Romancing the 'hogger'
Realtor Notebook
By Teresa Boardman, Monday, July 20, 2009.
Flickr image by lumaxart.When I went to real estate school I learned about the "hogger." That is the sweet deal that our instructors told us would happen if we represented both the buyer and the seller. Stories were told about unrepresented buyers calling listing agents and those agents selling the listing to the buyer. It is also called dual agency.
Agency is an issue I think about often and every six months or so I write a consumer-oriented post about it on my blog. I keep the Minnesota agency disclosure in each of my listings so that I have it on hand at all times if I need to show the listing to a buyer.
The idea of agency is a consumer education challenge. Consumers do not understand real estate agents, real estate companies or agency. The whole Realtor and commission process is a mystery to most buyers. They just want to see the house, and they don't care about who gets paid what or how.
Buyers who are interested in purchasing foreclosures seem to be the least educated of all. Some may get the idea of buying a foreclosure from late-night TV and infomercials. They go from listing to listing and call the agent on the sign; many believe that they will save money on a home purchase by not engaging a buyer's agent, and some are unaware that they can have their own agent.
They may even think that the listing agent knows more about the property. With the foreclosures none of us know much about them. The banks use a kind of nondisclosure and no one asks the people who lived in the home questions about it.
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.
There is an upside to being a dual agent in that it pays well, but there is also a downside. The dual agent cannot act in favor of or on behalf of one party or another.
When buyers ask me to write an offer for them on one of my listings they either get a no, or a lecture or both. I have had transactions where I have represented both parties, but I will only do it if I know both parties well enough so that I understand their needs and I trust them. ...CONTINUED
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Submitted by Susie Blackmon on July 20, 2009 - 12:55am.
I spent too many years in law firms to ever think dual agency was anything but 'problematic.'
Susie Blackmon
http://www.google.com/profiles/Susie28751#about
Submitted by Deborah Knuckey on July 20, 2009 - 4:02am.
I refuse to do dual agency and wish it were illegal as I think it is part of why buyers and sellers treat agents with suspicion. I think it is unreasonable for an agent to think they can be perceived as completely neutral when a dispute between buyer and seller arises and unethical to try. When I have an unrepresented buyer wanting to see a listing, I refer them to a colleague.
Submitted by Benjamin Dona on July 20, 2009 - 4:11am.
Very well put Teresa!
Unfortunately, in our area of Southwest Florida, too many brokerages and agents see it as a right in order to make the big bucks. They do nothing to discourage the uninformed buyer that they will not save any money (or very little) by using just one agent to represent both sides. It's sad, but greed (and stupidity) still rules the day for some in our industry.
Florida Real Estate | Southwest Florida Blog
Submitted by Robert A. Hulme on July 20, 2009 - 4:30am.
I agree with everyone so far, Buyer Agency is very important to every transaction. Both parties should have their own representation, nothing but problems are created and ethics will almost always be questioned when dual agency is used. It is too bad when "Hoggers" want to have the big payday, they make us all look bad in the end.
www.UtahCountyHomes.ws
www.UtahCountyRealEstate.us
Submitted by Missy Caulk on July 20, 2009 - 5:00am.
Heck I got questioned recently when my daughter wrote and offer on one of my listings. I didn't know the buyers, she didn't know the sellers.
I don't discuss with my team anything about my sellers only share the new listing.
The buyers found the home on the internet.
Missy Caulk
Ann Arbor, MI
Missy@MissyCaulk.com
www.AnnArborRealEstateTalk.com
www.SearchAnnArborHouses.com
Submitted by Bruce Hahn on July 20, 2009 - 5:09am.
American Homeowners Grassroots Alliance
The solution is simple. Just outlaw dual agency. It is not worth the mistrust and confusion it breeds among consumers. Between this practice, media exposes regarding anti-consumer legislative/regulatory initiatives by real estate broker organizations, and the inadequate level of training required to obtain a real estate license in many states, it is no wonder that real estate agents/brokers are held in low esteem by consumers.
Bruce Hahn
President
American Homeowners Grassroots Alliance and
the American Homeowners Foundation
www.americanhomeowners.org
Submitted by Daniel Rothamel, the Real Estate Zebra on July 20, 2009 - 5:23am.
