BLOODHOUNDBLOG.COM

There’s always something to howl about

Real estate is a crazy buffet

As the only member of the blogroll who regularly attends conferences like NAR and Inman Connect — or perhaps as the only one who is willing to admit it — it is my special privilege to glean some nugget from these events that I think will be of interest to the BHB readership.

As I was pondering the take away from this year’s Inman Connect in NYC — was it something the excellent David Carr said, or was it watching the 5 Realogy CEO’s get up on stage to talk for half an hour while saying precisely nothing?  — it turns out I got scooped by Bill Geist from CBS Sunday Morning.

Geist, unlike myself, got tickets to the Top 100 dinner…

Related posts:
  • Social Networking, the pork chop and my Cuban accounting professor
  • Fire Up the Echo Chamber, This Time It’s Hot.
  • Russell Shaw podcast wish list . . .

  • 44 comments

    44 Comments so far

    1. [...] This post was mentioned on Twitter by Tom Hunter, Real Estate Ninja. Real Estate Ninja said: Real estate chop suey http://bit.ly/ijBJn5 [...]

    2. John Kalinowski January 17th, 2011 10:39 am

      I don’t get it. I like Chinese food too, but what’s the connection to real estate?

    3. John Rowles January 17th, 2011 10:53 am

      “Analyzing humor is like dissecting a frog. Few people are interested and the frog dies of it.” — EB White

      That said, I was trying (and apparently failing) to convey the sense of “I just went to basically this same event” that I felt when I watched the story about the Chinese Restaurant Industry’s confab the Sunday after I got home from Inman.

      The desire to be recognized inside of an industry — and the anti-climatic futility of hanging the plaque on the wall when you get home — is, apparently, universal.

    4. John Kalinowski January 17th, 2011 11:28 am

      Ahhh, got it. I watched the video and thought it was cool how the winners seemed truly honored and excited about their awards. Many of them probably came to this country with nothing, and worked their tails off to get where they are. Not many American’s would be willing to sleep in the back of their store, or live in the basement to make their business work.

      There’s a Chinese carry-out place down the street from me, and the husband and wife who own it are there every time we stop in, taking orders and slaving over a greasy wok. Their children literally grew up in the small waiting/dining area where you first walk in, often riding on tricycles and playing with their toys at the small table.

      The work ethic these people exhibit is truly amazing to me, unlike the general laziness that exists in our business where agents will sit around their office drinking coffee and complaining about how bad things are.

      The guy who is doing the interviewing in that video seemed to be sort of making fun of the people and the industry, when we really should hold these people up as examples of what truly built our country.

    5. Greg Swann January 17th, 2011 11:42 am

      I’m sure the competition at Inman was heated for the Biggest-Hat-Fewest-Cattle award, but the award category that matters most to me, as a matter of comedy, is Most-Imaginary-Testicles. Even so, it would be a real improvement to disclose this information to the attendees, perhaps in very small type on the back of the name tags: “If you’re not a vendor trolling for suckers, you are a sucker.” Would’t hurt attendance in the least, I’m certain.

    6. John Rowles January 17th, 2011 12:59 pm

      @Greg

      Yeah but…

      As a “vendor”/consultant looking for customers I can actually help, I gotta go where they go. Whether or not they end up “suckers” depends on who they choose to work with, why and the results they get.

      BTW — The “Biggest Real Testicles” award goes to the lady from a start-up that connects buyers to sellers, dating site style. She had the balls to sit on a stage in front of a couple thousand brokers and say that her plan is to dis-intermediate them.

      (I’d pass on the name, but I didn’t take notes and Inman, lamely, has no on-line resource for after the show research.)

    7. John Rowles January 17th, 2011 1:15 pm

      @John

      There is good Chinese food and there are good real estate brokers. Some of them are probably in the same strip malls.

      If there is a travel agent, chiropractor, or dentist in the mall, you can bet that they also go to equally insular industry events.

      Sooner or later everyone gets to go to Vegas, but the Chinese Restaurant people have taken the concept to its logical conclusion and invested it with all the pomp, regardless of the circumstance.

    8. Greg Swann January 17th, 2011 2:10 pm

      > As a “vendor”/consultant looking for customers I can actually help, I gotta go where they go.

      I completely understand. Unfortunately, the people at any trade show are the people who are least-needed back at the office — suckers by the Peter Principle. Ideal candidates to receive awards for being useless, though, so it all works out.

