Back story: How we evolved our policy forbidding dual agency . . .

by Cathleen Collins

Realtor, Staging Consultant

Author website

Someone commented on Greg’s recent post regarding dual agency. I thought I’d give you the “back story” so you can understand how we came to this position.

Just this past May three events converged to make it crystal clear that dual agency was, in general, good for no one except the real estate agent — who doesn’t want to shake loose those extra dollars he can get from both of his clients by serving neither of them well:

One of the classes I attended to earn my GRI (Graduate of Realtors Institute) was taught by Cec Daniels and Don Martin, past president of Arizona Association of Realtors. For two days we learned from Cec all about how practicing dual agency was unfair to our clients, and Don was all over the idea of the liability dual agency creates for the brokers. During this lecture, one of the instructors wore a baseball cap embossed with a capital B (ostensibly for Buyer) and the other a cap embossed with a capital S (Seller). When they stood together in alphabetical order their caps spelled out another term for dual agency. 😉

At about the same time, Greg was representing a dear family friend in the sale of her house. He got a sign call from someone who didn’t think he needed buyer representation… he was shopping on his own and making sign calls. (He told us that the primary reason he was interested in our friend’s home more than any other was that Greg was the only agent who had returned his sign call!) By this time we were already convinced that it’s practically impossible to avoid dual agency when representing a client if the customer (a party in a real estate transaction who is not my client) is unrepresented. The party without representation is sure to rely on us for advice — even though we cannot advise a customer without creating an undisclosed dual agency. Thus, since we would be the only professional representation when half of the parties weren’t represented, we had made it policy to sign limited dual agency agreements with each party. That was the only way we could reasonably, realistically perform under that circumstance, so full disclosure via the limited dual agency agreement makes everyone acknowledge the elephant in the room.

Anyway, this particular transaction was a difficult one. Greg explained to both parties up front that since he represented both, he couldn’t advocate for either, nor could he disclose nonmaterial information he knew about one party to the other, because doing so would betray the other client’s confidences. So, when it came to negotiating the Buyer’s Request for Repairs and the Seller’s Response, he couldn’t help either. I was with the selling friend socially during this time, and she was really having trouble responding to the request for repairs so she asked my advice. I told her I couldn’t give it, and she said, “But he’s not your client, he’s Greg’s.” I had to explain that a client of anyone in one brokerage is the client of everyone in that brokerage. My friend pouted that this wasn’t fair, and she would never had accepted the offer of someone who wasn’t represented had she thought through all the consequences. Ahhhh…! Now ain’t that a kick in the head? At the same time, Greg was unable to tell the buyer how much he thought the seller might give in the negotiations, so the buyer complained to Greg that he thought he was playing favorites. When they both walked away from the transaction, we thought this was a sign from the gods.

All of this was punctuated when Greg and I attended ABR (Accredited Buyers’ Representative) classes, still in May. They were taught by Curtis Hall, a pioneer in buyers’ representation. Curtis told the class that he has a policy against practicing dual agency, and explained the difficulty of keeping this policy as an agent in a large brokerage. The entire class was stunned as we came to see the faults in dual agency… all the ways it can hurt our clients. He shared several brilliant ideas on avoiding dual agency, including having agents from other brokerages hold open houses on homes we have listed. We have since put this idea into play when we can find another agent who is available and doesn’t have a broker who forbids the practice. There’s so much that Curtis has to say on the problems of dual agency that if you’re a Realtor who doesn’t have your ABR yet, I highly recommend taking this class with Curtis Hall as your instructor.

Yes, deciding against the practice of dual agency creates new problems, but they’re problems for us rather than for our clients. We now refer out sign calls, and we try to have another agent from a different brokerage with us when we hold open houses. We know we’ll never gross more than half the commission on any home we represent, and we probably lose buyer clients by not becoming a buyer’s rep when we get a sign call or meet an open house prospect (which by the way, are two of the very reasons, from an agent’s typical point of view, to hold open houses and to promote themselves as compared to the house on their For Sale signs). But the law of agency calls for putting our clients’ interests before our own, and this is core to our business — in action as well as words.

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