Entry by Lester Langdon

Dual Agency Disclosure Fails Homebuyers


Although some states ban the practice, called dual agency, in which the same real estate broker represents the buyer and seller in a real estate transaction, most states have settled for a kind of disclosure Band-Aid that doesn’t work well for consumers.

It’s a little like the warnings on cigarette packets about the dangers of tobacco that really don’t make much difference to those who really want to smoke.

The problem is — and all real estate agents understand this — when consumers find a house they want to buy, they become so emotionally involved in the purchase that they barely listen to the legalities because they are focused only on two things: price and purchase.

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I'm not sure how it works in states that have transaction brokerage or any of the other substitutions for dual agency, but my perception is that these don't really do the buyer justice either, nor do they solve the problems presented by dual agency. The original problem back in the days when all agents represented the seller was that buyers thought that "their" agent represented them. What's the difference now in a state where the agent simply facilitates the transaction and doesn't represent anyone? The buyer and/or seller will still consider "their" agent to be representing them no matter what the law says.

The bottom line is that because there are two sides to the transaction, these misunderstandings will continue to occur. All of our state laws are designed to provide disclosure and it's up to us, as agents, to explain how things work to our respective clients.

Arkansas, where I work, is a dual agency state. I personally try not to represent both sides in a transaction, although the way our state law is written, my company may do so. All of our contracts (listing agreements as well as buyer representation agreements) are with the company not the individual agent. If a buyer doesn't permit dual agency, I'm not even allowed to show him/her and homes listed by other agents in my company. And one of those properties may just be "the one" which best meets my buyer's needs.

Ultimately, I think that it's our job to properly disclose (and explain) our relationships, whether dual agency or some other arrangement. It's not just a question of obeying the law, but rather of doing the right thing.

Mollie and I had an interesting conversation on this the other evening (over a glass of wine - face to face!) - and she pointed out something I'd never thought of... that when you revert to a transaction broker (never mind dual agent), you're basically being paid double to abandon your fiduciary role and simply be a functionary/paper-pusher! If we, as ACREs, believe that our value is in our fiduciary role, then transaction broker (never mind dual agent) status is completely contrary to our business model.


This page contains a single entry by Lester Langdon published on July 15, 2011 10:54 PM.

Using Banks And Lending Institutions To Introduce Home Buyers To 'The ACRE Way' was the previous entry in this blog.

How does this affect Arizona ACRE's? is the next entry in this blog.

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