Editors Note: The following are responses to: A Retired Major Declares War on In-house, Dual Agency Sales

Thanks to those of you sending support. Positive support is always appreciated. If I may apologize for the article's author, Blanche Evans, for the mistake about EBA and NAEBA. I think most of us know that all NAEBA members must be EBAs, but EBAs are not required to be members of NAEBA. However, there is strength in numbers and perhaps every EBA should consider becoming a member of NAEBA.

Its always amazing to me how people manage to miss the main point and instead focus on immaterial aspects. The main point is that dual agency, designated agency, transaction broker, and facilitator are all efforts to undermine and circumvent the common law of agency. In fact, NAR has issued instructions to all state and local associations to ask for new state laws that specificlly abrogate the common law of agency. Agency disclosure in the late 1980s revealed that an in-house sale might be impossible if both sellers and buyers requested representation. The fact that dual agency was, and is, dangerous for the agent, and an oxymoran by defination, gave rise to possible alternatives to save the in-house sale and the 10 billion dollars it brings. Facilitator and transaction broker were adopted in haste. After all, how can an "ex-agent" keep from advocating for an "ex-client". The possibility of undisclosed dual agency through implication or action becomes very possible and according to the law of agency is fraud. Now States are considering and adopting "designated agency". Thats where the employing broker designated one agent within his/her office to be an agent for the seller and another agent within her/his office to be the agent for the buyer. Why?

What is so wrong with the common Law of Agency? It has served mankind well throughout history. What gives NAR the right to "abrogate" a common law, an age-old law, and even a biblical law, just to accomodate their profession and the in-house sale. Greed? The 10 billion dollars will not be lost, only redistributed.

A short comment on the statistics in the article. As an analyst for over 25 years I realize that most analyses are subjective. The significance of the two periods is that the 1991-1992 break point was a time when the Colorado Association of Realtors was working on "emergency" legislation to circumvent the agency disclosure brochure mandated by the Colorado Real Estate Commission. Real estate licensees in the state of Colorado became instantly and intimately familiar with the fiduciary duties of an agent and immediately realized, as I had five years earlier, that representing both home sellers and home buyers would be impossible if not fradulent. The real estate industry would either have to change the way business was always conducted, or change the law. They chose the latter and in my market it has harmed "my client" the home buyer. The statistics I reported give significant financial support to my claim that dual agency and transaction broker harms the home buyer.

Who benefits from all the new "real estate laws" across the country? Do home sellers or home buyers benefit from dual agency or transaction broker? Of course not. They loose expert advice and representation. Will home sellers and buyers benefit from "designated agency"? I don't know, but it might depend on who is the stronger of the two agents within the office. So who is it then that benefits from these new real estate laws? Usually its the party that initiates new legislation that has the most to gain. NAR and state associations do the leg work because they are fiduciaries of the membership. Who represents the public? State regulatory agencies? Are they the fiducaries of the public? If so, then they better start acting like fiduciaries.

I urge all members of the real estate profession to study the Law of Agency. If we desire to be called "agents", if we enter into employment agreements with the public, then we must abide by, not abrogate, the Law of Agency which governs our profession. I welcome debates with all "knowledgable" and "informed" professionals.

A thank you to Blanche Evans for an excellent article and bringing this issue to a lighted forum.

Ned Marrs
Broker, Exclusive Buyer Agent
Home Buyers' Realty
Colorado Springs, Colorado

I appreciate the fine articles you have printed recently introducing the practice of exclusive Buyer Agency. However, there was an error in the article "A retired Major declares war-----", by Blanche Evans, that I believe you should correct. She states that in order to be an EBA one must become a member and receive the designation from NAEBA. This is not true. Exclusive buyer agency is a concept of doing business, not a designation. I have been a real estate broker for 30 years, but have only become an exclusive buyer agent recently. I may or I may not join the NAEBA, which is a trade organization; BUT I AM DEFINITELY AN EBA. I represent buyers 100% of the time, and never take listings.

Don Edwards Associates
EXCLUSIVE BUYER REPRESENTATIVE
FOR MID-MICHIGAN

Great story! I saw Ned's data at the NAEBA convention in Las Vegas and it was awesome. Ned's done his homework on this, and it would be interesting to see this "test" done in other markets.

Andrew Show, CEBA, CSP, ABRM, OSU LM 75, Broker-Owner
Buyer's Resource Realty Services
7100 North High Street, Suite 204
Worthington, Ohio 43085 - Serving Metro Columbus

This article brought to mind the joke about cutting off a frog's leg and when you clap your hand it makes him jump, but not at far as he did with 4 legs. So you cut off another leg, clap your hands, and he jumps - but not as far as with 3. And so on until all his legs are gone - you clap your hands and he doesn't move. The conclusion: cutting off legs makes a frog deaf.

