer extolling the benefits of why they need us in their corner. how can you (not you personally!) turn that off to deal with a customer is hard to understand, and sounds like talking out of both sides of your mouth!

I've heard agents try to justify to their client seller that their buyer customers appraisal came in a little low and that perhaps they should accept it, lower their price and take the deal. Who do you think they were working for at that point and do you think their broker would point out they just crossed the line of undisclosed dual agency if they knew? Hopefully... Which brngs us to why even designated agency has it's challenges when agents freely converse in a bull pen or at lunch.

Professional and committed agents can do it and keep themselves out of REALTOR jail, but it's still hard to understand why they would take the chance.

Unprofessional, incompetent agents sometimes make me want to embrace dual agency.

I've been selling real estate in various states since 1971. I first opened my own brokerage in 1978 and have seen many changes from the days where all agents were Seller Agents or sub-agents of a Seller's Agent. Then, in the 1980's came the changes AS THE RESULT OF LAWSUITS that created the agency relationships we know and are (in many states) encumbered by today. But, enough history (just to let you know where my thought process is coming from).

Dual Agency is the creation of limited thought which exposes agents to unlimited legal (and financial) liability. And, frankly, there's absolutely no reason for it. Particularly when there is a PROVEN ALTERNATIVE SOLUTION; a legally defined brokerage position as an independent mediator which does not represent either the buyer or the seller.

This alternative exists in a number of states; in New Jersey (where I'm also a broker), it's called Transaction Broker. It's also used in other parts of the world (yes, they actually do have real estate brokerages outside of the US). For example, in Portugal, the typical brokerage company (and, by extension, all of the agents working in that company) are known as Mediators.

The thinking that a real estate licensee MUST take sides is antiquated, impractical and only creates more and unnecessary distrust of those licensees that are required by law to do so.

Frankly, as a broker in the State of Arizona, I find it very difficult to participate, because I absolutely refuse to act in the capacity of a Dual Agent. Consequently, my ability to compete is seriously impeded. However, I refuse to jeopardize all I've worked so long to achieve by being subjected to a lawsuit where I can lose some or all of it.

I find it hard to imagine how so many other states and countries can operate so well and so legally unencumbered using the real estate "mediator" and the same cannot be done in Arizona, and other states that do not allow this practical and easy to understand alternative business relationship.

Maybe it's the heat.

I think you did a great job of trying to put a difficult issue into perspective. The real issue is how un-understandable it is to the consumer mostly due to the legal derivation of the concept. Practiced correctly by a licensee, all parties can be properly represented, particularly when the listing and selling agents aren't the same and DA only arises due to the commonality of the broker. I'm like you, want my client(s) to be well served. If I am involved in DA to accomplish this, so be it.

Good or bad - dual agency is incredibly difficult.  In my several experiences with mediating between both parties, I have lost my ability to truly direct either with the most logical solutions.  In all but one case, one of the parties has felt that they gave up more than they should have, and of course I was to blame.  Double commissions are great, but the headache is not worth it for me. I now ask another agent in my office to help advise the buyer.  After all, my original contact has been with the seller.

This is a incrediblewell written post and so worthy of being featured! There are truly advantages and disadvantages to this situation. In addition, I think if they get rid of it, there will be handful of people that find a way around it because when someone is not ethical, they will they are not ethical period. There is no doubt we are having Dual Agency happen big time in our market right now because of the limited inventory. Without a doubt, it  can cause problems so I think taking that additional time to make sure all parties clearly understand and have full disclosure, then if they choose to go forward, it's okay. I think it is best to avoid but there are time when works out well and we end up with very happy clients on both sides.

In Massachusetts we have designated agency with full disclosure so dual agency is legal. My experience has been that it is alway awkward at best. Even when both parties say they understand and are fine with it, the reality is that one or both parties ends up feeling slighted or that I was advocating for party over another, and in the end neither really trusts the agent.

I really try to avoid acting as a duel agent if possible, however, there have been times when it was the only way to get the job done. Everytime I do it, though, I promise myself that I will refer the buyer because it's not worth the stress and trust is too important to for me to give up.

I don't think, I have seen comments this long in another post before.  I have only done a couple of dual transactions because I prefer not to do them.  Each transaction is unique, and that is how I make my decision wether I will do one or not.

I believe there is great confusion amongst realtors and misuse of the terminology.  Dual Agency exists and is completely appropriate when two agents of the same broker represent the buyer and the seller in a transaction.  Being a Dual Agent, is not however.  Dual Agents engage in direct deals and represent both the buyer and the seller.

I have written many blogs on this subject and you are one of the first to correctly state that a dual agent who has the listing first can and only will be representing the seller in a designated agency situation.  The buyer can and only will be a customer.

Things get sticky when a pre-existing buyer client wants to buy one of your listings.  Then you are a fully disclosed dual agent - but you should, in my opinion, give up one of the sides to another agent in your office because you do have an inherent conflict of interest if you try to do the deal direct.

