Thursday, July 26, 2007

Maybe it's time to bury Dual Agency

First, let me say that I work for a brokerage that does NOT allow dual agency, but does allow designated agency. Dual agency is when an agent have contracts for representation with both the buyer and seller. In other words, the agent is bound by fiduciary responsibility to represent the needs of both the buyer and seller above all other.

Second, let me say that I work in a state which does allow dual agency, if it is disclosed on the contract to all parties.

But, as I look at the landscape, I see something I don't like. I don't like the idea of dual agency. And, further, I think it is time that the NAR step up and stop the practice among its members. I don't want to see the government take the lead, and I don't want to see any law passed. I want OUR trade organization to voluntarily stop this practice, and then tell the world that they have done it, and why.

As a person with of the libertarian persuasion, I don't like to see the government constantly stepping in to the relationship between service providers and the clients/customers. In fact, I think that licensing requirements for real estate agents should be relaxed or eliminated... but that is for another blog post (please save the comments on licensing for the post I'm sure will follow soon).

But, as a REALTOR, which promotes the ethics of its members, I can't see a way to reconcile dual agency with fiduciary responsibility. How can we represent two opposing parties and keep both of their best interests at the forefront? Obviously, we can work towards a win/win situation, and personally I try to do that anyway. But, when push comes to shove, and when a problem arises, what is good for one party will often be bad for the other. If there is a financing problem, and the buyer needs more time, but the seller may be better served to move on, or there is an inspection problem, and the buyer should move on, but the seller needs THIS buyer, the agent WILL be in a position that requires them to pick which party they are going to truly represent.

Obviously, we go through many transactions that don't have these issues. In fact, the majority don't have issues. But, the point is that I seldom get a memo at the beginning of a deal saying that I am entering a troublesome situation. Usually we only know we have a problem when we are in the midst of stepping in it. At that point, if we are "representing" both parties, we already have a problem. What does one do then? Pick a side and call another agent in to help? But, the original agent already knows more than they should about the other party. Not a good solution.

The bottom line is that if we, as REALTORS, are to truly serve our clients needs above our own, we need to begin by not allowing dual agency among our ranks. Then we need to spread the word that REALTORS are leading the charge for ethics in real estate transactions.

Walk the talk.

I look forward to your ratings and comments.

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