Dual agency and the 'hogs' who love it
By Glenn Roberts Jr., Monday, July 20, 2009.Bookmarking Sites
Inman News columnist and Realtor Teresa Boardman digs into the real estate dual agency issue in her column today, "Romancing the 'hogger' " (click here to read).
She explains that the "hogger" is the listing agent who ends up representing both sides of a real estate deal -- collecting the entire real estate commission (minus the listing broker's share).
She writes, "When I went to the classes that I needed to get my real estate license I remember the story the instructors told about the lucky agent who got the 'hogger,' or both sides of the deal. They painted a picture of the hogger being something to strive for because the agent gets the entire commission and does not have to split it with a buyer's agent."
Some states prevent agents from representing consumers on both sides of the deal (the practice of dual agency is sometimes referred to as "double dipping" or "double ending").
In some cases different agents from the same brokerage office will represent the buyer and the seller in a transaction.
A common argument by critics: "You wouldn't want your lawyer to represent the other side in a legal dispute."
Is dual agency ever a good thing for consumers? Are consumers still largely in the dark about dual agency and what it means? Will the practice of dual agency ever be wiped away completely from the real estate industry?
Flickr photo by Sheep purple.
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Submitted by Deb Counts-Tabor on July 20, 2009 - 5:50pm.
Oregon allows disclosed limited agency (dual agency), and there are no less than 3 times my buyer clients must sign that they understand I am within my rights to represent both them and the seller. I have them sign the paper, as required, but I TELL them - I don't do dual agency, except in very limited circumstances. I have not yet figured out how I can get what my buyers want (which honestly, is the best house for the LEAST money) and what my sellers want (TOP dollar), nor have I had any agent convince me.
Submitted by Lenn Harley on July 21, 2009 - 5:47am.
YES!
Consumers are still in the dark. Otherwise IDX would not have been so successful.
Lenn Harley
Broker
Homefinders.com
http://www.homefinders.com
Submitted by (Fort Worth Real Estate Guy) on July 21, 2009 - 7:49am.
I personally dont like double dipping. I will hand it off to another Realtor in our office. It is the best for the parties.
Mike Pannell
Nu Home Source Realty LLC
817-509-1400
http://www.nuhomesource.com
http://www.nhsfortworth.com
http://www.nhsdallas.com
Submitted by Michelle Carr-Crowe, ABR, ALHS, ASP, CDPE, PME, SRES on July 21, 2009 - 9:56am.
As the daughter of a real estate veteran, I agree that few agents have the integrity, skill sets and finesse to make dual agency work well for all involved.
However, in today's dark and difficult market, dual agency handled properly by an experienced and skilled real estate consultant (notice the qualification language there) is a tool that can help both parties succeed where two separate agents might give up.
We all know lazy agents. We all know part-time agents with licenses as a "side business" to their real job. We all know agents that are mere paper pushers that do whatever their buyer or seller says rather than share the painful truths and facts that would help them face reality and actually achieve their core goals.
It isnt' easy, and it often isn't even a matter of "hogging" as we all know when the deal is most challenging, both parties look to the dual agent to come up with an effective solution (and often the money differential) to keep it together.
I, and my mother before me, often found that the best agent who would actually persevere to get a difficult job done was the dual agent--and the best, hardest-working, skilled agent willing to take on that job is the one in the mirror.
Blessings & Aloha,
Michelle C. Carr-Crowe and the Get RE$ult$ Team of Altas Realty
Your San Jose Lynbrook and Cupertino Schools Experts and
Your Family's Real Estate Consultants for Life
For RE$ult$ ... Just Call ... (408) 252-8900
www.michelleju
Submitted by Rich Johnson on July 21, 2009 - 12:46pm.
My personal feeling is this is an agency to stay away from even during the good times. Agents who participaete in this type of agency today are asking for trouble. If there is a problem the dual agent has just set themselves up to be sued by both parties.
I just just referred a Buyer to another agent after the Buyer decided he wanted to write an offer on my listing. Sure it cost me about $12,000 but at the end of the day I don't have to lose sleep over who the principles involved in the transaction felt who did or did not represent them.
This is a business of planting seeds. You decide whether they are good or bad.
Rich Johnson
360-319-3267
http://www.johnsonteamrealestate.com
http://www.johnsonteamrealestate.com/blog/
Submitted by Ileri Ogunfiditimi, REALTOR® on July 21, 2009 - 1:59pm.
I agree with Michelle that if the agent is skilled to perform dual agency then there's nothing wrong with it especially once the proper disclosures have been made. From a profit-minded perspective, practicing dual agency can be one method utilized by an agent to increase gross revenues (i.e gross commissions). But the agent really has to be very familiar with agency law -and there are resources available to help in that regard.