Maybe we should come up with new names to make it less confusing!

Paul,

While I understand that intra office is technically dual agency, I see it as a limited exposure.  Especially when both sides are independly represented. 

As for myself representing both sides, I simply will not do it.  The cost for one lawsuit (regardless of victory) will outreach any commission upside - even over a lifetime of transactions.

While I realize I don't view this like my realtor colleagues, my opinion is when you represent both sides, you give up client representation and really represent yourself in the deal.

Great post!  Actually, its the best post I've ever seen here or elsewhere on this subject. Bravo!!! 

P.S. Yes, Paul -- the notion of handing out a referral does smack me as bullshit a conflict of interest.

Hi. Dual agency is tricky.  Not the process but keeping both parties happy.

A lot of times the buyer/seller says cut your fees - if you work with both parties you make more.  They forget twice as much stress, hassle, risk, work and probably hours spent on this one deal. Yup. sounds like a good reasone to me to make less money if I'm spending twice as much time.  (not).

If they were paid by the hour do they not expect to get paid more for overtime !  HMMM!

Dave baum

Remax from toronto

dave@thebaumteam.com

For #88.  Interesting perspective and quite logical.

However, I don't believe that a listing agent who has met a buyer for his listing must "give it up".  Or, give up either the buyer or the seller.

What the agent MUST do is give up the thought of trying to "represent" or let the buyer or seller believe that they are "representing" them. 

After all, the seller hired the agent/broker to list and sell that home.

The solution is to keep the agreement with the seller and let the buyer know that you can write the contract for them but cannot help them with any "agency" level information or services.  If that is not acceptable for the buyer, they can always bring in a buyer's agent.

Another sticky area is the listing agent who believes that, just because they showed the home, their listing and the buyer want to buy, the make thing very difficult when the buyer "brings in an agent of their own". 

I've seen that so many times it's almost routine here.  That listing agent will expect a referral fee from the buyer's agent, want to file a PC complaint, etc.  Silly, greedy and very unprofessional. 

Great post! You have certainly stirred the pot! : )  I agree with Michael O'Donnell saying that Dual Agency is not for the ethically challenged. You have to be so careful in a Dual Agent situation- I even had a set of lawyers wanting to buy my listing and ask what the sellers would accep.! This is a true test of our professionalism and a great test of our knowledge whe faced wth challenging situations. Not for everyone.

Moving to NC from CA I was actually surprised by the agency laws and practice here.  I have never represented both parties in one sale for the very reasons mentioned above.  But, that practice is actually encouraged by Brokers here in larger firms.  I think dual agency is acceptable when some two agents under one Broker are involved but still don't feel comfortable representing both parties.

Hello Paul,

I think dual agency can be done, however you should qualify the buyers before writing an offer for them, and let them know how you are going to represent both the seller and buyer in the transaction.  I usually refer them to agents in my office that I know are going to guide them through the home buying process.

I wish ActiveRain blogs were less emotionally loaded with unnecesary adjectives.

Simple and to the point

is not only strong

but also easy comprehension & retention.

I've never had a problem being a dual agent.

It's all about the delivery... timing, tone, the words you choose, and your non-verbal communication.

I make it very clear... and do it simply.

Creating a sense of trust starts at the first meeting of the seller or buyer.

Since people tend to "hear what they want to hear", I often remind them of the possibility... regardless of it ever becoming real.

My goal is for both parties to feel "in-control" of their decision to choose me as their dual agent.

Once I have established that both parties do feel this way... we move forward.

As a result... I've found those purchases to be more smooth than when I only work one side. 

Good post.  I probably need to learn more about the issue and how to handle it.

Christina - "I wish ActiveRain blogs were less emotionally loaded with unnecesary adjectives."

Just pointing out that you employ both adjective and adverb in your complaint ;)  That said, guilty as charged.  I am one giant, 35 year long run-on sentence that likes to dress itself up in the fancy clothes of hyperbole.  Sue me.

I think when you undertake dual agency you might even become a better agent because you want to make sure that your represent both sides fairly 

As long as both the Seller's Agent's and the Buyer's Agent's compensation is paid out of the proceeds from the sale, and both agents' compensation is based on the amount of that sale -- giving each of them more motivation for a higher sales price -- there will be a 'trust issue' within the general public as regards to real estate professionals.  Wish I could pose a solution that was universally acceptable, but greed always rears its ugly head.

"How can an agent or brokerage remain neutral when I employed him/her to be an advocate?"

By lying to one or both of the principals, and to the prosecutor when one or both of the principals find out who done what to them!

