I may have stirred up a hornet’s nest on the subject of No Dual Agency. Jim Duncan at Real Central VA posted his thoughts, and the sellsius° real estate blog posted a round-up, asking Are Buyers Customers or Clients? From Arizona, taking a trip Back East is also taking a trip back in time: Agency as it is understood in New York has been absent from this remote cultural backwater for at least 15 years.
That’s as may be. I work in Arizona. Plus which, if seller sub-agency is not already in the past in your state, buyer agency is definitely in your future. There’s a new sheriff in town.
This is all to the good, by me. The slim justification for our licenses is consumer protection, and it seem obvious to me that exclusive representation is the only way to achieve truly transparent protection for both of the parties to a real estate transaction.
Ardell DellaLoggia, in comments posted here, seems to disagree:
Due to the internet access of homes for sale, the trend is UP and not DOWN with regard to buyers calling listing agents direct vs. seeking separate and distinct representation. When the Buyer Consumer chooses to call the listing agent, if you outlaw Dual Agency, you leave them with NO representation at all.
It sounds good to say “outlaw Dual Agency”, but it leaves the Buyer Consumer back where they started, if and when they call the listing agent direct, with NO representation whatsoever.
I see that as a false dichotomy. In that circumstance, the listing agent can either refer the buyer to one of several trusted buyer’s agents (we do this) or simply advise the buyer to seek separate representation. The Buyer’s Broker’s commission is already built in to the MLS listing. There is no reason for the buyer not to seek representation.
Prove my point, Greg. Buyer calls you on your listing and only wants to deal with you personally when making an offer on your listing. Where do you go with that scenario if Dual Agency is “outlawed”, without leaving the buyer high and dry with regard to representation in the transaction at hand?
What should your attorney do, in a lawsuit you brought, if the respondent insists on representation by your lawyer and your lawyer only? Looked at another way, what should you do if, in working with a customer, you realize you are dealing with a rabid racist? Except where an agent creates an implied agency, representation is a bi-lateral agreement. If the risks of Dual Agency are explained properly, buyers will jump at the chance to have separate representation. Even if they don’t want to do it, they have to with our brokerage. Disclosed Dual Agency is still lawful in Arizona, but BloodhoundRealty.com forbids Dual Agency as a matter of brokerage policy.
In linguam Latinam, the term for a wild-eyed revolution is rei novi — new things. I was amazed to discover that sub-agency still exists anywhere in the United States. I agree with Ardell that Designated Agency is as much a fig leaf as Disclosed Dual Agency. Both — as with most real estate laws — are devised to protect the broker, not the consumer. From the point of view of a random juror, schooled by fifty years of television to believe that all commerce is crime, if there is even a hint of a possibility that collusion was possible, it’s a slam dunk verdict for the plaintiff.
And while the order of precedence should be reversed, statute law trumps ethics and court judgments trump statute law. What we do (at least in Arizona) is a subset of the practice of law, so it is not at all untoward to ask, “Would an attorney do this, in this situation?”
But if the answer to that question proves nebulous, here’s a much better one: “In a lawsuit brought by one (or both!) of my clients, in what light would a plaintiff’s attorney attempt to portray my actions?”
This is not an academic question. The judgments awarded in Dual Agency lawsuits are huge. The safest answer for a Realtor to make, whether from ethics, from policy, from statute law or from the naked fear of voracious lawyers is simply this: “Caesar’s wife must be above reproach.”
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boomer/bubblesitter says:
In Florida it is called ‘transactional agency’ and that is the only way to buy, peroid. I only deal with a listing agent on a given property, make a short offer, tell them they are bound to present the offer.
I then inform the dual agent or Transactional agent that my budget is 2% commission, as they do not have to pay a buyer broker, they do not kow this but I will go 3%, which is what they would make anyway.
When selling, the same thing, when a RE Agent brings a buyer, put the RE Agent into Transactional agency @ 2 or 3%.
I save thousands, have representation, and the money goes into my pocket. hehehe
September 8, 2006 — 6:22 am
boomer/bubblesitter says:
PS Florida Law is going to Transaction (Dual) Agency only in the future, I have head.
September 8, 2006 — 6:30 am
ardell dellaloggia says:
Greg,
You are missing the more obvious rei novi – the one Boomer Boy up there is touting…Show Me The Money!
To Boomer Boy: Florida went TB vs DA in 1996. I know. I was there. It sucks eggs.
The revolution is about commissions and NOT representation. EBAs have been trying to scare up a revolution on representation issues for over 15 years…it didn’t work.
You can’t run around with a big warning about agency, when buyers are saying “Show me the money”. People want the Buyer Agent Fee, when they call you on your listing. Sending them off to spend the Buyer Agent Fee on an agent other than you, does not support the Revolution…it contradicts the revolution.
You can’t MAKE them want representation more than the money…so you better be ready to take out your pen and write that offer, especially if they are the only howling dog barking up your seller client’s tree.
Looks like Boomer Boy knows the business better than you 😉 He’s a buyer ready to play the commission game, not the agency game. Keep on keepin’ on with that Dual Agency rant, if that’s working for you. But know that you are talking to agents, because the consumer doesn’t jump into that discussion. They’d rather have TB and the money, as your commenter clearly points out.
