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Dual
Agency is the process by
which one real estate
broker represents both
the
seller and the buyer
in a transaction. It is
legal in Georgia,
provided it is fully
disclosed and consented
to by all parties. It is
also of questionable
ethics – at
best! – and
impossible to effect
fairly in practice.
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Just Say "No" to Dual Agency
When a Realtor refuses to show a particular listing this would be consider
STEERING.
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Buyers and sellers of real
estate are often confused about
the role of real estate agents,
whom the agents represent and
real estate agency
relationships. Many states
require that agents give buyers
and sellers an agency disclosure
form to sign.
Buying agents who represent
buyers are working in a single
agency capacity as a buyer's
agent. Seller's agents who
represent sellers are working in
a single agency capacity as a
listing agent.
Agents who represent clients
under single agency owe a
fiduciary responsibility to the
client. They cannot share
confidential information with
the other party or the other
party's agent. Single agency
agents must use care and due
diligence to perform duties,
disclose all material facts and
be honest.
Buyer's agents and the buyer
generally sign a buyer's broker
agreement, which lays out the
duties and obligations of the
agent. In some states, if buyers
do not sign a buyer's broker
agreement with the agent, that
agent does not represent the
buyer but instead becomes a
sub-agent of the seller.
Sub-agents owe the same duties
to the seller as the listing
agent.
Seller's agents and the seller
sign a listing agreement, which
also lays out the duties and
obligations of the agent.
Listing agents and buyer's
agents each owes the client
loyalty, confidentiality and
accountability.
Many agents work as buyer's
agent with buyers and as a
seller's agent with sellers.
However, some agents work solely
as exclusive buyer's agents and
never, ever take a listing.
Dual Agency With Two Agents
Because all real estate agents
are licensed under a real estate
broker, it is possible to work
with one agent who is licensed
by the same broker as the
listing agent. This situation
creates a dual agency. The
agents could work at separate
offices and be strangers to each
other, but since they are
licensed by the broker, they are
still operating under dual
agency if one agent represents
the buyer and the other
represents the seller.
Starting out, an agent may have
created an single agency
relationship with the buyer, but
when the buyer chooses a home
listed by that agent's broker,
the agent's relationship with
the buyer changes. Not all
single agents note the
distinction. In the real world,
most of these dual agents talk
the talk of dual agency but
continue to walk the walk of
single-agency representation.
Dual agency must be agreed to in
writing between the parties.
Laws vary from state to state.
In California, for example,
exclusive buyer's broker
agreements contain verbiage that
allows dual agency, so most
buyers don't realize their
buyer's broker could be subject
to dual agency. Only exclusive
buyer's agents are never dual
agents.
Dual Agency With Same Agent
A listing agent who also
represents the buyer is a dual
agent. Dual agents cannot
operate in a fiduciary
relationship with either party
and must treat both sellers and
buyers equally. They cannot
share confidential information
but they cannot give
confidential advice.
A dual agent in California was
sued by the seller because she
told the buyer to ask for a
carpet allowance from the
seller. It is very difficult to
obtain the highest and best
price for the seller when the
agent also represents the buyer.
The dual agent cannot advise on
home price nor terms nor
negotiate on anyone's behalf.
Some buyers prefer to work
solely with listing agents
because they know the agent is
receiving both ends of the
commission, that is the listing
commission and the buyer's agent
commission. They feel the
listing agent is motivated when
a buyer makes a purchase offer
to get that offer accepted. They
might also ask the dual agent to
further negotiate the real
estate commission to increase
the seller's profit on a
low-ball offer.
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The Pitfalls Of Dual Agency
NO DUAL AGENCY
Real Estate Double Agent | Dual Agency
Dual Agency Should Be Illegal!
Dealing With Dual Real Estate Agents
Wolf in sheep's clothing?
Real Estate Charter Of Rights
The Pitfalls Of Dual Agency
Agency Relationships in Real Estate
Why I Don't Practice Dual Agency
Why You Should Know About Dual Agency
REALTORS TRYING TO BUILD HOMES
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What is Dual Agency? A dual agent
represents both buyer and seller
in the same transaction.
Although widely practiced, dual
agency has come under increased
scrutiny in the last few years
for the following reasons:
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Buyers Misperception Of
Agent's Role
Dual agency is commonly
misunderstood. Some buyers may
unknowingly confide in an agent
with the perception that the
agent is working with them as a
buyers' agent. In fact, the
agent does not legally represent
their best interest but is
actually working as a seller
subagent as required by
cooperation agreements with the
listing firm or agent.
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Undisclosed, Unintentional
Dual Agency
In dual agency, buyers are
sometimes not aware that the
agent working with them actually
represents the seller as a
subagent. This can lead to
confusion. If the agent does not
conduct him/ herself properly,
their actions could mislead the
buyer into thinking that the
agent represents them. The agent
must be very careful to not give
the impression that he/she is
working for the buyer. Improper
conduct by the agent could
result in the creation of
undisclosed, unintentional dual
agency.