John, the only thing I would challenge in your point (which I largely believe is true) is that there will be credibility issues regardless of the payment method employed in any human endeavor.  In the case of the price-based fee, it works better for the seller than the buyer, though I have yet to meet the true professional that would sacrifice future business for a modestly increased check (I don't believe that many buyer's agents out there would cut a limb out of there referral tree for an extra few hundred bucks gleaned by pushing the client to pay 10k more than necessary).  There is always the debate in favor of the hourly wage, but that brings a host of its own complaints (attorneys who are compensated in this manner are seen to "pad" there bills by not expediting resolution, and government workers are seen as unproductive because they lack motivation).  I am intrigued by the notion of each party paying for their representation independently, and would not lament seeing a day in which such a model came to be more accepted.  The argument against such an arrangement is not without merit, however.  The buyer is already bringing a truckload of money to the table.  Burdening them with the additional fee might actually not be tricky.  I do like the concept, though.

TNeathery - I see you have a firm grasp on the refined art of nuance.  Kudos.

Dual Agency... The term is so bad now that the State of Nevada no longer even allows the use of the TERM... Oh, they allow the practice, but now the term scares even the law makers. We now have to call it "REPRESENTING MULTIPLE SIDES IN A TRANSACTION".

YEE HA!!!

People, wake up, there are only two sides, how dumb is that? Oh we have our “scare” the client disclosures and people go on doing it. Now, I run a team of agents and I do not allow Dual Agency (by any name), the State of Nevada may and my Brokerage might, but I do not.

HELLOOOOOOOO… Your job representing a seller, is to get the seller the MOST for the property and at the same time allowing them to give up the least amount in concessions. Your job representing a buyer is to get them the property for the LEAST amount and get the most concessions from the seller. Yes, a good agent wants to create a win – win in transactions, but I want my client to win MORE, hahaha. Now, tell me how can you do that and be 100% fair to both sides, especially if they do not agree? And god forbid you need to recommend to your buyer to walk away from the deal, now you have pissed your seller off, because you just cost them the sale.

There have, over the years been two times that we had the situation. The first was a 100% disaster, because issues came up and neither side of the transaction was happy with the outcome or the feeling of representation. The second I would do again, OMG did I say that? It was where I, as an REO agent represented a bank and the property that was in a fully disclosed auction (everyone could see the bids of the other buyers). Since it was a cash sale, on an auction, with an AS-IS purchase, and with no disclosures, there were no conflicts possible.

What we do on our team is so simple, fair to all parties, and we still make extra $$... We just REFER the buyer to another agent and take a referral fee, in many cases for DOUBLE of what we normally charge for a referral because the other agent is not doing much work... When we make the referral we make sure the other agent is a FRIEND and will return the client to us if this transaction fails or pay a regular referral if they move to some other property wanting to keep that agent (yeah, it happens). We take it a step further and disclose to all parties the referral and the fact that we will get paid a % of the commission for that referral. Our clients LOVE US for it, and it gets us even more referrals from both parties for having high ethical standards.

Let me ask you, if a commission is say $3500 for the seller and $3500 for the buyer side (no talk of % here, and used a 50/50 split just an example figure, all commissions are subject to negotiation)... Lets say that you can get a referral of 15, 20, 25, 33, heck, 50 % of the buyers side too that means that in this example you are risking a law suite over $1750 and most E&O deductibles are at least $5,000... GOD, take the referral cash and represent your sellers, how hard is that???

The ONLY REASON one would do dual agency is GREED and if it gets to a court, you will lose (even if you did everything right in most cases)... PERIOD, end of question, game over!!! Do the research, in almost every case where the agent is sued in a dual agent situation, the agent and his/her brokerage LOSES... If you learn nothing else, NEVER, EVER, EVER do a deal that the risk is worse then your E&O deductable...

It is simple mathematics. Most people see the $7,000 commission and their eyes are wide... Do the real math, you already have the $3,500 in the bank and you can get more of the other side from a simple referral, so the risk you are taking is for no reason...

STOP BEING GREEDY AND GIVE GOOD REPRESENTATION TO ALL PARTIES... Ok, I will get off my soap box now...

Hi Paul,

A very interesting (and well written) post. Thanks for taking the time to go more in depth with some of your arguments. Unfortiunately, some of your language reveals the thornier side of dual agengies.

Dual agencies are not "transactional occurances." They're negotiated by the principals in their own self interest. Guns don't kill peple-- people do.

I also wouldn't be too quick to avoid the plentiful existence of "polyester clad" salesmen (women don't do that.) They just aren't wearing polyester anymore.

"Allegiance to a positive result?" I'm not going to touch that one with a 10-foot pole.

This being said, I don't have a problem with dual agencies where two agents under the same broker are invoved. It still requires the wisdom of Solomon on the part of the broker, but if the agents are negotiating on behalf of their clients only and are only dependent on the broker for review, then this usually shouldn't be a problem. The problem lies with the other brand of dual agency where one agent represents both parties which is legally under the same umbrella. No amount of excuses about the process being "less adversarial", more expedient, or simply the way things worked out mitigate the severe conflict of interest in this case.