    9. Jim Klein January 17th, 2011 2:21 pm

      > BTW — The “Biggest Real Testicles” award goes to the lady from a start-up that connects buyers to sellers, dating site style. She had the balls to sit on a stage in front of a couple thousand brokers and say that her plan is to dis-intermediate them.

      Makes sense to me, which is why I’m (still!) waiting for an explanation of why dual agency is inherently wrong.

    10. Greg Swann January 17th, 2011 2:45 pm

      > an explanation of why dual agency is inherently wrong

      Nothing is inherently — that would be ontologically — morally wrong. Moral wrongness is necessarily teleological. Why should you not represent both parties to a real estate transaction? Because you cannot do so in such a way that you can assure both parties, a priori, that each party will regard their interests as having been satisfactorily championed, post hoc. To the contrary, the only honest way to undertake dual-agency is to disclose to both parties, in advance, that they are likely to be disatisfied with your representation, after the transaction has closed. The benefit to making such a disclosure is that the buyers will understand, if they have not understood until then, why they should seek independent representation.

      The type of “brokerage” John is talking about would not entail representation, hence it would not be dual-agency. But: As soon as one of her buyers says, “Is it better for me to close at the start of the month or at the end?” the whole dating-site idea goes out the window, “better” being a concept that implies teleology, which, in the context of a real estate transaction, implies representation — since any sort of advice creates an implied agency.

      Note that if a buyer were to ask the same question to a dual-agent, whatever answer that agent made must necessarily disadvantage one party to the transaction or the other — “better” for the buyer is “worse” for the seller. There is no equitable way to resolve this or dozens of other conflicts, so dual-agency should — shoulding is teleology — be avoided unless there is no other way to achieve the objectives of both buyer and seller. (An example: If you are the only gold-mine broker in Alabama, you may have to advise both parties to the sale of a property.)

      Is that adequate, or do I need to go into this in greater depth? If I do, can I ask you to wait until you have had a chance to be represented in a lawsuit by the same attorney representing your opponent in that same suit? That may make the matter clearer.

    11. Jim Klein January 17th, 2011 4:02 pm

      Sorry, it’s not adequate but I’m not seeking to cause problems. I’m going after the principles and I understood John’s example to be different than dual agency, but I think the same principles apply. The main difference between this lady and DA are the charges for the service, at least as I see it.

      I’d say that a done good deal is better than a not-done perfect deal. This resolves all issues such as when the signing should be. Some people are deal-makers and you are assuming, wrongly IMO, that a deal is necessarily adversarial. Naturally, I prefer the “mutually beneficial” approach!

      “Disadvantage” begs too many questions IMO. It’s disadvantageous to have a listing agent in the first place by one imaginary standard, but of course it isn’t in the real world. And I’m not addressing the appearance of impropriety; I’m addressing actual impropriety. If there’s no impropriety, presumably rational participants will understand this. As I read you, your claim is that impropriety is impossible in this situation and I still fail to understand why.

      All attorneys are officers of the Court, so there is a sense in which you ARE being represented by the other side in many matters. This can turn out to be so, both legally and practically.

      If I can find you the perfect car that you dream of, and match that with someone who’s selling that car (and so likely receiving less of a price than you’d be willing to pay), what in the world could be wrong with me hooking the two of you up and receiving payment for the value I’ve added? And if I’m really good at that, what would be wrong with me setting it up beforehand, as a business? That’s the principle involved to me, and it occurs to me that home buying and selling involve even more idiosyncrasies than a car, thereby allowing me to add even more value to the transaction.

      Sorry if this is the wrong place for this, and I’ll be happy to save it for another time if you wish. I guess basically I find that you’re either claiming that a person can’t understand what another person actually values, or claiming that the person shouldn’t charge for this keen ability. I know that you don’t really believe either of those, so I’m at a loss as to why you believe they can’t apply to one person representing two people on opposite sides of a RE transaction.

      If I were shopping in Dayton, I’d call Teri in a second to represent me. Are you saying that would be a mistake?

    12. Jim Klein January 17th, 2011 4:08 pm

      Oops…obviously I meant, “As I read you, your claim is that propriety is impossible in this situation and I still fail to understand why.” And sorry to distract John’s thread, but I guess his title sort of captures it!

    13. Greg Swann January 17th, 2011 5:52 pm

      > the appearance of impropriety; [...] actual impropriety

      I have zero time for this, which is why I haven’t dealt with it, but if you ruminate on those two clauses, you will discover a whole host of epistemological errors, one of which results in your failure to understand why no one can faithfully serve the interests of both parties to any transaction.

