Oklahoma's new broker relationships act eliminates agency relationships between brokers and consumers. Although the law isn't clear whether there is any difference between single party brokerage and agency, licensees will not be allowed to call themselves agents, a fact that has a few people upset. Upsetting others is the disclosure forms being printed by most associations which will include an explanation of vicarious liability for the consumer.

The Tulsa Board of Realtors and the Oklahoma City Association of Realtors are both printing their new forms to get ready for the implementation of the new law, effective November 1, 2000. Both associations plan to include separate disclosure addendums to brokerage and listings agreements which explain the two types of relationships available to consumers. The disclosure forms explain that if a consumer chooses to have a single party broker representative, that she or he may incur vicarious liability through the acts or omissions of the broker. Some trainers feel that single party brokerage will die as soon as consumers see the word "liability," because they won't know that because of the Common Law of Agency, consumers might incur the same liability with a transaction broker.

Charles Bowles is the technical consultant for Keller Williams Realty and teaches classes for the Tulsa Technical College. "I was on the committee that worked four years on the new law.  What we had hoped to do has not been accomplished in the new law.  I'm afraid we have perhaps eliminated some of the liabilities inherent in agency relationships.  But we may have created a situation that will make the consumer wonder "why not consult an attorney and hire a courier?" 

Bowles says that his company will not represent clients without a written agreement, and plans to make full disclosure to every party explaining the differences in the two relationships prior to providing services. "The "reinsertion" of vicarious liability only for the Single Party Broker could only have been done to try to influence brokers to use the Transaction Broker relationship," he says.

Janet Braswell, owner of the American Institute of Real Estate Education, says that the Oklahoma Association of REALTORS and the Oklahoma Real Estate Commission are going the wrong direction, and that in the state's zeal to reduce liability, it may have killed any reason consumers have to hire real estate professionals.

"We have told people that buying or selling a home is a complicated process and to use a professional," says Braswell. "yet now we don't want to do anything for them. We're moving away from consumerism toward protecting ourselves. How are you going to provide a service without incurring liability?

"The other side is why would anyone pay a real estate agent? If you don't want to represent consumers, then what do you do? This law has just told people that we aren't valuable anymore."

Where the real estate commission and REALTOR associations are missing the point, says Braswell, is that the non-agency law strengthens other competitors to get into the real estate business, a fact that will ultimately hurt brokers as well as their agents. Braswell maintains that Realtors will be in competition with attorneys, title insurers, and bankers, all of whom are willing to process documents for significantly lower fixed fees than Realtors charge to facilitate a transaction through six and seven percent commissions.

"I don't think anybody thought about the fact that banks are getting into the business," warns Braswell. "Why can't a bank just hire a real estate broker and have a real estate department? They have a client base already - all the people who have bank accounts. I can see an attorney hiring their own appraisers, inspectors and licensees. It won't cost them anything because they can all be contract labor."

"All Realtors have done is watered down their services. If you want a transactional broker, you don't need us anymore. You can go to a title insurance company and get the same services."

"They are trying to write the laws to fit how agents do business away, instead of getting rid of the confusion of sub-agency," points out Braswell. "You can be a single party representative, but you can't represent them as a fiduciary. You don't have anybody who has your interests at heart. We're the only state that has wiped out agency."

Vince Mooney, owner of Mooney Real Estate School in Tulsa, says that problems with the new law are only just beginning. He plans to outline 50 or more issues he has found in a book that he plans to present to the Attorney General, the Oklahoma legislature, the Oklahoma Board of REALTORS and the Oklahoma Real Estate Commission. "It's left out more than it put in, and it has raised dozens of questions that weren't addressed in the law that have to do with the execution of the law," says Mooney.

"I just watched the official tape, and it didn't address a single issue in my book," says Mooney. "Telling anything to a single party broker who has a listing - is that the same thing as giving it to the seller? If you don't say anything, you are a transactional broker, but if you don't say who you are, the consumer has the right to assume you are an agent."

Continues Mooney, "They did not abrogate the law of agency; they only addressed the duties and responsibilities. They replaced those duties with new duties, but that didn't mean agency is abrogated. It just makes us harder to sue and win."

Braswell believes that the commission should have gone in the opposite direction - single agency for both sides. "A sophisticated buyer can do with a transactional broker, but the masses need our help. I think the ideal thing is to have a buyer's agent and a seller's agents, to be fair to the public. Agents need some liability to make sure they do their jobs."

"People trust us with the largest lump sum of money they have and now we're going to tell them that we don't want to represent them as agents? We aren't going to negotiate for either party, we'll just work for the deal? If that is the case, we need to do some other things."

She proposes a sliding scale fee structure for difficulty and willingness to take on liability with agency. State disclosures should also include the duties owed in agency relationships. Buyers and sellers need to be fully informed, or they can't make an informed decision.

"We need to explain the difference between agency and transactional brokerage. I think agency is a good law. and transactional brokerage should be offered as an alternative," suggests Braswell. "We need to wipe out disclosed dual agency, and charge fees so that the harder you work, people would be willing to pay you for more work. Fees should be tied to representation."

Braswell also blasts the industry for running to the state to protect licensees, instead of providing training at the company level. The swinging door policy of many big brokers who hold as many licenses as possible, without providing the infrastructure to properly train and support the agents who are working as contract labor, is to blame for the lawsuits they are working so hard to avoid, she says.

"We used to have better training. Now brokers want to have more agents, because it looks impressive, but they don't want to train them," says Braswell. "No other business operates the way we do in real estate. Again, we have to change the way we operate. I don't think we can continue as independent contractors, because too many don't abide by the law. Too many agents are getting their brokers into lawsuits.

"We have to have continuous training, and I don't mean continuing ed. I think the company itself has to offer continuous training. A lot of big companies don't even have a desk for you, and then they run to the state to keep you out of lawsuits?"

"There's got to be a better way."

Published: August 23, 2000

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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. For more articles by Blanche, click here.