I REALLY wish that states would begin to strike down the ability to practice single-agent dual agency. One major hurdle, however, is that the powers that be within the industry won't back such a restriction on the practice. Old habits die hard, even when they are better for the consumer, apparently.
To quote fellow Virginia REALTOR Jim Duncan, "Who benefits from dual-agency? The agent."
http://www.RealEstateZebra.com
Submitted by Bruce Hahn on July 20, 2009 - 5:42am.
American Homeowners Grassroots Alliance
The solution is simple. Just outlaw dual agency. It is not worth the mistrust and confusion it breeds among consumers. Between this practice, media exposes regarding anti-consumer legislative/regulatory initiatives by real estate broker organizations, and the inadequate level of training required to obtain a real estate license in many states, it is no wonder that real estate agents/brokers are held in low esteem by consumers.
Bruce Hahn
President
American Homeowners Grassroots Alliance and
the American Homeowners Foundation
www.americanhomeowners.org
Submitted by Becky Washam on July 20, 2009 - 5:57am.
It is a tricky subject. Since sometimes there is no way around it ensure all parties know what they are getting into.
Flower Mound Homes for Sale
Frisco Real Estate
Galveston Beach Homes
San Antonio Homes for Sale
Submitted by Judy Orr on July 20, 2009 - 8:17am.
I swore the last time I had a dual agency situation (I tried talking the buyer out of it) I would never do one again. The price negotiations were OK, but the inspection was what started very uncomfortable feelings.
Although I was trying to make the buyers and sellers know I was just trying to pass on information and requests by the other, I could tell they were both getting upset. And the inspector the buyer used was new in the business and it was one of the worst, longest and most ridiculous inspections I've ever been on. That's another story in itself!
Judy Orr
Classic Realty Group
Oak Lawn Homes For Sale
Submitted by Paul Howard on July 20, 2009 - 8:24am.
I don't think all parties always know what they are getting into. I also don't think the issue will be solved by focusing on dual agency/representation problems to the exclusion of the issue of the common practice of sellers and their agents thinking they can decide what the company the buyer has selected to represent them will be paid.
Take care of the money problem. Buyers should be required to negotiate with their agent the commission the agent is to recieve. It should be totally divorced from the agreement between the seller and their agent and there should be no mention of 'offers of compensation in the MLS'.
If the DOJ would stop the practice of "offers of compensation" (as opposed to cooperation) via the MLS that would be a good beginning.
This position stirs up a lot of folks. See this recent(and ongoing) thread on Trulia.
http://tinyurl.com/mezd4z
Paul Howard, Broker
www.NJHomeBuyer.com Realty
Cherry Hill NJ 08002
Submitted by Louise Jordan on July 20, 2009 - 8:27am.
Allow me to ask a question in the form of a scenario. A REALTOR is working for a buyer as a buyer's agent. The buyer is shown several homes offered for sale by other firms. The buyer then becomes interested in a property listed by his agent after working with the agent for several days. Obviously the agent knows quite a bit about the buyer by this time in the agency relationship. If the agent then refers the buyer to a colleague, ending the agency relationship with the buyer, and no longer represents that buyer but now represents the seller, who is hurt? The agent now has to disclose all his information about the buyer to his seller. Wouldn't dual agency be preferable in this case allowing the agent to keep the confidentiality of both sides?
Submitted by Lindy Rider on July 20, 2009 - 9:30am.
If you had a Buyers Rep form, your relationship will not sever just because you refer them to a colleague. You still owe the buyers confidentiality. The agent in no way owes the seller the confidential information that the buyer gave to him/her. So, dual agency or not, you still owe the same fiduciary duties to your buyer, whether you are continuing your relationship with them or not.
Dual Agency is a slippery slope. I would certainly be in favor of seeing it go away!
Submitted by Louise Jordan on July 20, 2009 - 9:55am.
To Lindy Rider regarding the comment above:
I could not continue my buyer's agency relationship and represent my seller fully. Also in NC the Exclusive Buyer Agency form does not allow the buyer to have two agents at one time so referring the buyer to a colleague would have to end our agency contract. The buyer agency relationship could not continue and therefore neither would confidentiality.
Submitted by Jon Boyd on July 20, 2009 - 11:22am.
In Michigan we have designated agency which becomes "hidden" dual agency in a large percentage of transactions.
We even have major brokerages use an agency disclosure form to tell a buyer they are a designated buyer's agent and then they don't sign a designated buyer agency contract. Thus... undisclosed dual agency.