A lot of people here in AR say that other people shouldn't worry about what's going on in their end of the pool and that dual agency is a personal, legal choice. This is what got us here in the first place, agents making personal choices. The problem is that these choices aren't always the best for their clients. Right now the law say's that this is O.K..... I don't agree.

Richard - So to absolve yourself of the conflict, and the clutches of greed, you refer one party to a "friend" who is expected to return "favors," and you charge more than a standard referral fee because the agent doesn't have to do much?  So in other words, the negotiation process is just a small subset of an agent's duties?  I actually agree with this.  Unfortunately, it goes a long way to defeating a large portion of your own argument.  Further, the amount of greed and self-interest represented by your focus on the bottom line of the beefed up referral fee and personal liability completely obliterates the rest of it.  I maintain that passing off the consumer to a "friend," charging a more than standard referral fee and theoretically absolving yourself of all liability, strikes me as an equal, if not greater, conflict of interest than the dual agency scenario from which you so quickly fled.  I respect those that do not feel they can adequately do their jobs in a dual agent function, I have mixed feelings of my own about it, but I would expect a less incestuous pass-off of the client from conscientious objectors.  You really make my point by the admission that there was a situation in which you performed as a dual agent without compunction.  Rationalize the unique circumstances all you want, as that furthers my own point.  Each transaction and party involved is unique and should be treated as such.

Andrew - Very good and well-received points.

How fun! A post worth reading--I vote for levity even if you can't find brevity. The Tar Pits and Princess Bride references in a real estate post.  YaHooo! 

Seriously:

1. I have never believed that I had the power to make someone (anyone) do something they wouldn't do ordinarily (even if you hypnotized them); so, the idea that you can't adequately represent two different parties at the same time doesn't make sense, provided the parties are informed, have given consent and understand the ramifications.

2.  Will either party give up and position in negotiations?  No one knows until they do it... even if I think I know, people are funny, they change their minds...  What was last week, yesterday, an hour ago, 10 minutes ago, 2 seconds ago, may not be right now.  So, undermining negotiations is not part of the process.

3. I practice honest, up-front real estate.  The seller needs to disclose what's material; the buyer needs to disclose what's material.  Anything else, is not material.  I let both parties know that if at any time they are uncomfortable with any aspect of the agency relationship, they need to let me know and alternatives will be found.

4. Much of the advertising we do is to drive interested consumers to us.  Does it make sense to say to a buyer, "thank you for responding to my ad, I can't help you?"; Sitting open house is a similar situation--if a buyer walks in and says they would like to buy the house, shall I say "no--you need to find another agent" have I served the seller?

5. Remember that both parties generally have the same end-goal in mind--a closing.

So, without seeking Disclosed Limited Agency (that's what it's called in Oregon) if it happens, it happens.  Use care, disclose and follow the instructions of your clients,

Duel agency is pretty much a non-issue in my mind when it's different agents within a brokerage.  But when it's the same individual agent representing both sides, I believe this to be a conflict of interest and the agent is truly unable to fulfill their fiduciary duties to either party.  It's often called a 'hogger' which references the amount of money one makes on these transactions.  And that is what often gets in the way of common sense in this situation.  Greed over ethics.  I see all the time and it's a real shame.  If I had a vote, I would do away with this scenario!

Again,

With the referral of a potential buyer, the seller gets full representation and our goal as their is to get the MOST for the property we can, the way it should be. The buyer gets what they deserve, full representation and an agent working for their interests to get them what they need. And yes, we get the good of what a dual agent situation would be, the extra $$… WITHOUT the negotiations conflicts.

But again, we do not do these referrals in back rooms in the dark. We DISCLOSE to ALL parties that the referral is being made and exactly what we stand to gain. That’s right, we tell both the buyer and the seller sides what the commission is and who is getting it, or you are right, there might be a potential conflict by hiding it.

We believe in higher representation and full disclosure to ALL PARTIES. That's right, we tell our sellers we found a potential buyer for the property, that rather then taking the full commission and having a conflict, we are referring the buyer to agent "X" and taking "Y"% of the commission (and it is always a different number).

Our sellers LOVE it. They feel that we are working for their best interests and are grateful that we are not just there for the $$. They all understand that we should be compensated for finding the buyer and I have never had a seller express an issue. But if I ever did have a seller that had an issue, I would waive the entire referral fee, because the sale comes FIRST. We have had buyers after the close of escrow refer us people because we did the right thing by getting them their own agent.

So many agents are after an excuse for why a dual agent situation works and how they can rise above the conflicts because they have good ethics... BS... As far as I am concerned, it should be outlawed and even made a violation of the REALTOR code of ethics to represent more then one party (side) at a time... That would solve this issue, but it will never happen because people will justify themselves how right it is all the way to the bank. Heck I would not even mind if they outlawed referral fees if they outlawed dual agency.

I have no issues with our ethics, because we DISCLOSE everything and are willing to drop the entire buyer side if and when a seller OR the buyer ever has an issue. After all, the seller hires my team and our brokerage to sell the property, the last thing we are going to do is let a referral fee get in the way of that goal.

