Carol Frick has been licensed for 27 years. She is the broker/manager of a 45-agent office in the greater Detroit area and a member of the Birmingham, Bloomfield, Rochester, South Oakland Association of Realtors (BBRSOAR). She is the president of the Michigan Association of REALTORS® (MAR)for the year 2000, and has been involved in designated agency issues and research for MAR for over 3 years. Find out why she believes designated agency is "what the public wants and needs," in this exclusive Realty Times interview with Agent News editor Blanche Evans.

B.E.: What is the purpose of the bill and how will it change things?

C.F.: The thing that is important to understand is this is proposed legislation. The bill isn't even written. The bill proposed is strictly voluntary to offer the opportunity for people to create a designated relationship. The way current agency disclosure law call for, they can't do that.

B.E.: What's the difference?

C.F.: Our original agency disclosure law was passed in an attempt to make sure the customer knew who represented whom - it was a customer protection legislation. The law in Michigan created confusion because of dual agency. This is what exists now. Dual agency is - "I can represent you and I owe you a fiduciary relationship and I will hold what you tell me in confidence. All of a sudden, if you want to buy one of the listings in our office, now I am this other guy's agent too." It creates confusion. The client wonders "Yesterday you represented me, now you are a dual agent?"

Designated agency will afford the opportunity within a given company for the client to sign a contract that the agent of their choice will represent them, or they will understand that an agent from the same office could represent the other side. If my agent Jane is working with Paul Smith and has a buyer broker relationship and my other agent, Tom Jones will represent the seller, the supervisory responsibility will rest with me, the management of the designated broker.

B.E.: Why don't they just offer single agency - represent one side or the other in a given transaction?

C.F.: That would be single agency. But there are 26,000 members in the state of Michigan, and single agency is less than 5% of the offices. So reality has to click in.

If a client establishes a relationship with a Realtor, and chooses to buy and sell through that Realtor, that is the client's right. We are serving the needs of the public, not five percent of Realtors. I agree that taking away dual agency removes one of their (single agents') marketing techniques.

B.E. But designated agency only eliminates dual agency for the agent, not the broker.

C.F.: You are right, but someone has to be responsible. Unless you create a state where everyone is a broker, someone must assume responsibility for the agents that work in the office. This legislation will allow that option.

You can amend and change the supervisors to avoid conflicts within one office, so that if I feel I am in a conflict, or if someone else has a conflict I can make sure I supervise my person and the guy who owns the company is responsible for both of us. It creates a clear and certain understanding of who represents whom in the eyes of the public.

B.E.: Do you believe it is possible for a broker to avoid liability when representing both sides of a transaction?

C.F.: I believe it is possible. I don't know whether or not it will produce more or less liability for the broker, the law isn't written yet. But the answer depends on the greater liability that exists with dual agency. I would assume and the hope is that the protection of the customer will increase and the Realtor will be better protected.

B.E.: Is what you are proposing a disclosed designated agency?

C.F.: What's good about our bill is it will mandate written disclosure. It will be given to every client. We have an agency disclosure law. It mandates the agency relationship for everyone we work with. If I have a buyer broker relationship and the buyer wants to see a FSBO home, I must also have a written agency disclosure for the FSBO as well as the customer. We will still have those disclosures. The only thing new is that there will be a different contract required if you choose designated agency, and it will also name the supervising broker. The association strongly recommends a buyer broker contract.

B.E.: When a client signs a contract, is it with the broker or the agent?

C.F.: That's where the designated agency comes in, if we are successful with what we are trying to write, what would happen is that the buyer broker contract would have to spell out if in fact you are going to accept designated agency (voluntary for office and consumers) and that you will be signing a contract to that effect, and that the agent represents the client, instead of the broker. The legislation will create the possibility of dual agency or a buyer/broker contract, or seller/broker and that the broker practices designated agency, the agent will be the representative subject o the supervision of the managing broker.

B.E.: So you are saying the legislation will make the agent no longer the agent of the broker but of the client?

C.F.: I don't know how that will work in the language. I can't give legal answers.

B.E.: When is this bill being presented to the legislature?

C.F.: Hopefully this year. We have spent three years, developing and researching this piece of legislation. It started three years ago when our membership was complaining about the dual agency situation. We have had task forces, and eight focus groups with small brokers with two or three agents to large brokers with over 1,200 agents. We have had six workshops around the state and will have 24 more. We have had 13 articles in our association publications. And so we have done heavy research to get member input and what is the best interest of the public and ourselves.

B.E.: Will the disclosure explain the option of single agency or exclusive representation? What if the client doesn't want their agent's company to represent the other side?

C.F.: It should be, but is it explained to buyers or sellers? I can't tell you that it is by every agent. Our company does not practice single agency. If they want to find an office that deals only with buyers, that is not an option that this office offers. There are offices that represent buyers only. If they want to do that, they can go to a company that represents buyers, or they can agree with me contractually that I would not show them any houses that are listed with our company and that would prevent conflict of interest.

B.E.: Let me put it another way. Is there an explanation of single agency included as an option on the disclosure document?

There is no disclosure document that represents single agency. What we are doing is creating the option to have a single agency relationship with their Realtor.

They may have the option already, but with designated agency we are creating that option. they don't currently have under agency disclosure. They have only the option of dual agency. The client has no option now.

B.E.: Are buyers aware that they can ask for single agency type of representation?

C.F.: This is a supply and demand world. If there had been a demand on the part of the public and if the public had wanted single agency, it would be there. If there was an outcry for companies to represent sellers only, it would be there, but I can't name one in my marketplace. There simply isn't a demand.

B.E.: When does disclosure take place?

C.F.: Before confidential information is disclosed, the agency relationship is formed.

B.E.: It's a complex issue.

C.F.: We are trying to simplify things so that the client can work with the agent of their choice from beginning to end on the terms that they can choose to develop.

Published: April 6, 2000

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