November 5, 2006 — 10:20 am
Greg Swann says:
> You are missing the more obvious rei novi
But by now we’re talking about the best way of achieving this revolution: divorcing the commissions altogether.
In fact, though, our experience is that people would rather have the representation than the money. Because we list so much harder than the agents we compete against, we are frequently the de facto procuring cause of the sale of our listings. We refer the buyers out or they find their own buyer’s agents. So far, no one has asked for the co-broke instead.
November 5, 2006 — 10:57 am
ardell dellaloggia says:
“talking” is the correct word there, regarding “divorcing the commissions altogether”. Ask Russell if he thinks THAT will ever really happen, and if there were NO commission offered in the mls, what the chaos in its wake would be. I’m not going there with you, as I’ve seen that “talk” before…ad nauseum…with no affect whatsoever. Very few support that idea and you would need a whole lot of support to move that mountain. Not in my three year plan, that’s for sure.
In a soft market, Greg, you run the risk of hurting your seller client by not playing the Buyer Agent Fee into the transaction. Let’s say you have a listing priced at $399,000. The seller can sell at $385,000, with no buyer agent fee, and achieve the same net proceeds as he would if he sold for $400,000. In fact, if the buyer takes the buyer agent fee, he may not negotiate at all, so the seller ends up with a full price net vs. $390,000 less 3%.
Your seller CLIENT ends up at $378,000 instead of $399,000 by your sending the buyer away. At the time that buyer calls on your listing, you represent the seller. Tell me how the seller is best served by your sending the buyer away? We’re talking money here. How does the seller get MORE money if you send the buyer away?
What if the person you send the buyer to, convinces them to buy one of his listings instead? Or convinces them to offer a lot less? Or convinces them to buy a different house down the street? How is that representing your seller client well?
I have to go back and read Russell’s article again, but it seems to me that you guys are not in a hot seller’s market with multiple offers. If you have waited three months to get an offer on that listing, and you send the buyer away when he comes a knockin’, and I were the seller, I’d beat you to a pulp or at the least, grab you by the neck and say “What the hell!?!”
November 5, 2006 — 11:30 am
Greg Swann says:
> I’m not going there with you
> Very few support that idea
Do you have the idea that this is going to be a voluntary reform from within the NAR? I’d be amazed at that. But since divorcing the commissions is the best consumer protection of the buyer’s interests, I have no doubt that it will be legislated in due course.
> In a soft market, Greg, you run the risk of hurting your seller
Our policy is fully disclosed, and is incorporated in the listing contract. No one who understands Dual Agency is in favor of it.
> How does the seller get MORE money if you send the buyer away?
For non-investor-owned listings, our results have been very good all through this market. We do a lot more than other agents to market those listings, which is why we are very often the de facto procuring cause.
> What if the person you send the buyer to, convinces them to buy one of his listings instead?
I’ll let you know if that ever happens. We don’t want for buyers or sellers to act to their own disadvantage, in any case. If a buyer is going to flake out, t’were best done quickly.
> If you have waited three months to get an offer on that listing, and you send the buyer away when he comes a knockin’, and I were the seller, I’d beat you to a pulp or at the least, grab you by the neck and say “What the hell!?!”
And this is why we would never represent you in the first place. We work with people who know we’re the best and know why we’re the best. Twice this year we made the mistake of taking listings from sellers who didn’t appreciate how much value we bring to the table. We ended up firing both sellers, but we will never take another listing from a seller who doesn’t understand that they need us a lot more than we need them.
Do you want to know the best service a listing agent can offer in a market like this?: To explain to a would-be seller why not listing right now will probably be more profitable in the long run. Part of that is their trust in us to give them the best possible advice, even though we will not get paid for it. And part is our trust in us, knowing that when they do list, it will be with us — because we bring so much added value to the listing.
November 5, 2006 — 12:12 pm
ardell dellaloggia says:
Greg,
You are barking up the wrong tree if you think getting rid of the mls offering is going to be “legislated”. I just love all of these opportunities to use doggie slang 🙂
Government has no power to regulate mls practices with regard to eliminating the “co-op” and the majority of mls systems are owned by the Board. Mark your calendar. If by 11/5/2009 the co-op is eliminated from even half of the mls systems in the country, I’ll be more than happy to jump on a plane and come to Phoenix to kiss your…ring.
Helping a seller to not sell his house is not added value. Best “service” and no house sold, is not what the public wants. Bottom line, a seller wants a buyer and a buyer wants a house. Give good service, yes. But not at the expense of the client’s true objective.
If the buyer agent you refer to is really doing their job, they will make sure that buyer is buying the BEST house for them and also making sure they get it at the very lowest price possible. Otherwise they are just your shill.
November 5, 2006 — 12:23 pm
Greg Swann says:
Indeed. How could I expect that our actual, factual, real-life, on-the-ground experience at selling houses quickly for very high prices would compete with your unassailable abstract theory, proferred from 1,500 miles away?
November 5, 2006 — 12:33 pm
ardell dellaloggia says:
LOL……let’s go back to talking about no co-op fees. Talk about abstract theories.
November 5, 2006 — 3:43 pm