In Illinois, license law specifically allows dual agency, but mandates written disclosure to all parties. Regardless, I prefer to refer to another agent rather than winding up representing both sides. I sit on Professional Standards  panels and have seen too many instances where the agent(s) thought they were doing the correct thing, but the consumer wound up filing a complaint when something didn't go exactly right (or to their expectations, or they "heard" something different than what was said... just too many things to go wrong).

Richard - Thank you for the further explanation, but sorry, I still think you need to recuse yourself fully from the buyer's choice in representation if you have an ethical objection to dual agency.  How is handpicking the buyer's representative ensuring they receive completely objective and vigorous representation?  The agent to which the referral was placed is in a somewhat subserviant position from the start, and will outwardly appear to have a conflict in loyalty between the client he/she just met and the referring agent with whom he has an established relationship and vested interest in keeping happy.  Not saying it works out to the detriment of the buyer, but the appearance of and opportunity for abuse is not mitigated.  Under such a situation in which I have concerns about my ability to adequately represent a party, I will not handpick the successor who is to negotiate with/against me.  I would simply suggest the buyer perform their own due dilligence and obtain the services of the agent of their choosing.  Hard to hop up and down on one foot about the potential for abuse when you hand-select your opposition, and are compensated handsomely for doing so.

Paul, your point is very well taken... I sit on the local Grievance Committee so professional standards are important to me and I like the different views expressed here.

The only issue I have with your way is that letting a potential buyer walk away from the property unrepresented (set aside any referral fees 100%) is that you risk they will NOT move forward with the transaction at all because they are discouraged. Buyers will just walk to the next property as there are so many to choose from and that would harm my seller far worse then the conflict you bring up (again a very valid point).

But, thank you so much for that view.

Richard

PS... I will say in my public defense, the agents I am willing to refer to, have ZERO issues with telling me to "jump in a lake" and are just as hard nosed negotiators as I am...

In fact, one time I referred a buyer to one and it became the "deal from hell" because he would not cut me any slack at all... And I never have let him forget it (in a good way)... But I am glad he did what he did, because that was one of the buyers who made referrals to me after the close because I referred them to such a hard case that represented his needs so well.

The only thing I would have done different in that case was I would have CHARGED that agent a higher referral %, because I had to work way too hard... HAHA...

But just think, what would have happened if I had done a dual agent... YIKES

Hi Paul...I continue to love your writing.

Dual Agency.  It's not for me.  When I take a listing, I tell the seller I will represent them through to the end.  When I work with a buyer I do the same.  If I have a buyer that wants to purchase my listing I refer them to another agent in my office.  That way they get full representation from that agent.  I would not be able to give them that and if that is what they said they wanted when I began working for them that is what they are going to get until settlement and beyond if necessary.  We call that Designated Agency.

When I am in a situation where I am working on the other side of a transaction with an agent in my office I make doubly sure that I do not say or do anything that will be disadvantageous to my client.

I take issue with the comment by #30 and wondered why you thought his comment was so well written: 

"I worry about those agents who give dramatic dissertations of the evils of dual agency.  Too much temptation to cross a line? Hiding behind the claim of less than their best service makes me wonder what their best service is....dumpster diving or computer hacking."

Although someone may not believe as #30 does regarding dual agency that does not mean their best service is not equal to or superior to his.

My clients often tell me things that would be advantageous for the other party to know.  By only representing one side I do not have the conflict of do I share the information or do I withhold it.  Either way you are not providing full service to one of your clients.  If at least some of your clients have not revealed these types of things to you perhaps you do not have their full confidence.

Some of the comments mention that they can easily "handle" both sides.  Most all of us are capable of handling the paper work and inspections, etc. for both sides of a transaction.  That is not the point.  It is whether we can provide total disclosure and advice to them.  We can only do that to one side.

Like you, Paul, and some others who have commented I will work with a client and a customer.  Even then my preference is that my customer take my advice and work with their own agent.  You never, ever know what is coming down the road.  Some of the transactions that have started out the easiest have ended up to be the most contentious and the reverse is also true.

Some folks have commented that it is easier and less troublesome when they do both sides because it is not adversarial.  Very, very few of my transactions through the years have been troublesome.  That can happen because of another agent or a principal.  When it is both principals you can be real happy to only be representing one.  Maybe I have been very fortunate but I have found that most agents and most principals are intent on making things work.

The comment mentioned something like "If it was that bad there would be a law against it."  I got my license in 1986 shortly before agency began to change.  There are states that do have laws against it and even in some of the states where it has not be outlawed it is often not favored.

I work in an office where everyone but me does dual agency.  Who's right and who's wrong?  None of us at this point.

Like Lenn said...why didn't I write a post?

Kate

P.S.  Oh, and #93, simply because one chooses not to practice dual agency does not make them ethically challanged nor does it denote a lack of professionalism or knowledge. 