      Here’s a hint, which we might call the Peikovian Fallacy: “Actual impropriety” implies an objective mental state — an ontological impossibility.

      I told Cathleen over the weekend — in discussions of actual, existential selflessness — that I’m not sure if even you understand what I’m talking about, at the essential root. This is a key locus — the ontological impossibility of an objective idea — which, in this context, means a non-subjective idea. No such thing. Cannot exist. Not a logical impossibility, impossible as such, in the actual ontological nature of the objects considered.

      Work on it. It’s all fascinating — much, much larger than this one pedestrian issue.

    14. Jim Klein January 17th, 2011 9:37 pm

      You’re making my point, not yours…or maybe no point! Firstly, one of the few things the Peikovians have mostly right is raising Rand’s take on objectivity to Tenet status. It’s about the interaction, neither intrinsic nor subjective. Okay, they’re so overwhelmed by this revelation that they take it all the way to Subjective! Bottom line on this…there’s no such thing as a non-personal idea, but there most surely are non-subjective, or objective, ideas. You’re chock full of ‘em, as is everyone to some extent. If you deny, then you are throwing out correspondence wholesale, not to mention objective epistemology.

      “Actual propriety” in this context would be rendering service to a party that’s as capable as any other. You have not shown, nor even begun to show, why this is a priori impossible if the fiduciary represents both parties. I’m not saying you’re wrong necessarily, but I am beginning to suspect it. Hey, even leap years go wrong every few centuries.

      I think maybe you’re associating the representation with aggressiveness. There’s some sense to that, especially in an adversarial proceeding like a trial, but that misses the context, or goal if you will. That context/goal is success of the sale or purchase, with “success” being measured by the values of the parties involved. This seems trivially obvious to me and you haven’t explained why a third party with intimate familiarity of the values of both parties cannot possibly represent both of them optimally.

      Everything else is tangential but that last clause. Why couldn’t I be that car broker with propriety? Why couldn’t Teri serve me honorably if the best place for me happened to be one of her listings?

      “I see nothing but individuals out there.” Tell me why Teri or Robert couldn’t do this properly, and I’ll understand.

    15. Jim Klein January 17th, 2011 9:46 pm

      > no one can faithfully serve the interests of both parties to any transaction.

      Doesn’t every honest jobber and manufacturer’s rep do exactly this?

    16. Greg Swann January 17th, 2011 11:01 pm

      >> no one can faithfully serve the interests of both parties to any transaction.

      > Doesn’t every honest jobber and manufacturer’s rep do exactly this?

      They work for the seller only, never for the buyer. Same for your drivers. Same for car salesmen.

      Same for bartenders, incidentally, and when they upsell you on the top-shelf liquor, they are not working in your interests, no matter how much you tip. On the other hand, when the bartender “buys” you a drink, he is almost always betraying his agency to the owner of the bar — seemingly to your benefit, but actually to induce you to tip him even more.

      The arrangement you keep conflating with agency is simply brokerage, the introduction of buyers to sellers. As soon as a broker in this sense offers any sort of advice or service beyond simple introduction, an agency relationship has been created. In English common law — derived in its entirety from the Roman law of domestic slaves — an agent owes a fiduciary duty to the principal, with two important implications: The agent is obliged to put the principal’s interests ahead of all others, including his own, and, in consequence, the agent’s actions taken in behalf of the principal are held in law to be the actions of the principal — the doctrine of vicarious liability.

      Fides in Latin is faith, fidelity, and it is not possible — existentially — for one agent to be faithful, simultaneously, to two principals in the same transaction. Not only is it an agency violation for me to represent both buyer and seller in the same one transaction, I regard it as an agency violation for me to represent two different buyers who are separately pursuing the same one property. I can name other common circumstances that seem to me to be slam-dunk violations of the fiduciary duties of agency.

      I am not without an interest in my work — the fact that I am compensated for my efforts creates, de facto, an agency-with-an-interest. But, by having explicitly or implicitly created an agency relationship, I am obliged to put the interests of the principal ahead of all others, including my own. That means I can’t induce a principal to close if that would be against the principal’s interests — think back to the Patron-pushing bartender — nor can I possibly represent the interests of both the buyer and the seller, both “ahead of all others.”

