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Category: Dual Agency (page 1 of 4)

July 17, 2021

Buyer Agency Project: Buyer agents offer no value today.

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

“I just showed three houses this week, out in L******, and all of them had 2% co-brokerage fees.  Learn to sell, listing agents”

I read this post (paraphrased), from a former car salesman with a Florida real estate license, in a Facebook group the other day.  The irony of it was too delicious to pass up so I responded with something like this:

“It is laughable to watch an agent, who can’t sell a buyer on the value of his services, complain about the fact that his compensation is set by another real estate agent.  Sell your value to your buyer, charge a fee for the services you will provide, disclose how that buyer brokerage fee will be paid, and negotiate a contract which pays you that fee in a manner which benefits your client”.

I may have taken a snarky swipe at the original poster but I don’t remember because he deleted the thread.  Good.  I am sure the guy was just airing his frustrations but that sort of weak sauce is the last thing I would want on the internet if I were him.

Let’s talk about the REALITY of real estate brokerage in 2021:

1- While price appreciation may have slowed, the real estate market still has a supply/demand imbalance.  This means that homeowners can negotiate lower commissions to sell their homes.
2- Listing agents, with the right property, have little to no need for buyer agents today.  If it is priced at fair market value, entered properly in the MLS, and aggregated across all of the realty bots, buyers will line up to tour the home.  Thus, paying a co-brokerage fee of more than $1 seems like a giant waste of money.
3- The US Department of Justice doesn’t like this at all and the National Association of Realtors has lost any power to perpetuate the existing compensation model.  Expect buyer brokerage compensation to change.

Every time this subject comes up, buyer agents wail and grind their teeth.  The most common comments I read are “It’s so hard to work with buyers nowadays, I DESERVE to get paid more; I practically work for minimum wage”.  Read more

May 6, 2011

Which home is the right one for you? Coldwell Banker says it’s the property for which Coldwell Banker will get paid double.

by

Suburban Phoenix Real Estate Broker

Author website

Is this home the right one for you and your family?

No, sorry. That’s an exclusive listing. Your trusty, ever-faithful Coldwell Banker broker won’t get paid if you buy that house.

So is this the perfect home for you?

Oh, no! This home has serious systemic defects, the worst of which is… it’s a fizzbo… Not only will there be no doughnuts at the closing table, your trusty, ever-faithful Coldwell Banker broker won’t get paid if you buy that house.

But this — this is the ideal home for you and your family:

Why? Because your trusty, ever-faithful Coldwell Banker broker will not only get paid, she’ll get paid double, once for suckering the seller into listing with Coldwell Banker and once more for suckering you into a dual agency.

Here’s the full clip:

When you say “yeah” you are conceding my argument. When you say “but” you are contradicting yourself. If this commercial is not a sleazy hustle, what is it?

June 29, 2010

Real Estate Declaration of Independence

by

Realtor, Media Mogul

Author website

I’ve been a bit quiet on BHB due to some personal issues I’ve been working through.  But, I was very happy to see Greg’s latest post on challenging everything!  I had a little holiday brainstorm today and wrote a post on my local Lake Chelan blog on a Real Estate Declaration of Independence for the consumers of services from Real Estate Professionals.

I want to share it here on BHB and get your thoughts on what I missed, should add or could have said better!  So, without further ado here is my Independence Week start to the Real Estate Declaration of Independence:

Real Estate Declaration of Independence

We, the people who buy and sell real estate, hold these truths to be obvious:

  • We the people believe that information on real estate for sale should be readily accessible without surrendering our private information.  We reject having to register on a web site in order to view listings in an area.  We value our time and will contact a real estate professional when we are good and ready for their services.
  • We the people reject all policies of the National Association of Realtors that are not in the best interest of the real estate buying and selling public.  Limiting our access to information, restricting our ability to a free and open market through regulation and limiting our market choices are all examples of policies we reject that are designed to line Realtors pockets at the expense of the public.
  • We the people reject “Dual Agency,” where a real estate agent has an inherent conflict of interest with his agency and fiduciary duties by attempting to Read more
February 22, 2010

I like dual agency so much that I’m writing a commercial for it — and you can help!

by

Suburban Phoenix Real Estate Broker

Author website

Okay, I don’t like dual agency. The more I’ve thought about it, over the years, the more I see that it cannot possibly done in a manner that it is actually fair to both parties. And that ignores the perceptions of the principals.