Hi Kate, I think I liked Michael's perspective from the comment in question because he addressed some of the potential advantages, when all one ever hears about are the potential disadvantages.  I wouldn't go so far as to tab those who are uncomfortable with a dual agency role as somehow ethically challenged.  Far from it, actually.  Just refreshing to see a unique perspective that does not forecast the impending doom associated with a dual agency transaction.  I also took his pointed criticism to be reserved for those most screechy objectors who tend to elevate their pure service through demonizing others.  The quip you cited nonwithstanding, which reads more like frustration to me than a primary thrust of his argument,  I thought he was spot on.

great post! I love hpow entertaining you are while speaking to a real issue. You are 100% correct and I feel the same. It needs be a case by case and what is the reason issue. My broker has 300+ agents in several offices, we end up selling each others listings often..

Although NY allows dual agency by a single agent, the warnings from the Department of State are so dire, that I would hesitate to ever attempt it.

"A real estate broker is strictly limited in his or her ability to act as a dual agent: As a fiduciary, a real estate broker is prohibited from serving as a dual agent representing parties with conflicting interests in the same transaction without the informed consent of the principals... If dual interests are to be served, the disclosure to be effective must lay bare the truth, without ambiguity or reservation, in all its stark significance." [emphasis mine]

There is also the issue of implied agency, because so many agents in my area are acting as buyer agents even though they are technically broker agents. I am currently an agent trying to introduce the concept of buyer agency in my area, and it is difficult enough to try to educate consumers about the benefits of signing a buyer agency agreement. It would be like navigating a mine field to try to then sell one of my listings to my buyer clients. For example, if I'm working with buyers for a while, and then I get a listing that matches their requirements, I already know so much about the buyers, it would be very difficult to act in a way that benefits both parties. How can I say to my buyers, "for this transaction, I cannot offer you my full individed loyalty, but if it doesn't work out, we'll go back to the way it was"? I wouldn't buy that if I were the client.

Designated agency seems a good solution to this dilemma, and although it also may have some of the same pitfalls, it seems much safer.  

Although NY allows dual agency by a single agent, the warnings from the Department of State are so dire, that I would hesitate to ever attempt it.

"A real estate broker is strictly limited in his or her ability to act as a dual agent: As a fiduciary, a real estate broker is prohibited from serving as a dual agent representing parties with conflicting interests in the same transaction without the informed consent of the principals... If dual interests are to be served, the disclosure to be effective must lay bare the truth, without ambiguity or reservation, in all its stark significance." [emphasis mine]

There is also the issue of implied agency, because so many agents in my area are acting as buyer agents even though they are technically broker agents. I am currently an agent trying to introduce the concept of buyer agency in my area, and it is difficult enough to try to educate consumers about the benefits of signing a buyer agency agreement. It would be like navigating a mine field to try to then sell one of my listings to my buyer clients. For example, if I'm working with buyers for a while, and then I get a listing that matches their requirements, I already know so much about the buyers, it would be very difficult to act in a way that benefits both parties. How can I say to my buyers, "for this transaction, I cannot offer you my full individed loyalty, but if it doesn't work out, we'll go back to the way it was"? I wouldn't buy that if I were the client.

Designated agency seems a good solution to this dilemma, and although it also may have some of the same pitfalls, it seems much safer.  

By the way, I get the impression from some of these posts that some agents think that bringing a buyer customer in to buy their listings is dual agency. IT IS NOT! It is only when you have a buyer client that you have a dual agency situation.

Maryland does not allow one agent to represent both parties, but Virginia and DC do allow it. I am licensed in all three. Having to deal with the rules and regs of 3 different jurisdictions on a daily basis tends to force clarity. If I have a signed buyer agency agreement with a buyer and they want to see a listing of a fellow agent of my brokerage, we have forms that require signatures for that. If they want to see MY listing, I have to be clear with them that in the event they chose to make an offer, I would need to withdraw from being their agent. I could still offer them assistance with paperwork, but not advise them. Or I could ask them if they want to be represented by an agent I can refer them do. That would actually be my preference.

Hi Paul...I appreciate the points that Michael made and I can understand if he is frustrated by those that do not do dual agency acting in anyway superior.  I felt the same frustration when I read what I quoted from his comment and certainly with what Cheryl's wrote. 

I was a dual agent on a number of transactions before I came to the conclusion that it was not for me.  I believe you have pretty much come to the same conclusion. 

Most of us try to do what we consider to be in the best interest of our clients and, if others have their own policies about how they conduct their business it is their business.  Unless something is not allowed than there is nothing positive in denouncing their practice.  Why disparage others because they have a different point of view?  You can make your point without doing that.  I hope I did.