      It may not be the case that anyone measurably gets the hind-tit from my performance, but it is not possible to behave in such a way that neither party can perceive that I have given the other party the edge. To the contrary, the most likely outcome from dual-agency is that both parties will feel themselves aggrieved, thinking — usually correctly — that the agent was most interested in doubling his own compensation, rather than in serving the interests of either principal.

      In any case, “ahead of all others” cannot possibly mean “ahead of all others except for the other guy.” In practice, all dual-agency normally means is that the agent is screwing one or both of the principals in order to get paid more — again like the bartender stealing the boss’s liquor to goose his tips.

      Even if you insist on indulging the idea of an imaginary “ideal” performance, it remains that the seller will have had the benefit of 90% of my good advice before the property even hits the market — that is, before the buyer has heard word one out of my mouth.

      In reality, most listing agents suck eggs — a fiduciary violation, in my opinion, even if the property does not sell — but whatever effort the listing agent bestirs himself to undertake is explicitly intended to advantage the seller and to disadvantage the buyer. When the buyer then consents to a so-called “disclosed dual-agency,” what the buyer is actually doing is ratifying his own pre-planned despoiling, with the only alternatives being the agent’s betrayal of the seller, instead, or his betrayal of both buyer and seller in his own behalf.

    17. Greg Swann January 18th, 2011 12:05 am

      > You’re making my point, not yours

      I missed this when I replied to your other comment.

      This entire comment is rife with epistemological errors.

      > but there most surely are non-subjective, or objective, ideas.

      False. An idea is never anything other than an attribute of an individual, living, cultivated human mind. An idea cannot ever have an objective — non-subjective — existence. Ideas can be expressed or encoded or embodied in non-subjective matter, but they are not ideas in that form. Ideas exist only in the active thoughts of ideators — individual, living, cultivated human minds. This is ontological fact, which you will readily concede once you make a careful distinction of the many, many conflated, definition-swapped meanings of “objective.” To have a non-subjective existence means to exist apart from the mind, and ideas do not ever exist apart from the mind.

      > “Actual propriety”

      “Actual propriety” could only mean an idea of justice that is somehow more than an idea. The idea of justice — anyone’s idea of justice — turns on ideas of law, which themselves turn on ideas of ethics — teleology. All of these are never anything other than ideas, which, as before, cannot possibly have any non-subjective existence. This is a much bigger point than dual-agency, but it is a well-worn path to error: What I want is so obvious and so beneficial that it simply must be objectively true — which would mean true even if no one knows it’s true, even if no one is capable of discovering truth, even if no human mind is left in existence. The universe is what it is, but any idea is never anything other than an attribute of an individual, living, cultivated human mind. The map is never the territory, Jim, no matter how closely correspondent it might be to that territory.

      > Hey, even leap years go wrong every few centuries.

      A perfect example of the invalid and hence erroneous conflation of the map with the territory. A “year” is a creation of the mind. The transit of the stars can be affected by active human agency — albeit not yet — but the transit of the stars cannot possibly be in error. Truth, falsity, accuracy, error — among many, many other ideas — are never anything other than attributes of the mind, having no non-subjective existence. We conceive of and calculate years for our own convenience, but the earth was circling the sun long before we existed as a self-aware species, and long before we ever figured out what the hell was going on. The earth does not rotate on its axis and revolve around the sun — itself in constant motion — to serve our interests, and the fact that that the rotation of the Earth does not happen in precise rhythm with its revolutions around the sun is not an error but simply a physical fact. Moreover, “leap years go wrong” not because the universe is in error but because our calculations of those physical facts are imprecise and the physical forces in play are degrading the calculated performance through time. Nothing in reality has “gone wrong,” but reality has changed enough that the map, never perfectly correspondent to reality to begin with, is less so through time. Leap years and leap seconds are not correcting the territory, they are correcting the map.

      (Incidentally, before Gaius Julius Caesar hired an Egyptian — that is, Greek — geometer to craft the Julian calendar, the Romans “intercalated” with leap months, so erroneous were their concepts about reality.)

      Whenever I use the word “ontology,” what I am referring to is every actual action, attribute and property of the object considered, irrespective of any ideas anyone may have about it. If you have trouble understanding anything I say, now or ever, carry your question back to the object. When you find yourself insisting I must be wrong, it will be worth your while to ask yourself if you are arguing — subjunctively — that some idea of yours must somehow instead be a real action, attribute and property of the object considered. The name for this process is reification — conflating ideas with entities — and, properly understood, it is the diametrical opposite of philosophy.