The one little bit of glue holding the Rube Goldberg machine of dual agency together is the fact that very few consumers even know what it is. Many times, I have had to explain dual agency to people who were either going through it or had in the past. Not surprisingly, none of them had been fully-informed by their agent about the risks of dual representation — although many of them suddenly understood what had smelled fishy to them.

My argument would be that no fully-informed consumer would embrace dual agency, but there are exceptions: People who want to take unfair advantage of the other party. There is a name for the role you would play in that scenario, as the Realtor: Shill.

Not only is dual agency exceptionally good for cheating one of your clients — normally the buyer — it’s also excellent for leaving the impression in the minds of both buyers and sellers that you yourself are a cheater, a liar and a person of egregiously low character. That’s some first-rate marketing, Jasper!

Here’s my take: As a very easy baby-step on the road to raising your own standards for the benefit of your clients, swearing off dual agency can’t be beaten. There’s a lot more you can and should do, and BloodhoundBlog is full of ideas for raising your standards. But there is nothing else you can do that will communicate to your clients your commitment to putting their interests first as compelling as renouncing dual agency. And no matter what else you might do, if you do not renounce it, you’re still going to look like a snake to anyone who actually understands dual agency.

So as a step toward informing consumers about what is really going on in a dual agency transaction, I thought I would make a commercial about it. The spot would feature a bunch Read more

February 18, 2010

Dual Agency Smack-Down: Real estate in real life . . .

by

Suburban Phoenix Real Estate Broker

Author website

Kicking this back up to the top. I wrote this on November 19th, 2006, but nothing has changed since then. But, as it happens, our friends at Agent Shortbus have taken up the topic of dual agency, albeit without reference to anything rigorous or dispositive. We have a whole category devoted to dual agency, and some very interesting Bloodhounds have weighed in on the topic, over the years. I think I’ve written more on the subject than anyone — possibly more than anyone, ever — but this one post is the giant-killer on dual agency.

So: While our #RTBar-buddies are telling are telling you that dual agency feels just as good to them as a healthy bowel movement, this post explains — in painstaking detail — why disclosed dual agency cannot possibly be effected without persistent, repeated, egregious agency violations against both principals to the transaction.

Don’t doubt my gratitude, though. I love the #RTB marketing message: A “professional” Realtor won’t do open houses, but he will take a double dip when the opportunity presents itself. I cannot think of a better way of selling our own high standards than for our competitors to be so forthcoming about their self-serving “professionalism.” Very nice.

Anyway, even though every bit of this is painfully obvious, here is why even a properly disclosed dual agency is unethical.

–GSS

 
Addressing Jeff Brown’s claim that Dual Agency is more about perception than reality, and Russell Shaw’s contention that clients do what they intend to do, rather than what their agents advise them to do, let’s go buy a house and see what happens.

I’m going to split my personality in thirds (I have plenty to go around). Realtor Gregory is going to represent the buyers. Realtor Stephen is going to represent the sellers. Then we’re going to reexamine events from the point of view of Dual Agency, with Realtor Swann representing both parties in a Disclosed Dual Agency.

So: Realtor Gregory is out showing homes with his party and they settle on one they like, listed by Realtor Stephen. Because it’s a buyer’s market, and because the buyers aren’t very well-prepared, they don’t Read more

February 8, 2010

Agents of Change

by

CEO, Redfin.com

Author website

Don Stewart posed an interesting question this morning about whether real estate is changing top-down from the broker or bottoms-up from the agent. In a post about how Redfin sees the real estate industry changing, Don suggested we had focused too much on the laws, the brokers, the MLS data sharing rules and the system by which sellers pay buyer’s agents:

I think that many agents are becoming more client focused, less afraid of discussing value for money, and are happy to be judged by their performance. They are not just trying to grab commissions, they want to build a professional practice. Real change happens from the ground up, not the top down and I see some very encouraging signs.

Don’s right. When I first got into this business, Redfin focused on structural ways we could make real estate better: by surveying customers and publishing responses, by paying agents at least in part based on survey results, by sharing as much data as possible with consumers.

But the most profound change has probably come from our agents. I’m not sure if we attracted the most progressive agents, or if those agents were in fact what made us progressive in the first place. But the longer I’m in this business, the more I’ve come to realize that what I think doesn’t matter as much as what our agents do every day.