A dual agent also has to be skilled in the fundamentals of negotiation. But again, this can be learned as well. Bottomline: Dual agency is doable and really represents an advanced level of real estate brokerage practice.
Additionally, it's still very possible for an agent (dual agent) to offer a brokerage fee to cooperating agents while retaining the opportunity to broker both sides of the deal. I think that the biggest gripe against dual agency is the potential for agents to "hide" listings from the brokerage community or mass marketplace(i.e. pocket listings).
Anyone who practices commercial real estate knows that this still happens today, albeit unfortunately. Now, keeping pocket listings - that's "hogging!" Dual agency practiced ethically and responsibly, however, can be a win-win for all parties involved. Real estate is still a relationship business and agents are constantly placed in the position of providing or acting as a transaction mediator.
So why not "broker" the deal if you've got the skills and established relationships to do so.
Ileri Ogunfiditimi, REALTOR®
Ileri Ogunfiditimi, LLC/Jobin Realty
7825 Tuckerman Lane, Suite 201
Potomac, MD 20854
Direct Dial (240)403-3400, Ext 742
Direct Fax (866)283-7840
Email: ileri@ileriogunfiditimi.com
www.ileriogunfiditimi.com
www.jobinrealty.com
Submitted by Paul Howard on July 21, 2009 - 6:17pm.
Statements such as these make me literally sad for the industry.
"Dual agency is doable and really represents an advanced level of real estate brokerage practice."
"As the daughter of a real estate veteran, I agree that few agents have the integrity, skill sets and finesse to make dual agency work well for all involved"
The writers of the above statements obviously don't see any ethical problem with it if you 'do it right'.
I also see a statement: "I don't do dual agency, except in very limited circumstances. I have not yet figured out how I can get what my buyers want (which honestly, is the best house for the LEAST money) and what my sellers want (TOP dollar), nor have I had any agent convince me." This statement gives me a little hope.
Still the industry as a whole wants to believe that dual agency is not wrong if it is 'disclosed'. Whether they think it is wrong or not, an agent serving both sides serves neither and gets paid (often) twice as much for doing so.
NAR studies show that 'disclosure' is often not given when it should be and many time - not at all. But even when it is given - how does that make serving 2 sides with conflicting interests ok?
Why is there even a discussion about this? Only because a large part of the industry wants the system to be the way it is and needs to rationalize it.
From a consumer perspective - it is wrong.
Paul Howard, Broker
NJHomeBuyer.com Realty
Cherry Hill NJ 08002
Submitted by Ronald Ogden on July 21, 2009 - 7:26pm.
QUOTE: "A common argument by critics: "You wouldn't want your lawyer to represent the other side in a legal dispute."
But we aren't lawyers, are we. We are in the business of bringing buyers and sellers together in a mutually beneficial way. And, honestly, most of my clients aren't out to pay the least amount of money or sell for the highest dollar amount: most want a fair deal all around.
Now, I haven't done many double-sided closings, but I am perfectly comfortable with the ones I have done and am confident that I have treated both parties fairly and ethically. My clients also feel like they have been well-served.
If I feel confident that I can ethically complete a double-sided transaction, I am branded as unethical! While those who admit that they are unethical and hence cannot fairly represent both sides are, paradoxically, the ones lauded as having higher ethics!
Ron Ogden, Associate Broker
RE/MAX Metro - Salt Lake City, Utah
Salt Lake City Utah Real Estate
Dwell Utah Real Estate Blog
Submitted by Ileri Ogunfiditimi, REALTOR® on July 21, 2009 - 8:51pm.
Paul, you're right. I don't find a problem with dual agency and do believe that some agents can do it, have done it, and are currently doing it effectively (Ron Ogden is a good example). But those who are practicing it, are comfortable doing it and shouldn't be barred from doing so just because another agent (or colleague) isn't comfortable with managing both sides of the transaction. The practice of dual agency is truly an individual agents' choice that equally depends on the factors involved in the real estate transaction.
So many of us like to think that we're looking out for the consumer by not providing them with options, but instead choosing what's "best" for the consumer because they are so "naive" or "unsophisticated" in real estate matters. Personally, I don't believe that. In fact, there are some consumers who are very sophisticated in real estate (more than some agents), but have absolutely no interest in practicing real estate brokerage as a career.
Besides dual agency having the potential to increase an agents' share of the commission, it also presents another way for consumers to do business and consummate the real estate transaction. Discussing and disclosing dual agency with all of the parties involved is a demonstration of an agents' professionalism, confidence, and skill which is why I also refer to it as being an advanced level of brokerage practice because it does involve some complexity.
But that complexity doesn't preclude a skilled agent from practicing dual agency successfully. Real estate brokerage is a very individualistic business in the sense that no agent possesses the same level of performance, skill, knowledge, talent, or creativity. The Tayloristic approach of "One Best Way" doesn't work in our industry. What works for one agent, may not work for another.