      I need to go to bed. You’ll make a better use of both my time and yours if you argue with me less and think more about what I am saying. You understand my thinking better than anyone I know, but you are still lost in Plato’s Cave, insisting simultaneously that concepts can exist apart from the mind and that real objects are somehow transformed by the power of your thinking. Neither idea is true, but, as luck would have it, both errors originate in the inversion of the truth. Turn both ideas over in your mind and the scales will fall from your eyes, I promise.

    18. Teri Lussier January 18th, 2011 5:10 am

      >The desire to be recognized inside of an industry — and the anti-climatic futility of hanging the plaque on the wall when you get home — is, apparently, universal.

      On my office wall I have a cheesy and now bedraggled ribbon that proudly proclaims that I’m the “World’s Best Mom”. Odd as it might sound, that little ribbon kicks my butt on a regular basis.

      Peer or industry recognition in and of itself isn’t such a bad thing, IF, the recognition comes for true accomplishments, not just booty-kissing back-slapping camaraderie, AND the recognition comes from people who are truly in a position to determine what makes a true accomplishment. What I’ve discovered about RE industry conferences is that everyone (else) comes away happy. Which I’ve determined is very good because when RE industry conference goers ain’t happy, ain’t nobody happy. Keep those folks lubed up and shaking hands. I got work to do.

    19. John Rowles January 18th, 2011 6:30 am

      @Teri: I’d put a lot more stock in your “World’s Greatest Mom” ribbon than I would any plaque-mounted crystal chotskie handed out at a convention.

    20. Jim Klein January 18th, 2011 7:49 am

      This is efficiency of a sort, since you’ve managed to pack so many errors into 2 comments. I’ll try to respond in one. Your clue that you’re off-base might be the time you spent tearing apart a simple quip about leap years, intended to be nothing but kind. Did you think I was seriously implying that leap years “go wrong”? As to your suggestion that I think more about this, that’s an existential impossibility. Better maybe, but not more.

      I’ll devote but one paragraph to objectivity. Your claim is that ideas don’t exist and this is terribly wrong. Epistemic existents are existents. You might as well claim that waves don’t exist and only the water does. The point of objectivity is that there is an /existential/ relationship between the external existents and the internal conceptualization of them. Yes, of course those concepts exist only within an individual mind and yes, of course they are of a nature different than what we call “physical” existents. But they exist nonetheless, and this is self-evident. Water is not rocks and waves are not avalanches. Big deal. I’ve written a fair amount about correspondence being metaphysical (as opposed to epistemological); maybe that would help. But I’d rather take this up another time, so we may focus on your error about agency. Besides, I already noted the error of confusing “personal” with “subjective.”

      Like most of the educated thinkers with whom I debate, you have the disadvantage of having been required to learn the current agency paradigm in mandated licensing courses. You of all people should readily see the joke of, “The agent is obliged to put the principal’s interests ahead of all others, including his own…” This is a legal fantasy of course, and ontologically impossible. Luckily it doesn’t really matter, since we understand the point.

      Or do we? As I already said, I’d take the point as “serving the principal’s best interest,” and for this I’m even willing to stretch it to, “serving the principal better than the principal could possibly be served in any other manner by any other person.” IOW, optimally. That’s a mighty high standard, and technically no agent but one could ever reach that level on any particular transaction. IOOW, I am using a far higher standard than even your legal one. I find this a legitimate approach logically, since if you can’t defeat the extreme, you surely can’t defeat the ordinary.

      I don’t care what the law says; I care about reality. A judge must recuse himself is he’s had a relationship with one of the parties; this hardly means that it’s existentially impossible for the same judge to offer a ruling on the matter that’s strictly in accordance with the law. Indeed, you keep bringing up how it all /appears/ to the parties…besides being manifestly false, it just doesn’t matter. Virtually every RE sale ever made /appears/ to be imperfect to the principal—the seller figures he could’ve gotten a drop more and the buyer figures he could’ve paid a drop less. Big deal again; that’s human nature and the relevant question is whether better agency could’ve produced a better outcome.

      Your claim simply put is, “If the agent represents both parties, then it can not be optimal for both.” This is just terribly wrong and in one fell swoop, you are denying the existence of capable middlemen. This is the crux of your error, I’m sure, and you are confusing legal mumbo-jumbo with…well, with existence. I have little to add to this paragraph as far as principle is concerned, so I’ll just clarify your misunderstanding of two examples that you brought up.