What do you think? Is change coming via the agents or the brokers?

February 27, 2009

Dual Agency Debated Outside of the Echo Chamber

by

IDX Search Entrepreneur

Author website

Google News plopped a link to a Blog post on SFGate.com (The San Francisco Chronicle’s Web site) about dual agency in front of me today.

It’s always interesting to see a discussion about what Greg calls “…the insane way we compensate buyer’s agents in the residential real estate market” in the MSM, even if the arc of the dialog is predictable (“Agents are whores and criminals!”, “No we’re not”, “The traditional Real Estate model is dead!”, “No it isn’t!”, ad nauseum)

Discussions in the Real Estate blogosphere on this topic have a certain navel-gazing quality to them. That is not the case when regular people, many of whom have been involved in a recent transaction have their say. My favorite comment from the thread:

No conflict here. Just get the highest price for a seller and the lowest for the buyer at the same time. This is great!

The way the Realtors, some of whom identify themselves and some of whom just embarrass themselves by shilling for the status quo in such an obvious manner that their identity is transparent, jump all over these discussions just adds fuel to the fire.

The Realtors doth protest too much, methinks.

January 30, 2009

Times Are Tough – But That’s No Reason To Be A Thief

by

Associate Broker

Author website

I haven’t had a good rant in a while… and unfortunately, I don’t have enough time to have one right now – so the Reader’s Digest condensed version will have to do.

Most agents who have been in this business a few years or more know when something doesn’t look right. We’ll see something – and although we don’t know the underlying logic… we instinctively know it’s just not right.

This morning, I was perusing some rental properties for a client. As with listings for sale, it’s not uncommon to find some agents who are offering a ridiculously low co-broke. This morning was no different.

This particular agent is offering a 10% co-broke if you show the property. Since many brokerages charge transaction fees – the co-broke on this listing could easily be less than the transaction fee. Kinda gives “co-broke” a whole new meaning.

Now don’t get me wrong – a 10% referral fee for sending the client to a property shown by the listing agent is just fine. But 10% for bringing the tenant and showing the property is a non-starter – I don’t care who’s doing the paperwork.

Just for giggles and grins – I pulled up this agent’s recent history. One sold listing and more than sixty leased listings. Every single one of them offered a measly 10% co-broke… and all but two were leased out by – drum roll please – the listing agent.

[snarky comment] What an unexpected surprise! [/snarky comment]

Of course, both of those co-oped listings rented out for full asking price… while nearly every single one of the double-ended listings involved a rent reduction… sometimes several hundreds of dollars in rent reduction.

Now maybe you think that I’m just whining about some agent who is too greedy to offer a more generous co-broke – that’s fair. Maybe you think that I believe that a co-broke of 25% is more appropriate. I will tend to agree with you on both counts.

But there is an underlying ethical problem here.

When you list a property for lease and offer a ridiculously low co-broke – you are denying your client the best possible chance for Read more

April 5, 2008

Please Show Me How You Disintermediate Results and Superior Expertise

by

Real Estate Investments Broker

Author website

Before beginning in earnest, let me take a shot of addressing what surely will be the first comments made concerning disintermediation. Have there been instances of this happening in other industries? Sure — the ‘go to’ is almost always travel agents. I maintain the average person still uses travel agents when arranging anything more involved than visiting Grandma or a business trip. How many of us will arrange a two week tour of Europe on our own? Not me. You?

The point remains — any industry requiring real expertise and which must produce results of real value to their customers/clients, will not — cannot — be replaced by the mere act of clicking. The concept is absurd on its face.

Of course, the jury is out on whether or not I’m in the minority or majority. Opinions are just that. Certainly my opinion isn’t taken from Divine Inspiration. Empirical evidence drives me to my conclusions here. The marketplace has decided, at least so far, the experienced agent producing consistently excellent results by way of superior expertise is the dominate choice of buyers and sellers of real estate.

Click that.

Russ Shaw and I must be the last remains of the species long thought to be extinct — Trirealasaurus Rex. Apparently we just don’t get it, and are on our way out. Everyone’s eatin’ our lunch, or soon will be. Techno-Geeks who could study what Russell does for a year and still not know what he’s forgotten, insist their way, (whatever the hell that is — they argue among themselves) will eliminate him just like the meteor crashing into earth wiped out dinosaurs.