Kate

You always do, Kate.  We would all do well to strive to attain your even keel and level of diplomacy.  Yes, that includes me ;)

Paul - WOW! What a discussion about dual agency. Interesting to say the least; however, these old eyes had trouble weeding or was it reading the entire post. Because YOU were writing it though - I stuck it out and enjoyed myself. I did NOT read all of the commenting however; else, I'd never make it to bed tonight. ;-)

Great post! If you're honest and ethical, it is very possible to represent both sides.

Lets talk on this same item about how the commissions work. We should have the listing broker negotiate their fee, and separately have the buyer broker submit their agreed compensation with their client in the offer form. I as a listing broker should not determine the buyer brokers compensation. We will then have true buyer broker representation. What do you all think about this? 

    Fooksteam.com

Dual Agency as by the comments posted has its pros and cons! I explain dual agency (and disclose ) before any offers the pros and cons to clients and I leave it up to them to decide if they would like me to find them another representative or they can find someone to represent them.

Has never been an issue yet if explained up front and disclosed

Ty

It is lawful for a real estate agent to represent both sides buyer and seller if it is disclosed to all parties. In northern New Jersey both parties are also represented by an attorney. This practice is most useful  in these situations to protect the client's interest.

Merry Christmas to you, too, Teri.  Hope you are well, and I look forward to seeing you at the next local function.  Rebarcamp 2, perhaps?

Well it's still legal in my state and yes the largest part of your E&O insurance because most people don't know what they are doing.  I think that it will come down to personally deciding if you want to do dual agency.  If you don't have the 'stomach' as someone said, then step away.  I think that when inexperience, greed takes over, you're in trouble.

Paul, thanks. Absolutely will be there! Actually already signed up. I'm looking forward to seeing you and the rest of our AR friends! ;-)

Thank you, Paul.

Kate

Paul,

48 hours later, and the dust settles a little bit.

All of us who have commented should thank you for posting a blog on such an important, albeit contoversial topic.  Each agent, as has been said many times above, needs to find a comfort level for the many options that this career and its diverse situations present us.  That said, agents who disagree with your thesis might chose better arguments than those of moral or professional superiority. My several comments where submitted with that idea in mind.

The only thing missing in this lengthy feedback are comments from Mandy Patinkin and Christopher Guest. Perhaps the next time, Paul.

As a fellow Scottsdale REALTOR, I look forward to meeting you at local events.

(One parting comment...sorry, I couldn't resist. At the end of the day we are agents, and we work at the pleasure of, and for, our principals.  The number of "scalps" someone takes in testosterone-laced, hard-nose negotiations is more about ego, than about service)

Or perhaps some of us just watch the wrong movies...say "Glengarry Glen Ross" instead of "The Princess Bride."

Look forward to meeting you at one of the myriad local functions as well, Michael.  Until then, Happy Festivus!

Wow, I just printed this out in its entirety and will set aside time to review.  Obviously a great topic!

Paul,

Thanks for writing this excellent post. In Arkansas we have a legal responsibility to deal honestly and fairly with the "other side" as well. Our office performs dual agency, and yes it is limiting to an extent, and tightrope walking to a huge extent, but I keep going back to the "shmuck" quote, and find it priceless!

all the best...

Paul, WOW! What a boat load of comments! In Florida, Transaction Brokerage nullifies the whole discussion here. I did not relaize one of the nuances of dual agency is that even within the same brokerage, the fiduciary relationship would be nullified. Hadn't thought about that. My sister-in-law in Virginia and her husband won't do 'dual agency' but they mean that they won't represent both sides of a transaction. To me, if it is two separate agents, you have the same represenation as if it were in two different brokerages. That is, unless you are in a small brokerage where the broker is leaning over your shoulder urging the deal to close.

Paul, don't know how I missed this great post on my favorite subject. 

Like you, I won't personally represent two sides in one transaction.  And it's intereting to me that attorneys, who as you said shape many of our practices, will not do that - ever!  At least not around here.

Hi, Paul-

I'll agree with your most quotable sound-byte that Limited representation from a pro is of far more benefit than full representation from a schmuck.  You can have bad actors in any system.  But the best scenario---for consumers---is full, undivided, competent representation throughout the transaction for both buyer and seller. 

As the principal broker of a very small company that covers a relatively wide geographical territory in Eastern Massachusetts, I'll admit that it's rare that I run into potential dual agency situations.  Therefore, the practice of single agency---representing either side in a transaction, never both sides---is much easier for someone like me than for someone in an office with 20, 50, or 100 agents, or with 30 or 40 percent of the local market share.

And I would never suggest that the practice of dual agency, where allowed, is, in itself, unethical.  I agree with proponents who say that dual agency can, in the hands of a conscientious and skilled agent, be practiced without harm to either party. 

But the absence of harm should never be the benchmark of service in a fiduciary relationship.  In most real estate transactions, one side or both would benefit from hearing about all opportunities to exploit an advantage at any of a multitude of points of negotiation:  the initial contract, post-inspection issues, or any of the smaller issues leading up to the closing.  In dual agency, however, you cannot recommend or even discuss any course of action that helps one client at the expense of the other.