      Many manufacturer’s reps represent several sellers to one (or a handful) of large buyers. Their “loyalty” therefore is to the large buyers—if they don’t serve them well, they won’t be repping anything to anyone. But as you note, they represent the seller too; they are “manufacturer’s reps” after all. You can talk about fiduciary responsibility and vicarious liability till the cows come home, but the FACT of the matter is that the best manufacturer’s rep is representing BOTH parties optimally. Until you address this point, you are doing nothing but evading the central issue.

      “None of this is theory to me.” I already explained that I was witty enough to not own the cars most of my life and dealt with Owner-Operators. So even legally as well as existentially, I put willing buyers together with willing sellers. I’m confident that a poll would say I did this optimally for all participants, which is to say that no other person could’ve done better for the seller nor better for the buyer. So much for “appearances.”

      This is the nature of ALL so-called middlemen and you are claiming that because a law says such-and-such, that therefore reality goes along. But even in theory, you should realize the folly of this. All production ultimately reduces to information, and there’s simply no reason that one person can’t have sufficient information about both sides to a transaction to optimally broker the transaction for BOTH parties.

      THAT is the issue and you’ve danced all around it. Eloquently, I admit, but you still haven’t addressed the simple focal point. No doubt this explains why you still haven’t told me why Teri or Robert couldn’t honorably, properly and optimally represent me as a buyer of a listing they have. If your theory is right, then it should instantiate there, don’t you think?

    21. Jim Klein January 18th, 2011 7:58 am

      > Keep those folks lubed up and shaking hands. I got work to do.

      Very picturesque, Teri. Maybe I won’t call you!

    22. Teri Lussier January 18th, 2011 8:42 am

      >@Teri: I’d put a lot more stock in your “World’s Greatest Mom” ribbon than I would any plaque-mounted crystal chotskie handed out at a convention.

      I do too. :)

      >Very picturesque, Teri. Maybe I won’t call you!

      As long as the people I don’t much respect keep liquored up and shaking hands at every convention they can boogie at, I’m able to keep to my own business unmolested by busybodies, and I like it that way. But, if you prefer to do business with a slaphappy convention-pro, you probably do need to call someone else Jim, ‘coz I ain’t that Huckleberry.

    23. Greg Swann January 18th, 2011 9:46 am

      > Your claim is that ideas don’t exist

      False. I said:

      An idea is never anything other than an attribute of an individual, living, cultivated human mind. An idea cannot ever have an objective — non-subjective — existence. Ideas can be expressed or encoded or embodied in non-subjective matter, but they are not ideas in that form. Ideas exist only in the active thoughts of ideators — individual, living, cultivated human minds. This is ontological fact, which you will readily concede once you make a careful distinction of the many, many conflated, definition-swapped meanings of “objective.” To have a non-subjective existence means to exist apart from the mind, and ideas do not ever exist apart from the mind.

      And:

      All of these are never anything other than ideas, which, as before, cannot possibly have any non-subjective existence. This is a much bigger point than dual-agency, but it is a well-worn path to error: What I want is so obvious and so beneficial that it simply must be objectively true — which would mean true even if no one knows it’s true, even if no one is capable of discovering truth, even if no human mind is left in existence. The universe is what it is, but any idea is never anything other than an attribute of an individual, living, cultivated human mind. The map is never the territory, Jim, no matter how closely correspondent it might be to that territory.

      To which, without quoting any of this text, you aver as follows:

      > Yes, of course those concepts exist only within an individual mind

      By which means you insist I am wrong by agreeing with me in less-precise language.

      You again:

      > You of all people should readily see the joke of, “The agent is obliged to put the principal’s interests ahead of all others, including his own…”

      You want to buy a house, but the house you want to buy has potentially-toxic mold contamination. You know nothing about mold, but I’ve seen it so many times that I can smell it from up the street.

      My choices:

      1. Disclose the mold and queer the deal.

      2. Keep my mouth shut and get paid.

      As your agent I am morally obliged to put your interests first, even though it means dashing my own interests entirely. That’s agency, and its codification in statute law means nothing. The law of agency precedes statute laws by two millennia, at least, as an ontologically-consonant teleological principle of human social interaction.

      Putting your interests ahead of my own is what any sane person wants from an agent, and what any sane employer wants from an employee — which phrases are identical, since an employee is an agent of the employer.

      Swap it around: I represent you as the seller of the property, and we both know about the mold. A buyer asks me to represent him in the transaction as a dual-agent.