(In Michigan designated buyer agency requires a written contract, buyer agency does not.)
The lies and misinformation runs rampant, in part because of the anti-consumer efforts of our state and local associations.
There are even "teams" in our market where different members of the team represent opposing interests. Try that in professional athletics and somebody goes to jail.
It goes something like this:
A consumer signs a designated seller agency listing contract with one member of the team and then someone else from the "team" signs a buyer to a designated buyer agency contract. So not only is the brokerage a dual agent, the "team" is a dual agent.
Almost like dual-dual agency.
Some of our local board members even use the term "buyer agent" for their designated buyer agents. There is clearly a difference in the law, why wouldn't they just tell the consumer the truth?
With all this institutional dishonesty why would a consumer ever trust a REALTOR?
The only way to create credibility in this "profession" is to return to common law agency and enforce meaningful disclosure of agency relationships.
In Michigan the contrived agency (designated agency) is a sham and the agency disclosure statement is a sham.
Jon Boyd
Broker/Manager
The Home Buyer's Agent of Ann Arbor, Inc.
1908 W. Stadium Blvd. Ann Arbor, MI 48103
Ann Arbor Buyer's Real Estate Company
Exclusive Buyer Agency in Ann Arbor
Submitted by Jim Hale on July 20, 2009 - 11:32am.
I agree with Lindy Rider. You can't fix the liability issues by simply referring a buyer to a member of the the same brokerage. You certainly can't fix it by referring the buyer to a member of your own team.
The obligation of confidentiality does not go away (at least in the State of Oregon)...ever -- no matter what.
Buyers often call listing agents out of ignorance of our system. But they also do it because they want to go to the best source of info on the home.
And, by the way, I've never heard of "a hogger".
If I represent both sides, I do twice the work and retain all the liability. I deserve to be paid more.
Only a buyer's agent, smug in their role, would call someone handling both sides, a hogger.
Submitted by Jim Duncan on July 20, 2009 - 6:18pm.
The interesting thing that I find every time the single agent dual agency debate comes up is the fact that there rarely seems to be someone willing to defend the practice.
It seems the only ones defending it are the Realtor "Leaders" - their refusal to address agency, or even examine it - is a tacit acceptance of the practice.
Unfortunately, there has yet to be a progressive enough group of Realtor leaders - even in the so-called progressive Commonwealth of Virginia - who has the gumption and integrity to address this where it needs to be addressed. I've tried. "Leadership" likes the status quo.
Until the Realtor Associations and PACs step to the plate, we're going to be left railing on blogs about what a terrible thing it is.
I'm doing what I can - not doing single agent dual agency, and am a partner in a firm that specifically has "no single agent dual agency" as a founding principle.
What are you doing?
Jim Duncan
434-242-7140
http://www.realcentralva.com
http://www.nestrealtygroup.com
Realtor/Blogger
Submitted by John F Sullivan on July 20, 2009 - 6:43pm.
With the morass of statuatory agency laws in the 50 states, it is nearly impossible for any of us to make a comment on agency that would be true in all states.
What our association is proposing is a national agency disclosure statement and certification that would inform the consumer of the various types of agency available and let the consumer decide whom they want to represent them. Given the knowledge that there are licensees that are affiliated with agencies that will exclusively represent the buyer or seller or single agencies that will represent buyers or sellers but never both in the same transaction, the informed consumer is never going to choose dual agency. Add a certification statement to the disclosure statement where the consumer indicates he understands his/her choices and the licensee certifies presentation to the consumer and you have very good chance of an informed consumer.
With the disclosure and certification mandated by Federal legislation, including enforcement with real penalties, we may be able to recover some trust of real estate professionals.
President,
National Association of Exclusive Buyer Agents
www.naeba.org
Associat Broker
Buyer's Edge Co., Inc.
Bethesda, MD
Submitted by Lenn Harley on July 21, 2009 - 5:46am.
What this industry needs is a few more "Edinas".
Lenn Harley
Broker
Homefinders.com
http://www.homefinders.com
Submitted by Kevin Tomlinson on July 21, 2009 - 5:53am.
In Florida as our default agency is a Transaction Broker. We don't represent a buyer or seller. Only an "agent" can rep a buyer or seller (done in a special form that most Florida companies frown up) because anything an agent says or does, the client is responsible if you are acting as the client's agent.