How can one show a cause and effect relationship between in-house and out-of- house sales when the sales price is not the only variable? Perhaps more expensive houses are more sought-after in that MLS area and therefore sell quickly within the office before the other agents are aware of it; that would raise the average sale price. Perhaps because the office tours its own listings early on they get in there to sell the particularly nice ones faster; that could raise the average sale price. Length of time on the market is probably the biggest factor in commanding high sale price; buyers recognize that if they are the first to see a better-than-average house they had better offer a high price so that they can walk away with it; this scenario is very often played out by having knowledge of a new listing even before it's in the computer. Does that mean the buyer is overpaying? Not necessarily. Buying a house is not like shopping for a VCR - there's only one of any entity and if you see it early on, you're much more likely to pay high for it rather than lose it. The buyer's agent should be applauded for being able to bring an in- house listing quickly to his client, not castigated for it.

Consider this also: if statistics show that the average sales price has dropped in an area, does this mean that people are paying less for a house than they did the year before (a declining market) ? NO - it may mean just the opposite! It may mean that interest rates have dropped and more buyers are able to come into the market at the lowest levels - increasing the numbers of low-priced homes and thereby LOWERING the average or median sales price. What I'm trying to point out is that unless one is comparing the sale of the same house to the same people (obviously an impossibility) then there is the high probability that there are variants which affect the sale which do not show up on a neat statistical chart.

My company has recently withdrawn its policy of bonuses for in-house sales in response to concerns about appearing to favor selling in-house listings to the detriment of the buyer. I don't ever remember pushing a buyer to buy a particular house because I would make out better from it, but I accept the change because of the perception of wrong-doing. However, I defend the right to have a homefield advantage for the BENEFIT of my buyer clients, not the perceive harm.

Sandy Duffy
Coldwell Banker Residential Brokerage
Princeton Jct. NJ

I am an exclusive buyer's agent.

First: a correction. It is not true that only members of NAEBA can call themselves exclusive buyer's agents. An exclusive buyer's agent represents buyers only and does not take listings. This is true whether or not the exclusive buyer's agent is a NAEBA member or not.

The table for Period I, 1984 - 1991 shows a trend opposite that for Period II, but I did not see any explanation in the article, and would be very interested in seeing an explanation. Also, did Mr. Marr only comple these statistics for his MLS or did he choose s few other MLS areas at random, and see whether they hold true universally:

Steven K-Brooks
Brattleboro Buyer Brokerage Real Estate
Brattleboro, VT 05301

After being in the business for almost 30 yrs and having never had a question raised, let alone a problem, over agency issues in probably 1000 transactions (nor have I known of any among my fellow Realtors until very recently, i.e., since this law was passed in Ohio), I seriously question many of the assumptions set forth underlying the conclusions in this article. One major flaw in the major's reasoning is related to the statement that the only conclusion one could draw from the statistics presented is that which he sets forth. That is blatantly faulty given the information presented. Having an undergraduate degree in economics and a masters in business I have dealt extensively with statistics and immediately questioned those as they relate to this issue and know that one would need to know a great deal more information about that data before coming to any such conclusion. The retired major should have done the same, as should his critics at the meeting mentioned before having been so outraged about his conclusions. Maybe there was more information given than just those numbers presented here and therefore I don't have all the information that they had which would have been helpful in analyzing the data more thoroughly.

One thing about agency disclosure is certain, based upon my observations, there is a great deal of confusion. There is confusion with the practitioners, the public, and the people interpreting these laws. In some cases, as in Ohio, certain administrators have actually put forth totally conflicting opinions on interpretations of specific issues that we must now live by. That is not a healthy environment to be doing business in especially given the public's high propensity to indulge in sport-suing. A recent seminar I attended mentioned that the probability of a real estate sales person being sued has gone from one in twenty per year to one in eight. I suspect, but will suspend judgment until I have sufficient data to prove my assumption, that much of this is the result of agency disclosure, a solution we have created to solve a problem, that in my experience, never seemed to exist.

Now, I watch the zealots, such as the major, with much amusement. I honestly doubt that the public is being served any more now than they were previously by agency disclosure laws and I definitely feel that agents as a group will be, in the long-run hurt by it.

Ignorance is the main cause of any disadvantage that any buyer or seller might have in making an informed decision. It is my opinion, based upon my unscientific limited experience and observation, that this might occur equally with or without agency disclosure and whether or not they are represented by a buyer's agent, seller's agent, dual ....etc. It would be interesting to see the ongoing results of a continuing "rigorous study" done on this subject over time.

Tom Kelly

Ned Marrs is absolutely right! I have been in mortgage banking for 20 years and dual agency is the best example of collusion I have ever heard.

Gene Silverman