Friday, 23 June 2017

Dual Agent: A Misunderstood Concept

Written by Posted On Monday, 25 November 2013 20:27

Is the real estate agent you are working with representing your interests? Is she your agent? Is he a designated agent? Is she a dual agent? Do you know, and more importantly, does your agent completely understand his/her role?

For many years, the agent represented only the seller. If you were selling, you would list your home with a real estate broker - called the "listing agent". If another broker/agent found a potential buyer who entered into a sales contract, that agent was the "selling agent".

Today, however, there are many forms of agency:

single agency: the agent represents either the seller or the buyer, but not both in the same transaction;

designated agency: (also referred to as "designated representation"). Here, the seller has a listing agreement with a broker and the buyer has an agreement to be represented by another agent/broker - but who is affiliated with the same real estate company.

Brokers and agents in the Washington metropolitan area are required to provide disclosure of their role to prospective clients. If there is a designated representation, all parties are put on notice that the agent must not disclose information obtained in confidence to other parties in the transaction.

Dual representation: (also called dual agency). Here, the agent represents both the seller and the buyer. According to the District’s disclosure form, "the ability of the licensee (the broker) and the brokerage firm to represent either party fully and exclusively is limited. The confidentiality of all clients must be maintained."

This is the area of real estate brokerage that is extremely confusing. According to a survey compiled this year by the National Association of Realtors, many agents who responded do not understand dual agency, cannot explain it to their clients and in fact do not provide the State required disclosures.

In Maryland, although the disclosure forms use the term "dual agency", in fact it really is the same as the District’s "designated agency". The form that potential clients must sign states "if all parties consent in writing, the real estate broker ... (the "dual agent") will assign one real estate agent affiliated with the broker to represent the seller... and another agent affiliated with the broker to represent the buyer..." Agents in Maryland are not permitted to represent both buyer and seller.

Virginia has a new law which will take effect July 1, 2012. It is a comprehensive approach to enhance the agency relationship disclosure requirements between agents and those they represent. Accordingly, single dual agency is permitted, so long as the agent has provided the potential client the written consequences of such practice and obtains the written consent of the client.

What does the agent have to disclose?

  • the agent will be unable to advise either party as to the terms, offers or counteroffers;
  • that the agent cannot advise the potential buyer of the suitability or condition of the property;
  • that the agent will be acting without knowledge of the client’s needs, or experience in real estate, and
  • that either party may engage another agent if either requires additional representation.

The question then becomes: why should I - as a potential buyer or seller - agree to a single dual agency arrangement? What’s the benefit to me?

Recently, the New York Office of General Counsel issued a memorandum entitled "Be Wary of Dual Agency". The memo cautioned consumers that "by consenting to a dual agency, you are giving up your right to have your agent be loyal to you, since your agent is now also representing your adversary. Once you give up that duty of loyalty, the agent can advance interests adverse to yours. For example, once you agree to dual agency, you may need to be careful about what you say to your agent, because, although your agent still cannot breach any confidences, your agent may not use the information you give him or her in a way that advances your interests."

And, while most agents are honest, there is always the possibility that what you tell the agent will get back to the other side.

Many brokers - and legislators who allow dual agency - believe that it is not a problem so long as buyers and sellers are fully informed and sign a written disclosure form. But in my opinion, that is not the real world. Buyers get excited about a new house and do not pay attention to the various documents they sign - including the real estate sales contract. Similarly, often the issue of dual agency arises only after the seller has signed the standard listing agreement ; the seller’s broker suddenly finds a potential buyer who is not represented by counsel or by another agent.

My advice to buyers and seller. While I have serious reservations about the designated agency arrangement, I can live with it since there are at least two agents involved - one representing the buyer and one the seller - albeit from the same brokerage company.

However, I cannot under any circumstances recommend anyone to engage in a single agent dual agency agreement. You will not be properly represented - which has been the hallmark of american real estate agents for years.

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Benny L. Kass

Author of the weekly Housing Counsel column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of Kass, Mitek & Kass, PLLC and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts.

Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues. In addition, he is a life member of the National Conference of Commissioners on Uniform State Laws. In this capacity, he has been involved in the development of almost all of the Commission’s real estate laws, including the Uniform Common Interest Ownership Act which has been adopted in many states.


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  • Comment Link Ramon Ramos Gonzalez   Realtor Thursday, 16 April 2015 17:12 posted by Ramon Ramos Gonzalez Realtor

    I have two clients purchased a property as a partnership, time goes and some problems have arise, now one like to sell, the other not, one of them isn't make payments on time damaging the other party credit report. What can I do?

  • Comment Link Kirk  Shultz Wednesday, 21 January 2015 23:19 posted by Kirk Shultz

    I should have said I'm saving 2%. The next best commission I could find having my own agent was 2% higher.

  • Comment Link Kirk  Shultz Wednesday, 21 January 2015 23:14 posted by Kirk Shultz

    I'm selling a house in Nevada and before I had a chance to list it, a buyer found me and we agreed on most of the details ourselves. We would rather just be able to handle the entire sale ourselves, but realize that's not a reality. We just need to have an agent handle the details of escrow and we have one. Neither one of us has signed anything, but we're saving 2% over the next best deal by using one agent. Since we've already agreed upon terms, I don't see a problem. Of coarse, complications are a possibility, but I don't see us not being able to work things out ourselves.

  • Comment Link Patricia Beattie Thursday, 08 January 2015 22:29 posted by Patricia Beattie

    Thursday, 08 January 2015 12:59 am posted by Le
    Hi. I have a quick question. We are going to by a house and our agent is also the sellers agent We didnt sign any disclosure form for the dual representation. So the contract is valid?

    Answer: Yes. The form is a NYS consumer disclosure agents are required to present to Buyer's and Seller's to describe relationships between the parties. However, there is no law requiring either the Buyer or Seller to sign it. This form is not a contract and has nothing to do with your sale contract. Your attorney can verify this.

  • Comment Link elaine stratos Thursday, 08 January 2015 15:56 posted by elaine stratos

    I have made many comments on this I see it to simplify
    but I want you to get more money for me...if he seller doesn't even understand that this concept is occurring...or what it is..
    same Lawyer representing wife and husband in a its ok if I know you are representing
    but if I don't its Fraud,Lying,Withholding,you are sleeping with both sides....agent should lower commission one point..
    I'm just reeling because my agent did not have the class to explain which left me feeling frankly well as
    my Lawyer, explaining....They want to sell.........thats it..

  • Comment Link Le Thursday, 08 January 2015 06:59 posted by Le

    Hi. I have a quick question. We are going to by a house and our agent is also the sellers agent We didnt sign any disclosure form for the dual representation. So the contract is valid?

  • Comment Link athen Thursday, 07 August 2014 13:26 posted by athen

    After all is said and done my Agentinformes me that she did not engage in Dual Agency after all just only getting my signature on all An y relatio
    nships on the disclosures in case she decided to go forwardrd...again my not being informed............gotit...
    only to become a
    FACILITATOR......IN THE TRnsaction.....again getting all the commision...this is after being questioned by the Ny Liscense
    so get the signaturefr safety, then change your mind an be a Facilitator.....any comments.....Realtors?I

  • Comment Link Patricia Beattie Friday, 18 April 2014 13:12 posted by Patricia Beattie

    Estratos, there is a lot involved in selling a property. The sale price you've indicated is fair market value for the property, still in 2014.

    Yes, you can always have multiple offers. The agent would have presented those other offers to you, if it existed.

    A common rule of thumb is: how many offers did you receive during the first 30 days of being listed. If the answer is 0, there's a problem, typically price. If the answer is 1, I would also encourage the Seller to accept the offer. If the answer is 1 or more, you're golden.

    The number of days on market is very important when selling. If the property is overpriced, it sits. If the Seller is serious about selling, a short time on market shouldn't be an issue, regardless of how the offer and sale came about.

    Many NYC agents practice dual agency and there is nothing wrong with it, it should have been disclosed, is my only beef. The reason it is common in NYC is because of the very quick turnover of properties. Typically, an agent lists a new property and receives consumer inquires and bam, deal done. Dual Agency is NOT against the law, however, it must be disclosed.

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