A "client" relationship is technically created by the customer signing a form. If we act as a Transaction Broker we don't have "clients," we have "customers."
HOG,
Kevin Tomlinson
Miami Beach Real Estate Resource
South Beach Real Estate Blog
About Miami Beach Florida
Submitted by Mollie Wasserman on July 21, 2009 - 1:23pm.
The problem is not that the consumer doesn't understand agency. It's that they can't buy the concept of being truly represented by a salesperson being paid by commission.
The traditional sales model made total sense when our total role was to move the product. However, in the 90's, our state and national associations asked us to not just move the product but also act as "fiduciaries" without once examining how we were being compensated.
As I said in my book, no matter how it's presented or dressed up, there is an inherent conflict of interest when a real estate professional is expected to act as a fiduciary, providing objective, unbiased counsel to clients while being paid by commission.
No amount of ethics training will change this reality: a consumer can't buy into an agent giving them objective counsel when how much they are paid, or whether they are paid at all, is totally dependent on the action of the client that they are advising.
Mollie W. Wasserman
Founder: Accredited Consultant in Real Estate®
Course and Coaching Program
Direct Phone/Fax: (508) 613-9101
http://www.TheConsultingTimes.com
Author: http://www.RippingTheRoofOffRealEstate.com
Submitted by Debra Sinick on July 21, 2009 - 3:05pm.
Great discussion. I find dual agency to be a disservice to the consumer. I do not do it, and will not practice dual agency. The buyers and sellers who think dual agency is not an issue are usually the ones who end up having an issue during the transaction process.
Think about it. The buyer wants to spend the least amount of money and have the most repairs done and the seller wants the most money and to do the least amount of repairs, two very different agendas.
If the real estate industry wants to be perceived as a professional group, then we need to act professionally and advocate for one party, and one party only.
Debra Sinick, GRI,CRS
Windermere Real Estate/East,Inc.
Kirkland, WA
425-260-3219
www.eastsiderealestatebuzz.com
www.eastsiderealestatebuzz.com
www.debrasinick.com
Submitted by Keith Labrecque on July 21, 2009 - 7:53pm.
I said it before and I'll say it again! (And again, apparently!)
I'm ALL FOR dual agency.
I'm all for having the prosecutor defend me in my criminal trial.
I'm all for having my future-ex-wife's lawyer represent my interests in my adversarial divorce.
I want to hire the used-car dealer to inspect & report to me on the condition and all defects in that nice cream-puff car he's selling, before I decide to buy it.
I'm a pro sports player and want the team's salary negotiator to help me negotiate my salary with the team.
I want the poker player across from me to advise me on my betting strategy for each hand.
I even want Kim Jung Il to be my negotiator on nuclear proliferation.
Like I said, I want a dual agency whenever * * * I * * * buy or sell a property.
I want that listing agent to know everything about my strengths and weaknesses in the negotiation, including my financial limits and how much I just HAVE to have that property! And if I can't have dual agency, I suppose I;ll have to settle for second best. I'll have my buyer's agent disclose all the pertinent information about me to the seller's agent. That is a poor second best... another person in the chain of communication... who may fail to communicate clearly all my weaknesses to my adversary... woe is me... what a miserable lot I have...
I'm ALL FOR dual agency.
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The spider wants to have the fly "over for dinner", too. He certainly can maintain his unbiased professionalism, according to him!
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Um, remind me why I, the consumer, would want it? And remind me why lawyers (of all the honest people!) are BANNED from dual representation? Aren't they the ones who make up the laws? What's wrong with it ? ? ? ? If LAWYERS can't be trusted with dual agency, help me with this please, how can Realtors be so trusted in an adversarial relationship? (Inquiring minds want to know!) Lawyers have ever so much more ethical and professional training, after all.
;>P
Keith Labrecque
TwoMaplesProperties.com
p.s. if no one is doing dual agency, then SOMEONE has to take the other half of all those transactions, no? Or are there somehow fewer transactions in the end? If dual agency is banned and the number of transactions stays the same, just WHO will be the beneficiary of all those could-have-been-dual half-transactions? Certainly it will all wash out in the end? Or will some new agency be created just to soak up those potential transactions and all their glorious profits and keep current hoggers out in the cold, profit-wise? So is all the self-serving rationalization and justification seen for what it must be - short-term greed?