Last time I checked, he’s not feeling very threatened.

Every time I read something telling me how I’m on the verge of extinction, I consciously avoid going into Dad’s default mode, which was to extend his favorite finger in the direction of the offender. 🙂 I’d rather learn what the smartest guys in the room have to teach. They’ve taught me how to apply their Geekinology to my Old School ways. I’ve been walking that talk now for quite awhile, coming up on Read more

April 1, 2008

Where Were You When The Real Estate Industry Morphed?

by

Real Estate Broker

Author website

Life is good — I’ll be going to the Master’s next week. It’s been a few years since I’ve gone. A friend has some family connection with passes and if one of his business clients back out, he gets me in. Business is picking up also. I just got a contract on one of my “flips” before I even finished and put it on the market, so now I’ll change hats and be a buyer for a while looking for another one.

Leads are coming in on a regular basis, a mixture of strong leads, not so strong and weak. They are all possibilities. I’ve even had time to browse the web and see all the distinctions without much difference being made. As topics run thin we tend to make finer and finer distinctions to prove….what? Superiority? Most likely. Hell, I always think I’m superior. Well, not really, I just like to think I am a lot of the time. In my better moments I realize I’m perpetually on a learning curve. Just as soon as I’m ready to crown myself as “Expert” I hear something from left field that sends me back to the drawing board, to tweak, re-think, adjust.

Perhaps that’s the highest value of this great learning environment called the internet, we’re contantly evolving and becoming better, never crowned for long as “Expert”. However, the more we learn the closer we get to being knowledgable enough to know what we don’t know and how to find the missing pieces.

One thing that fires my imagination and pulls me into the good and the bad of the internet is the growing “conversation”. From Maine to Florida and from Georgia to Oregon, to Canada and overseas, people typing away, posting and responding, creating conversations that for certain specific interests like real estate become Great Conversations with various ideas and concepts being woven throughout. There’s no central authority managing the conversation, there’s no hierarchy of experts, only diverse voices growing, hopefully, not into a Tower of Babel but in different directions of movement and progress until the best ideas and concepts begin forming a great change for the better.

It’s a such a Read more

March 12, 2008

Practical dual agency in real life: It is possible to have a fiduciary duty to your sellers — that you cannot get away from — that feels like a complete betrayal of your buyers. What then?

by

Suburban Phoenix Real Estate Broker

Author website

There is a debate on dual agency going on at VARbuzz. This is my contribution to the conversation.

I abhor dual agency — notoriously so. I make no distinction between one licensee or two in the same brokerage, and I am more than prepared to be suspicious if there is any relationship that might seem more important to the practitioners than the fiduciary relationship to the client.

Even so, Russell Shaw convinced me in person that there could be circumstances in which I might have to do a dual agency, like it or not.

What circumstances?

Like this: I’m at open house at my listing, some buyers come in, fall in love with the house and insist they have to put it under contract right away. I would prefer they got their own representation, but my fiduciary duty to my sellers is clear: I owe them the best possible chance at these buyers.

The question is, what duty do I owe to the buyers? The state and federal governments have so gummed up the process of transferring real property that ordinary people cannot competently represent themselves. Moreover, the due diligence process demands expert oversight and advice.

In short, if both parties are unwilling to countenance the idea of separate representation, I’m stuck. I cannot betray the seller’s interests, and I cannot in good conscience permit the buyers to betray their own interests. (And it is plausible to me that I have created an Implied Agency with the buyers in any case.)

This has nothing to do with compensation, and, if we ever have to do this, we will probably split the buyer’s agent’s commission three ways — a point each to the buyer and the seller, in consideration for suffering with limited representation, and a point to us for the extra work. But even that would be at Close of Escrow. My Buyer-Broker Agreement would specify that the buyers could obtain separate representation at any time, even down to the last minute, and I would joyfully pay the buyer’s agent’s commission.