So if one agent isn't comfortable with practicing dual agency that's okay. There's nothing wrong with that. And equally, there's nothing wrong with an agent who is comfortable practicing dual agency from doing so as well. In the end, whether an agent utilizes dual agency or not, truly depends on the needs and desires of the parties involved in the real estate transaction.
Ileri Ogunfiditimi, REALTOR®
Ileri Ogunfiditimi, LLC/Jobin Realty
7825 Tuckerman Lane, Suite 201
Potomac, MD 20854
Direct Dial (240)403-3400, Ext 742
Direct Fax (866)283-7840
Email: ileri@ileriogunfiditimi.com
www.ileriogunfiditimi.com
www.jobinrealty.com
Submitted by Mark Jacobs on July 22, 2009 - 1:32pm.
I been doing Dual Agency for over 9 years and with full disclosure to all parties there is nothing wrong with dual agency..
Augusta Real Estate
Submitted by Ron Redlich on July 22, 2009 - 2:34pm.
It may be in the best interest of both buyer and seller to work with an agent who is motivated by a full commission.
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Submitted by Ask the Kansas City Broker on July 22, 2009 - 6:36pm.
Disclosed dual agency is one thing. I think many times the consumer does not know what he is doing much less understand what dual agency is. Can most real estate people explain the difference between dual agency and transaction agency? I don't think so. Our laws are what they are...getting better but still not there yet.
Submitted by Lenn Harley on July 23, 2009 - 4:41am.
Representing both parties "fairly and ethically" does not fulfill the duty of fiduciary to either party.
I bet that each party, buyer and seller, believes that the agent/broker managing the contract is representing their interest.
Little do they know.
Lenn Harley
Broker
Homefinders.com
http://www.homefinders.com
Submitted by Nick Chucales on July 23, 2009 - 7:07am.
For those that believe that dual agency can be handled by the utmost professionals, I usually respond with "would you want your lawyer representing the other side in a legal dispute". But we have a poster that has pointed out that we are not lawyers. He is right we are not lawyers, but we still have a fiducary duty to our clients and how can you provide each party with complete representation? It is still a sales transaction and each side expects the best price, the seller wants the highest price and the buyer wants the lowest price. To use a different analogy, would you disclose to a car salesman the amount you are willing to pay for a vehicle and expect him to get you the best deal? The car salesman works for the dealership and you work for the seller!
Submitted by Ellen Walker on July 23, 2009 - 1:04pm.
How big is he? He's so cute.
Submitted by Jay Thompson on July 23, 2009 - 2:16pm.
Sigh.
"It may be in the best interest of both buyer and seller to work with an agent who is motivated by a full commission."
Uhm, I find myself motivated by client service. I hope anyone that ever reads this will come yank my license if it takes a "full commission" to make me serve my clients best.
"Bottomline: Dual agency is doable and really represents an advanced level of real estate brokerage practice."
I don't even know how to respond to that.
I'd love for someone who finds nothing wrong with double-siding a transaction to explain to me how it benefits the CLIENTS. Not you, not your pocketbook. How does dual agency benefit the buyer and seller you represent? Directly and tangibly.
I'm listening.
Jay Thompson
Broker / Owner
Thompson's Realty
Blog: www.PhoenixRealEstateGuy.com
.
Submitted by aaron williams on July 24, 2009 - 6:02pm.
I think there is a greed factor when an agent represents both parts of a real estate deal. I think the agent is of dis service to the end consumers and they don't get the true answers and true negotiating power as oppose to 2 agents representing both sides. Its a bad idea.
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Submitted by Larry Estabrooks on July 26, 2009 - 6:07am.
What concerns me is that all these licensees hold themselves out as an "agent" when in fact most are licensed under the Agency/Brokerage that employs them as sales people, sales associate, what-have-you.
I challenge anyone to point out a licensing jurisdiction in North America that gives a license to real estate salespeople wherein they are called "agent". I further challenge anyone to point out a licensing jurisdiction wherein the consumer may enter into a contract of real estate "agency" services with any real estate licensee licensee other than a the holder of the Agency or Brokerage license.
Far too many real estate licensees and real estate writers have little or no understanding of agency law as it applies to agency in real estate. And until they understand it is less likely that consumers will understand. And until real estate consumers understand they will be unable to make an informed choice about agency.
Larry Estabrooks,
Licensed Independent Agent
(and I have the license to prove it)
Submitted by Patsy Snyder on July 26, 2009 - 11:35am.
In Texas, we have the "Intermediary" status where two Realtors from the same agency may work together with one representing the Seller and one representing the Buyer. I, however, prefer to represent one side and have an agent from another agency representing the other. I am a "bottom liner" who believes in prevention.
Submitted by George Walsh on July 26, 2009 - 7:16pm.
