Ned Marrs began his post-military real estate career as a traditional agent. But gradually he learned that everything he was taught about traditional agency was wrong in the eyes of the law. Becoming an exclusive buyer's agent, Marrs is firing the first volley in what may prove to be the biggest battle the real estate industry has faced yet - dual agency ethics. Marrs is releasing irrefutable evidence that consumers lose money participating in dual agency transactions.

Ned Marrs is a retired army Major, a strategic intelligence officer and public relations specialist who really didn't know much about real estate until his retirement.

Relocating from Virginia to Colorado Springs in 1982, Marrs was uncomfortable with how he felt his home sale and new home re-purchase was handled by the agents who represented him. He decided to investigate.

Marrs read how-to books, took classroom instruction and finally enrolled in a real estate college. That was when he learned for the first time that as a buyer he had not been represented at all. At the time, dual agency and undisclosed agency was a way of life in the world of real estate. Marrs was angry, but decided that he could work the system.

His enthusiasm grew as he made the decision to represent buyers. He was quickly jolted back to reality by a surprising adversary - the U.S. government.

In 1987, Marrs received a HUD solicitation for a proposal to become an exclusive listing agent for HUD properties in Colorado Springs and was accepted. As a buyer's agent, Marrs decided that he could serve HUD's agenda while promoting buyer agency at the same time. Using seminars, TV infomercials and meetings, Marrs educated buyers on how to buy HUD homes.

He was secretly filmed by a competitor who forwarded the film to HUD.

Marrs was served with a cease and desist letter from HUD which informed him that he could not represent the interests of buyers and HUD at the same time. This constituted an "impermissible conflict of interest." Marrs was dumbfounded. Wasn't working both sides exactly what he was taught to do in real estate school? He wasn't going to take this lying down.

He turned to the NAR for help. Reviewing his copy of the 1986 "Realtor's Guide to Compliance with the Law of Agency" Marrs was stunned to read the following: A real estate broker who becomes an agent of a seller or buyer, either intentionally through the execution of a written agreement, or unintentionally through the execution or a written agreement, or unintentionally by a course of conduct, will be deemed to be a fiduciary. As a fiduciary, a real estate broker will be held under the law to owe certain specific duties to his principal, in addition to any duties or obligations set forth in a listing agreement or other contract of employment.

Under the description of loyalty, Marrs read: Thus, a real estate broker's duty of loyalty prohibits him from accepting employment from any person whose interests compete with or are adverse to his principal's interests.

All this time, he and every other agent he knew was breaking the law.

Marrs spent the next six months reviewing over 40 federal and state appellate court decisions, concerning agency. Every decision came down to this: An agent can't serve two masters.

He felt like a fraud.

"Every government agency was telling me that HUD was right," says Marrs. "Even though the whole industry was working with buyers and sellers, HUD, the NAR, and the court system was saying that it wasn't right."

"I felt that I couldn't go back," Marrs said. "I had to work with sellers or buyers, but not both. He chose buyers, and became an exclusive buyer's agent.

"We received obscene phone calls. We were chastised and harassed," recalls Marrs. "Now everybody's a buyer's agent because the consumer is asking for it."

But not everyone is an exclusive buyer's agent. That is a designation that can only be used by members of the National Association of Exclusive Buyers Agents. NAEBA members by agreement take no listings and work only in exclusive buyer agency environments. No in-house sales allowed.

To assure his survival as an exclusive buyer's agent, Marrs knew that he would have to take disclosure issues public. If the public doesn't know they are being fairly represented, then what good is exclusive agency?

Marrs believes the real estate industry is complicit in hiding information from buyers (and sellers) so that traditional brokers can continue to serve both sides of the transaction. He knew that he needed proof. His own MLS handed it to him on a silver platter.

The following table, embargoed from the public at penalty to agents or brokers who would reveal its contents reveals what Marrs had suspected from the time he was a buyer - that buyers pay more for homes when they use in-house brokers.

What the table proves conclusively is that in Colorado Springs during the six-year period between 1992 and 1998, buyers paid over $82 million more for their homes because they used in-house agents instead of co-op agents. That is an overpayment equal to $980,000 a month. The only conclusion to be drawn is that dual agency and transaction brokerage harms home buyers.

When Marrs revealed this table at the NAEBA convention last month, shocked agents in the audience raised their hands and said, but "you can't share that with the public. It's in the MLS by-laws."

Marrs trained the guns of a level gaze back at the questioner, "I'll be happy to face whatever comes, but this is something the public needs to know."

Using the NAR's own language, he adds, "If we are true "fiduciaries," what do we have to hide?"

Should he face any disciplinary action, Marrs is fully prepared to take the battle to the media.

"I would love to play this out in the papers," says Marrs.

Marrs knows he is on an uphill battle. In-house sales constitute approximately one-third of the market. Very few brokers will give up both sides of the transaction. That's why he knows he will need to watch his back.

Some officers have been shot by "friendly" fire.

Published: March 22, 1999

Use of this article without permission is a violation of federal copyright laws.

Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.