But wait. There’s more. We had a multi-party debate about dual agency at BloodhoundBlog, and, while I would Read more

February 20, 2008

Besides that Mrs. Davison, how did you enjoy the post?

by

Chicago Broker Owner Realtor | RE 2.0 Blogger

Author website

I think I first realized we exist in a quirky, if not passionate and divided adult society when I found myself in a lecture hall observing an assistant professor and a fellow graduate student nearly coming to blows over a Henry James excerpt from the aptly titled,  An International Episode.  I watched on as a confederacy of my peers and elders; some undergrad, some doctoral, some by proxy—chimed in from the gallery seats as the two went at each other, a coffee breath’s apart.  Before long, the entire crowd seemed to join in, taking sides on what does and does not constitute a cultural faux pas and whether James himself, a man already dead for 72 years, was a genius or an ass.  

It was like a Pulitzer prize fight gone wild, only everyone was wearing turtlenecks and corduroy.  I was proctoring the lecture to make up some lost hangover hours from another class.  The whole Henry James dialectic was over my head to begin with,  so who was I to judge, one way or another, who had the longest literary wiener?  I fancied myself a sports writer, a true reporter of facts…(as I understood them, of course.)  That was more than 25 years ago and the memory all but faded away…

…only to resurface this week as I got sucked into the Comment Section vacuum of  a thousand faceless internet voices.  I think we all know of what I speak so no more linkage.  It intrigues me when I witness, walking past the bar of course, the same, aforementioned ardor present in, let’s say… the wide-screen crowd watching a televised sporting event.  I’m always curious as to why these raving fans, dressed in home team regalia; scream, curse and cheer for or against a particular team or athlete (or candidate, for that matter) who doesn’t even know they exist. Like the Chazz Palminteri character, Sonny,  says to C,  in A Bronx Tale,  

“Why you care about Mickey Mantle? He don’t care about you…” Willing suspension of disbelief can be, well…disbelievable, I guess. 

I played sports, albeit Division III, well into adulthood and I’m here to reiterate what the majority of us should already know; most noble opponents, whether professional, amateur or literary, leave it at the field once the game has ended or the last shot has fired.  It’s Read more

February 1, 2008

The upside of exclusives

by

Mapping Technology Entrepreneur

Author website

What if sellers could list with anyone and everyone and what if only the party that brought the buyer got paid? Online listing search paralysis: no agent will disclose the address to a buyer unless they can show it.   

Sounds like the ideal place to go direct-to-sellers to list their house on the web; they’re already distributing their listing all over the place. 

It also sounds like agents really provide no service to help consumers get more for their listing there; no staging, pricing advice, etc. They’re just trying to find buyers and get it sold. Note to Spanish agents: the internet eats information withholding middlemen for lunch. Provide valuable services or die.

December 18, 2007

A Bolt From the Blue for the FTC

by

Mega-Producing Realtor

Author website

I have to agree with the FTC ‘s initial action but for all the wrong reasons. And I don’t agree with them now pursuing the case further. A few days ago a Judge bold from the bluedismissed the complaint filed by the FTC against a Detroit area Multiple Listing Service. The position of the FTC was that it was “hurting consumers” for Realcomp to deny brokers using an “exclusive agency listing” the right to be on Realtor.com and other public websites. The brokers who were up against the FTC decided it would be easier to just stop doing it so the judge dismissed the complaint. The FTC officials plan to pursue the case further (making a “Federal case out of it).

From Inman on December 13th:

This policy, which was adopted following the FTC’s complaint against Realcomp and other MLSs, provides an exception that allows MLSs to ban the transmission of listing information if the listed property’s street address or a graphic display of a property’s location is publicly displayed and the seller displays a for-sale-by-owner sign on the property or another sign or notice that indicates that the seller is seeking direct contact from buyers.

Meanwhile, Albert Hepp, a flat-fee broker who serves as president of the American Real Estate Broker Alliance, a national alliance of flat-fee brokers, said he is disappointed with the judge’s decision and NAR’s stance on the issue.

“We are disappointed in the ruling and urge the FTC to appeal,” he said. “Anyone who truly understands the MLS knows that this is a clear-cut case of an MLS hiding the listings of discounters to harm consumer choice. Once again, the NAR has unfortunately chosen to fight competition while claiming to promote it.”

For example, an attachment to the judge’s decision details an agreement by Realcomp and the FTC over a contested “search function policy” adopted in 2003 that defaulted to a search of exclusive-right-to-sell listings and required MLS users to specifically search for exclusive-agency listings to view those properties. That policy was changed in April 2007, and the agreement provides that Realcomp “shall … cease and desist from adopting or enforcing any policy, rule, Read more

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