Why Dual Agency Should be Rare

J Philip Faranda December 23, 2008

In light of this post by the Somers team on Dual Agency I feel compelled to share my thoughts on the practice. I can only speak about it from my own knowledge of the practice in New York, so agents in other states might get limited value from my thoughts.

When I list a house, I am hired by the seller to be their advocate. I work for them. They are my client. They hire me  because they feel that I have the best chance of bringing them a buyer. But if I do bring a buyer myself, they have utterly no desire for my allegiance to switch or be compromised in any way.

If I show the listing to someone without their own agent who calls on a sign or ad, they are not my client. They haven’t hired me, they are told I work for the seller, and if they want to go forward, they will sign disclosures that clearly state that I represent the seller, my client. If they ask me to represent them as well, the only answer I can truthfully give them is that I can’t represent them.  Even if they ASK, I cannot. They don’t become my client with a verbal request.

If they want their own agent, I tell them that they can go get one to represent them. But I cannot compromise my loyalty to my existing seller client. Does this mean they won’t work with me? No! People value competence and honesty. Everyone whom I have sold my own listings to since 2005 has done so with the understanding that I don’t work for them. But they feel comfortable enough to go forward anyway.

So how can dual agency occur? Only with two existing clients who want to do business with each other. For example: You list your home with me. You are my client. It sells. You then decide that you want me to represent you in your purchase of your next home. Common enough? Lo and behold, I show you another one of my listings and you decide you want to buy it. A conflict now exists. They are my client. You are my client. Aside from withdrawing the listing or you hiring a buyer agent, the only solution is for all parties to consent to dual agency. Have they lost 100% zealous, bulldog advocacy? Yes. Does it compromise their confidence in the transaction? Evidently not, because they have a relationship with me, and that trumps dumping a deal into the lap of someone unfamiliar with the transaction or the principals. Another plausible example of dual agency would be when a buyer I have been working with as a buyer agent for a while chooses to engage one of my listings.

This is rare. And it requires the informed consent of the principals.

I think many cases of dual agency are misnamed, because listing agents believe that buyers will only buy the listing if the agent promises to be dual. But that isn’t really where a client relationship comes from. Moreover, it is strictly semantics, it tempts fate if an issue arises, and can potentially cause unneeded liability.

For the record, I am fine -in theory- with dual agency in this context because a) it is already legal, b) the principals know me and I know them, and c) good will and respect typically trump the doubt and suspicion that is the acorn for the need for representation to begin with. Another benefit it shares with double ending your own listing with customers is that you have more control over the details of the transaction and you don’t have to chase another agent down for updates.

But this all boils down to understanding what makes a client and what makes a customer. Understanding that makes us better advocates, and an agent in command and confident of his or her role will be of better use to, and attract more, clients and customers alike.  

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