Submitted by Keith Labrecque on July 21, 2009 - 8:06pm.
Oh, yes, I was wondering if the term 'Hogger' was perhaps a reference to a profit-fat pig clients being brought to the slaughter?
Put another way, who better for trusting (and hog-tied) clients to take advice and representation from than someone who has every motivation to make this particular deal happen? And is pretending that they are impartial? Or in denial believing that they actually ARE impartial? Who's zooming who?
If I am interested in buying a property that is listed by my Buyer's Agent, I surely am in a pickle, aren't I? I can fire that agent, who now knows everything about me and my negotiating position, and get another, ROLF! at the sense that makes. Can I insist the seller be assigned a new agent for my negotiations? Perhaps from another company? Do I get to choose that agent? ROLF Again! Or does my agent, who is undoubtedly going to select the representative that maximizes his/her chance of a quick payday? Inquiring minds want to know!
Keith Labrecque
TwoMaplesProperties.com
Submitted by Kevin Crosthwaite on July 25, 2009 - 10:30am.
In New York, presenting a Disclosure form to a prospect typically elicits a response “I have never seen a form like that before from any Realtor. I am not signing it! If Agency Law was actually practiced and upheld, an increased level of trust, respect and professionalism would be injected into our industry. Double Hoggers are those agents that have listings on MLS with no pictures, don’t return agents phone calls etc. If the consumer at large understood representation, everyone would benefit.
Kevin Crosthwaite
kevin.crosthwaite@elliman.com
Submitted by Nancy Fennell on July 29, 2009 - 2:35pm.
I am never been a believer in "absolutes" and outlawing anything, including dual agency is one of them. Sometimes there is a real need for dual agency when used properly. If you have been in the business as long as I have you have assisted many buyers and sellers, and if you are good at your job, then you have helped those buyers and sellers more than once. Sometimes a real estate agent can perform in a fully informed dual agency situation better than someone who has no trust or history with the parties. Because you are a "trusted" consultant or advisor, you can put a real estate transaction together without the adversarial situation that can sometime arise between a passionate seller, buyer and two passionate agents. So before we outlaw dual agency, I suggest we educate our buyers and sellers (if we have not already) and let them decide.
Nancy Fennell
nfennell@dicksonrealty.com
Submitted by john barry on August 21, 2009 - 12:22pm.
Jack Barry: 415 235 7897
jackbarry99@gmail.com
...When I was a kid...our family never talked about sex or money at the supper table....How impolite!..
Today, agents are still that way, about money...
A typical listing, in SF, on a $100,000 property, carries a 5% commission... the typical agent would rather pocket $5,000, as a dual agent, than take $2,500, and see another agent take $2,500.. That "twin killing" is enough to lead people to squeeze anywhere it seems will help close the deal, too much so.
I pre-discuss this with the seller, and we usually agree, that I will not also act as an unrepresented buyer's agent. I WILL act to protect them from mistakes made out of ignorance. I will not let them breech any term of the contract that I would have written for their signature. I will give them all the data on recent sales, and current competing properties. I will not advise them on what to offer, or how to disadvantage my client.. I do only take the 2 or 2.5% for the "listing agent commission. I do also charge my seller an extra fee for all the extra work that I do, but never more than 1/3 of what a buyer's agent would have pocketed. In that case, the seller is saving 2/3s of the missing buyer's agent commission, and I point that out to the buyer, as well as the seller.... so that both principals are aware of who is netting what... Some call this "transactional agent"... I call it "Facilitator"...
I expressly cite all things a "buyer's agent can do for the buyer, that I cannot. I cite the only clear benefit to the principals as the saving of 2/3s, or more of the 'buyer agent commission'.
I do think that if a "Fully Disclosed Dual Agent" is taking the whole "commission pie", they are being patently greedy, to put it mildly.
Finally: I do not believe that there can be such a thing as a "Dual Agent", anymore than there can be "a square circle"...
One of the prime requirements of being an Agent, is to be totally loyal to the principal, and their goals. The seller wants the top dollar, the buyer wants 'bottom dollar'. A "Dual Agent" is going to have to betray the interests of one OR the other, if not both.
The only reason that "Dual Agency" is legal..is due to the lobbying of the big brokerages, from what I can deduce.