Please. Recognize that everything I say or write is true and do not argue with me. Thanks!
Hi! Welcome to BloodhoundBlog. My name is Greg Swann. I question everything. 😉
From my point of view, we’re still not getting any traction.
But single agency is not a viable business model. Period. A viable business model is one that would allow for unfettered growth (as long as it was filling a need to the consumer) and single agency is not possible if a company grows.
Without intending to quibble, agency is not about the vendor, his business model or its potential for growth. Agency is about the interests of the client, which are paramount to all others. If a particular business model violates agency, then, as Russell argues very cogently with respect to Redfin.com, it is criminal in se in states where agency is a fiduciary obligation.
There are about 925 agents with John Hall & Associates. It would be quite stupid to preclude them from showing a listing so the seller (and buyer) gets the “benefit” of single agency.
This is not an argument against dual agency. It is an argument for getting rid of the broker/salesperson licensing laws. If we did that, then every listing agent would be alike unto a self-employed broker now. Dual Agency would still be possible, but it would be much easier to manage, since it could only occur when the agent represented buyers to his own listings. Major brokerages like John Hall could easily transition to affiliations or companies, instead — same cost structure, but no liability. We would still have to police for other forms of collusion or shady dealing, but Dual Agency would be all but eliminated.
In any case, arguing that refraining from Dual Agency would be impractical is not a persuasively-valid reason to uphold or reject it. As before: Sub-Agency was much more practical than Buyer Brokerage, but we got rid of it anyway.
The idea that the agent somehow controls what a buyer will pay and what a seller will accept only indicates a disconnect from reality.
I think this is a very weak argument. I want to deal with it in detail in another post. For now: Either skill and expertise are worth something or they aren’t. If they aren’t, we have worse problems than Dual Agency. If I am forbidden by a Disclosed Dual Agency from exercising the very best of my skill and expertise, how is this not an agency violation essentially equal to the agency violations practiced by Redfin?
Both Russell and Jeff have complained that this is a dreary issue? Is it? So far, I haven’t heard one argument that I think is dispositive as a matter of policy. Todd Tarson’s argument has merit in certain fairly rare circumstances. Jeff Brown’s 1031 argument is plausible, but a contrary case is equally plausible. The other arguments — sellers like it, it’s practical, and it’s useful in big brokerages — seem to me to skirt the fundamental issue of agency itself: What is in the best interests of each client, considered separately, irrespective of any other interest?
I don’t think anyone here can argue that, ideally, the best circumstance for seller and buyer is to be represented by one brokerage in a Disclosed Dual Agency. Another way of saying the same thing: If you were an unlicensed buyer or seller, which would you prefer, a zealous advocate for your interests or a mute transaction facilitator?
Russell, Jeff, I hold you gentlemen in the highest esteem. But, so far, I don’t think you have offered any persuasively-valid reasons for an actual consumer to prefer Dual Agency to separate representation.
Technorati Tags: arizona, arizona real estate, dual agency, phoenix, phoenix real estate, real estate marketing
ardell dellaloggia says:
Hey Greg,
Didn’t you read Russ’ final line:
“Please. Recognize that everything I say or write is true and do not argue with me. Thanks!”
ROTFLMAO
November 19, 2006 — 2:26 pm
Athol Kay says:
Approached hypothetically, dual agency does struggle to fully represent individual clients. However faced with an actual house they want, or an actual viable offer on the table, many clients will likely decide their best interest is the way of dual agency.
Disclosed and designated of course.
November 19, 2006 — 2:35 pm
Broker Bryant says:
Dual Agency. One of my favorite topics. Dual Agency is illegal in the State of Florida. Personally I never understood the practice of Dual Agency. How can you serve 2 masters? It just does not make sense. Florida law now says that we are presumed to be Transaction Brokers unless we choose to work as either Single Agent or non-representatives. To me Florida is heading down the right path. IMO I think Single Agency should be done away with as well. Transaction Brokerage just makes more sense. The problem with Agency in Real Estate is that it creates a fiduciary relationship and a fiduciary relationship is forever.
Lets say, for arguments sake, I have just taken a listing as a single agent. The seller is selling because her husband committed suicide in the house a couple of years back and she now feels the house is haunted. She tells me this and then ask that I do not disclose this to any potential buyers. Now in Florida this is not something that would have to be disclosed, so being that I am the seller’s agent, I agree. Several months go by and I have not been able to sell the house and unfortunately she has now listed with another agent. I’ve moved on with my life and have not given her or her ghost house another thought. A couple of months later, Mr Buyer walks into my office and we sign a Buyer’s Broker Agreement, with me being his agent. We go about our business looking at homes and lo and behold one of the listings, that perfectly matches his parameters, is the ghost house. I’ve completely forgot about the ghost story and show Mr. Buyer the house, he loves it and wants to make an offer. While writing the offer Mr Buyer says, “Broker Bryant my fiance’ is really going to love this house. She wanted me to ask you if you knew why the Seller is selling and I know it sounds foolish but she was wondering if the husband had died in the house? She’s afraid of ghosts”
Now this may be a little far fetched and I am sure you can think of much simpler example. However, the question is, What do you do? Since a fiduciary is forever you cannot answer this question AND since you have a fiduciary with the buyer you cannot not answer the question. Quite the quandary. Agency and Real Estate, doesn’t work in my opinion.
Now as a Transaction Broker you can still represent either seller or buyer, or you can represent both as long as it is not to the detriment of either party. You do have limited confidentiality but you do not have a fiduciary responsibility. You can take a listing as a TB and you do not have to represent the buyer. This way you are still able to look out for your seller. The biggest advantage is that when the deal is done the relationship is done. OK I’m done. I hope this makes sense. I didn’t want to write a book.
November 19, 2006 — 4:05 pm
CJ, Broker in L A, CA says:
Another thought: The positions of buyer’s agent Realtor Gregory and seller’s agent Realtor Stephen could be played exactly as you described even if both Realtor Gregory and Realtor Stephen were employed by the same brokerage. If it’s a large brokerage, Gregory and Stephen may not even know each other! Maybe the dual agency issue needs to be revisited in terms of individual agents, not employing brokers……
November 19, 2006 — 7:06 pm
Todd Tarson says:
>>Maybe the dual agency issue needs to be revisited in terms of individual agents, not employing brokers……
Yes… yes!! This will totally lead me to where I think the business should go. The broker/agent business model is in need of a massive overhaul. Would be a giant first step.
November 20, 2006 — 8:30 am