      1. My fiduciary duty to you as the seller is to get the property sold.

      2. My fiduciary duty to the buyer is to protect that buyer from making a grievous error.

      Whether explicit or implicit, agency creates a contract — just as tenancy does — and my contractual obligation is to put the principal’s interests ahead of all others, including my own. I cannot possibly put the interests of two opposing principals ahead of all others — ahead of each others’ — so dual-agency cannot ever be effected equitably. The examples shown here are extreme and extremely simplified, but they serve perfectly to illustrate both the impossibility of equitable dual-agency and your own failure to think these issues through.

      Please stop arguing and start thinking. I know more about this than any Realtor you will ever meet, but I have a ton of work to do, and I have been more than thorough in discussing these issues. I’m confident you can work things out on your own if you will stop insisting that mere brokerage is representation — and that the universe is what you want it to be.

    24. Chris January 18th, 2011 12:59 pm

      Wow! I do love a wide variety of Chinese food and I never knew there were actual awards for it. Nice stuff right before lunch…

    25. Dan Connolly January 18th, 2011 4:21 pm

      The mold example leaves me scratching my head. As I see it you have only one choice whether you represent the seller, the buyer, both or neither. You disclose the mold to the buyer. There is not an option for keeping your mouth shut and getting the house sold. Your fiduciary obligation to the seller does not include the option of keeping your mouth shut. As a seller’s agent you’re duty is to inform him that he could be sued into the poorhouse for not disclosing this information. To represent his best interest you may have to find the most reasonably priced contractor who is licensed to deal with the mold.

      There is nothing in your argument that has convinced me that dual agency is inherently wrong. When you speak of “putting the interest” of one party ahead of all others, I don’t understand what that even means. You “put” the wishes of anyone that you represent on the table. The other party decides if they can live with those wishes. You can champion both sides of the negotiation to the two parties and they ultimately are going to make up their own minds.

      Most of the arguments I have heard against dual agency are based on the idea that buyer’s agents think that something in their toolbox is going to help the buyer “force” the seller to take less than he would with open transparent discourse, or something in the seller’s agent’s toolbox is going to make the buyer pay more than he wants to, for the house. I think this is just a case of the agent’s delusion of grandeur.

      Remember, for there to be dual agency, both parties have to agree to it. Believe it or not there are a lot of fair people in the world who would not dream of selling their house to someone who is not fully informed of the process.

      Why does dual agency exist? It boils down to the money. The commission is normally less on a dual agency transaction. The parties agree to transparent fair dealings in exchange for a reduced fee. In many transactions this reduction will pay for a mold treatment, or a new septic tank. It can frequently pay the closing costs that neither the buyer or the seller can afford to pay. If everyone is informed and in agreement whats the problem?

    26. Greg Swann January 18th, 2011 4:38 pm

      Hi, Dan,

      Just off the top of your head, what would you guess is the number one source of lawsuits against residential real estate agents?

      Moreover, mold is not the issue, putting the interests of the client first, even against my own interests, is the issue. I know exactly where the SR-303 Freeway is going to be built South of the I-10 in Goodyear, AZ, even though not one whisper of planning has hit the press. Do I owe it to a buyer to disclose that he is considering buying a home that may later be seized by the state?

    27. Dan Connolly January 18th, 2011 5:31 pm

      #1 source of lawsuits? Well I would guess it has to do with dual agency, (since you are bringing it up now ;-)).

      As to the second question, I would say always disclose everything you know to everyone, regardless of which side of the transaction you are on. But that goes along with the fact that if the seller didn’t want me to disclose it as the listing agent, I would not be the listing agent.

    28. Jim Klein January 18th, 2011 6:41 pm

      Here’s Dan—”I would say always disclose everything you know to everyone, regardless of which side of the transaction you are on.”

      That’s me, too. Greg, you simply have not explained how real estate agency is so different from brokerage or repping or jobbing or any other sort of business representation. You clearly seem to put it in the legal-adversarial class, and I just don’t understand why it belongs there and not in the business class.

      Even legally, the distinction is clear. A lawyer would not offer, to a local regulator say, that I have mold in my house if I could suffer penalties for admitting it. An honest real estate broker (broker!) should and would. But please don’t waste your time on legal details, since I’m only interested in the facts of the matter.

      Is a house really such a different class than a car? Than a plane ticket? Who does a travel agent represent, and who should he represent? Why are there so many brokers in the world?