And no one would suggest that the way to avoid dual agency is to not show your own listings or listings held by other agents in your firm.  That would serve neither the buyer-client nor the seller-client.  As others have suggested, you can refer those showings or at least all negotiations regarding your company's listings to other agents outside your firm.  If you partner with a good agent in another firm to refer your potential conflicts back and forth to each other, each of your clients will have received the full representation they believed they would receive when they hired you.  And, over time, you won't have lost any income.

Several years ago, I heard a great concept at a seminar that has informed many of my decisions on client policies and procedures.  Allen Dalton, then-president of Realtor.com, said that if there were a tool or a procedure that you would want used whenever you buy or sell your own home, you owe it to your clients to use or provide nothing less.

If you were in a legal battle, say, negotiating over the dividing of the interests in your real and personal property in a divorce situation, would you want your lawyer to one day switch from representing your best interests to acting as a neutral mediator?  In many instances, both parties might find this to be the easiest and best situation from an emotional point of view and could easily end up with a fair and equitable resolution.  This is possible even though either party may have come out with a better resolution by having a zealous advocate on their side. 

However, choosing to have mediation is different from having it forced upon by outside forces.  If you were working with your own lawyer who was only on your side of the divorce for weeks or months, and s/he suddenly said one day, "Hey, do you remember when you first contacted me a couple of months ago and we talked about all the things that could happen in this process, I mentioned that it might happen that I would have to become a neutral referee in your divorce?  Well, that has happened, and here we are.  Instead of looking out only for your best interests at every turn, from now through the finalization of your divorce I'll be working with both you and your spouse as a neutral facilitator.  I will no longer be able to make recommendations to you or say anything to your spouse that will cost them a penny."

I doubt that any of us would be happy with this turn of events if it happened to us.  And if you wouldn't want this for yourself, why would you allow it to be forced upon your clients, even though you fully disclosed, at the appropriate time, the possibility that it might happen?

And please don't focus on how a divorce is different from a real estate transaction or how real estate agents are different from lawyers.  The nature of analogies is that they can shed light on one situation by comparing it with another.  They are similar in some ways and different in others.  If they were identical in every way, they would not be analogies, they would merely be the same event.

These situations are similar in that 1. you have two parties with opposing interests in the same property, and 2. you have fiduciary-level representatives who suddenly switch to being neutral facilitators.

To sum up, you can't be the servant of two masters, especially when those masters have diametrically opposed interest in a piece of property.  You can be the referee to two masters and it certainly possible to be a fair, maybe even a great, referee.  However, in states where the consumer-agent relationship is at a fiduciary level, a referee is not what most consumers expect or deserve.

Bill - Very well stated position, and not without merit.  Single agent dual agency is not without its limitations, though I do think there are occasions in which it is of greater potential benefit than harm.  I find little to dispute with your comment, but I will say that working with a buyer for 3 months, educating him on the market, values, etc, only to say, "This is Chuck, he'll be your new agent," if he happens to want to purchase my listing, doesn't strike me as an infallible solution to a potential conflict of interest.  Not only is the buyer handed off to someone with whom no rapport or level of trust been established, but have I not already provided the noose of education by which my seller and I are to be hanged?  "Adversarial" is oft mistaken for "advantageous."  If both parties trust the agent in the middle to act impartially, thus really pitting the principals against each other (or in concert with each other), they are often okay with the practice.  As long as no decided professional advantage is swung to the other side of the table, many have no qualms going mano a mano with the other party on price, terms, etc.  If the agent has done his/her job up to that point, they are both well armed for the process.  The biggest difference is that the agent is not able to seek or exploit weakness.  This is often a more theoretical advantage than practical one.  When I represent one client and another agent represents another, we are very limited in the access to "secret information" that can be exploited for better terms for our clients.  When an agent represents both, he/she has much greater access to confidential info that he/she would not have otherwise had.  Refraining from disclosing information that would have otherwise been inaccessible does not strike me as a representative shortcoming or failing. 

Now that I have played Devil's advocate, I will restate that I avoid single agent dual agency whenever and wherever I can.  Works okay for the "Can't we all just get along" crowd, but not for the "Oh yes, there will be blood" crowd.  Certainly much cleaner and easier to draw battle lines and have at it.

Paul you are correct to apologize for the thesis, an since you like movie metaphors---Flash Gordan---one of my favorites, here is one for Jeff Goldblum and THe Big Chill...http://www.youtube.com/watch?v=MyrQ3YD75NA

I was born with a disclaimer.  Now, if I can pull myself together, I think I owe Jeff Goldblum an a$$kicking.  Third time this week.

I find it appalling to witness what many St Louis real estate agents do when it comes to dual agency in our market.  I'm fortunate to have some of the best buyer agent/sales partners in my business so I as a matter of course NEVER practice dual agency. Life is simpler and more professional and I have less stress and worry.  Great post and discussion.