In states that permit dual
agency, a real estate agent (or
firm) may not represent more
than one party in the same
transaction without the full
knowledge and written consent of
all parties.
Dual agency is most likely to
occur when a buyer, represented
by a buyer’s agent, wants to
purchase a property listed by
that same agents' firm. A dual
agent must carefully explain to
each party that the agent and
the agent’s firm are also acting
for the other party for whom
they have the property listed.
Agent A has a contract to sell
Homeowner Bs' home and he also
shows potential buyers the home.
(He represents both buyer and
seller).
In this situation, both seller
and buyer must agree in writing
to this arrangement. The agent
must carefully represent each
party. (It is difficult for the
agent to try and help the seller
obtain the highest possible
price for their home AND try to
help the buyer obtain the lowest
amount possible.
Agent A desires to show a
potential buyer one of his own
firms' listings.
Under the firms' relationship
with the seller, this too can be
considered dual agency. The
agent must disclose that the
firm represents both seller and
the buyer.
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Practical Problems with Dual
Agency
Buyers and sellers have
conflicting interests - In a
general sense, the real estate
agent is obligated to serve the
best interests of his or her
principal. An agent representing
both buyer and seller must be
extremely careful to represent
both equally and fairly. Under
the common law of agency, if an
agent chooses to represent both
parties, this dual agency must
be fully disclosed in writing
and consensual by both parties.
Both parties lose "advocacy" for
their best interests - By
representing both client's (with
conflicting interests), the
agent cannot advocate or seek an
advantage for either client. A
dual agent must always remain
neutral even if he/she has
previously represented one of
the parties exclusively and
cannot show favoritism.
Providing equal service to both
clients may be practically
difficult. Some states do not
permit dual agency.
How does an agent handle
personal information about a
client? The dual agent may
become aware of personal
information that does not
necessarily relate to the
property but, if disclosed,
could harm one party and benefit
the another.
Example: Agent A lists
commercial property for seller B
with an offering price of
$500,000. Seller B tells the
agent that he is in need of cash
and will take as low as $425,000
for a quick sale. In a morning
staff meeting the next day at
Agent A's firm, Agent A informs
other agents of the buyers
bottom line price and need to
sell quick. Agent C (another
agent with the firm) acquires a
buyer who is interested in the
property. (Agent A and C at this
point become dual agents).
The above example creates a
unique situation since under
traditional agency law, Agent C
must disclose the sellers bottom
line. At the same time, the firm
and selling agent are obligated
legally to act in the best
interest of seller B without
disclosing personal information
about the seller that might harm
the sellers' bargaining
position. One possible solution
to the above dilemma is for the
agent to include, in the dual
agency contract, a provision
that the dual agent cannot be
liable to either party for
refusing to disclose information
the law does not require be
disclosed and which could
compromise (potentially harm)
one party's bargaining position
and benefit the other party.
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Key Issues In Dual Agency
Courts vary in their
interpretation of what is
acceptable and not all states
endorse dual agency. Primary
issues in determining equitable
treatment in dual agency
include:
Did the agent provide timely
disclosure of dual agency and
were the potential consequences
of dual agency sufficiently
explained to both parties?
Generally, both clients must
provide "informed consent"
meaning that not only do they
consent but that they
sufficiently understand the
agency relationship.
Did the agent treat each party
equally fair and comply with
his/her duties required under
the laws of agency? Most
importantly, a dual agent cannot
favor one party over the other.
All the disclosures in the world
will not relieve the Agents'
liability if he/she advocates
for one client at the expense of
the other. It is not yet clear
by the courts whether the loss
of advocacy (in dual agency)
results in a reduction of the
agent's "duty" to the client.
Proper explanation and advance
authorization by all parties in
the initial agency contract is
the critical factor.
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1. Discuss with the agent how he
or she plans to be fair to both
parties.
2. Talk with some of the agent's
past clients where dual agency
was performed. Ask whether the
clients felt the agent treated
them fairly throughout the
entire process, if the agent
fully explained his or her role
early on in the process, and
whether the clients would
recommend this agent to a good
friend.
3. Get comparable prices of
homes in that neighborhood from
another real estate firm to
ensure the property is not
overpriced. (Companies usually
provide this information for
free.)
REALTORS TRYING TO BUILD
HOMES:
You would have to wonder the quality of a home when Realtors are involved in
building homes, listing them and selling them all at the same time. Realtors
should not be practicing builder duties. A builder has the experience, knowledge
and the license to build solely homes verses an inexperience and with the lack
of building knowledge a Realtor would. You would have to question who will
warranty the construction if problem arises. Each Professional needs to stay
within their field of expertise. You would also have to wonder the loyalty of a
realtor taking on listings from other home sellers and trying to sell his own
built homes.
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dedicated to expressing the opinions that we hold
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