We have disclosed dual agency in NJ. Most buyers prefer to have an agent other than the listing agent to represent them, however some do not. In a different market when homes were selling in a day or few hours (yes it happened often and not that long ago. I am sure many of you remember.) it was more frequent that buyers opted for dual agency with the listing agent often assisting the buyer with the purchase. In those times it was probably a true benefit to the client/buyer. There appeared an equal benefit to the client/seller as well.
In this slower market we still find many instances where both buyer and seller are well-served by dual agency.
Some of the postings here seem to assume that there is an automatic unfairness on the part of the agent who practices dual agency. This feeds the public perception that real estate agents are, in general, lacking in professionalism. This is a symptom of having a large number of weak agents in the business.
As for the agent collecting both sides of the commission, few here seem to recognize that it is actually more work. The commission is, in fact, EARNED on both sides. To perform dual agency properly (and that inherently means ethically), the practioner MUST work with two clients. To make sure you are properly representing each side, you have to work harder by the very nature of the situation. It is extra work - I hesitate to say "double" work. It seems that those who have NOT performed dual agency are the biggest critics, quick to accuse the dual agent of some sinister motive.
Many comments here are focusing on the selling price as somehow a conflicting matter. The buyer wants the lowest, the seller wants the highest, are the statements. In the end it is the price at which a ‘willing buyer’ and a ‘willing seller’ reach agreement that achieves the sale. There is a suggestion that the dual agent is somehow fooling both parties to agree to an unfair price. This suggestion also casts the real estate industry in a negative light. Are those commentators saying that we are so untrustworthy that we cannot be fair to all parties? Are we not charged with that obligation even when there are separate agents for buyer and for seller? Are they saying that an agent is inherently trying to take advantage of the other side?
And references to trial attorneys representing both parties in a law suit as rationale for dual agency being unworkable are NOT APPROPRIATE! In NJ we are “cooperating brokers” when representing a buyer to a seller. We are not called ‘adversarial’ brokers. We are supposed to facilitate the process and reach agreement, not dispute resolution.
Lastly, do not forget that, in NJ anyway, but I bet in other states also where dual agency is accepted under state law, the seller must also agree to dual agency. If either party does not agree then there cannot be dual agency.
I realize it can be a complicated matter to handle. And I realize there are many agents who choose not to work as a dual agent where it is permitted. That is their choice. I can understand why an agent would choose not to because of the reluctance to be careful and make the extra effort to be fair to two clients. I hope those agents forego acting as a dual agent not because they believe they are incapable of fairness.
George Walsh
Keller Williams
Summit, N J
Submitted by Ki Gray on July 28, 2009 - 4:04pm.
I think two agents in the same office being on different sides of the deal is ok. In Austin Keller Williams has a huge share of the market so the situation is somewhat common. I personally don't like it when agents do both sides. Its not a pressing issue but I think its hard for us to say "You really need a realtor working and fighting for you" but then in the case of dual agency you basically dont have an agent fighting for your side. It would be interesting to see how many lawsuits are from dual agency situations.
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Submitted by Steve Hysinger on July 31, 2009 - 8:03am.
Trouble waiting to happen.I have done it many times in the past but do not anymore. I personnaly have not had a problem but just witnessed a very experienced agent get sued. Dual representation is mostly about greed. How can you possibly represent both sides in total fairness and do the best possible job at obtaining the best price possible for buyer and seller ?
Submitted by Rebecca Kohout on July 31, 2009 - 11:00am.
While dual agency is legal in Texas, it's unauthorized in my office. How can anyone claim to treat both parties fairly under these circumstances? I've done a few in my 15 years as a realtor, but I can't say that if given the opportunity, I would do it again. And by the time you explain how much your hands are tied in a dual agency situation, what sane client would want to be part of that transaction?
Submitted by Steve Castaneda on July 31, 2009 - 11:34am.
Dual agency is tough to do. I personally believe that a responsible real estate agent does have the ability to remain objective in the negotiations between buyer and seller in a real estate transaction.
Have I done it before? Yes. It's very rare, but I have represented both sides. I would say my biggest fear is that I know at least one of my clients has that lingering thought in the back of their head, "Are they really representing my best interests"?
Which is why we have a policy to not do dual agency, but will represent the side of the transaction that came first. If we found a buyer for a listing, then we'd refer out the buyer.
The referral fee we charge is higher, however. We feel that if we're referring you a ready, able and willing buyer prepared to buy a home, that the higher referral fee is justified.
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Submitted by Jacqueline Cliff on August 14, 2009 - 6:14am.
I personally think that dual-agency should not be allowed. Honestly if I have a buyer contact me directly for on one of my clients listings, I hand them off to another agent that I trust to do a good job.
There is no way you can truly represent both parties in the transaction and work for both of their best interests at the same time.