      I’m pretty sure we agree about map/territory stuff basically. So please explain how the territory of buying or selling a house is more like being charged with a crime by the State, than it is like buying or selling a car. Just offhand, I think you’re over-analyzing the map and failing to glance at the territory. I’m completely prepared to concede the impossibility of honest, capable dual agency…just as soon as I see a reason!

      BTW I readily agree that a ne’er-do-well could take advantage of dual agency. But then, he could take advantage of plain single agency too, and many do. Hell, I’m not even arguing about the sanity of being against dual agency; I can imagine various problems, especially on issues involving codified fiduciary duty. I get that, but that’s never been the question. The question has been and remains, why is it impossible for an honorable, capable person to represent both the buyer and seller of a piece of real estate? You haven’t touched that question yet, neither in principle nor in the instance of Teri or Robert…or I reckon most Bloodhounds.

      FWIW, if I have an attorney, that attorney exists (in the legal context) in my stead. He speaks for me, as me. You seem to associate RE agency with that, as opposed to a person seeking to represent my wishes in a single voluntary business transaction. I can easily see how you imagine it that way in your head–no doubt with good reason, I’m sure–but we’re trying to identify the nature of the territory, not judge the nature of the map.

    29. Jim Klein January 18th, 2011 6:55 pm

      Uh-oh, I hope this isn’t trouble…

      > I know exactly where the SR-303 Freeway is going to be built South of the I-10 in Goodyear, AZ, even though not one whisper of planning has hit the press. Do I owe it to a buyer to disclose that he is considering buying a home that may later be seized by the state?

      On the question of whether you owe it or not, see Splendorquest; I think I covered that.

      So what exactly are you saying? Do you view your fiduciary duty to the seller to be not mentioning it? If so, I’m nearly afraid to ask…when is the line of fraud crossed IYO? Is it only when the legal rules say it is? I know that can’t possibly be the answer, so the challenge for you is to explain why that line changes when you represent the buyer as well as the seller. For Dan and me, and I’m bettin’ for Teri and Robert, that line doesn’t change. Your assertion is that this is provably false, that the line /must/ change in the case of dual agency. All that’s missing is some evidence.

    30. Jim Whatley January 18th, 2011 7:32 pm

      Does this mean I don’t get soup and eggroll with my dinner?

      Words have different meaning to people. I used to be a chef. I was taking my 4 year old son to the Whitehouse egg roll. He went around telling people he was going to make eggrolls with President Bush.

      Some people believe the can equal serve both sides.
      I would not hire anyone who is not representing only me. What’s the point.

    31. Robert Worthington January 18th, 2011 7:39 pm

      @ Greg Swann, I do agree with you Greg on your point of view for Dual Agency. I’ll keep this as short as possible, but I’ve operated in WI a dual agency state. With that being said, I believe, like your mentioned Greg, that it’s a morally wrong to put the paycheck above and ahead of the seller. I’ve personally closed dual agency deals and was honest with both parties to the transaction.

      However I must also say, just because some states do not allow dual agency, the same dishonest problem can still exhist. Many times, especially in this economy, my gut feeling tells me realtors are putting their paychecks above their moral duties.

      In conclusion, dual agency or non dual agency, the same problem can still remain.

    32. Greg Swann January 18th, 2011 8:15 pm

      > Do you view your fiduciary duty to the seller to be not mentioning it?

      I would not represent a seller if I knew the home was likely to be condemned for a freeway. But if I did, absent any reliable facts it would be an agency violation for me to disclose the future hypothetical possibility of an unannounced freeway. I would be acting against my clients interests purely as a matter of conjecture.

      Moreover, we will not represent any seller who will not correct all correctable red-flag defects in the property prior to listing.

      > why that line changes when you represent the buyer as well as the seller.

      Because their interests are not aligned.

      > All that’s missing is some evidence.

      Most of category 11 is good, but the pick of the litter is this post, which solves the problem by making the absurdity so plain that no one would proceed with a transaction with a dual-agent:

      The only workable way even to achieve Disclosed Dual Agency is by repeated, overt agency violations against either the buyer or the seller, or each in their turn. In other words, you would have to hint at them what to “order” you to do, and each one of those hints would be a betrayal of the interests of the other party.

      > Here’s Dan—”I would say always disclose everything you know to everyone, regardless of which side of the transaction you are on.”

      He doesn’t actually do this. I know this because he has not been sued to death. I know many, many things about my clients that it would be an agency violation — a violation of my fiduciary duty to the principal — for me to disclose to anyone. The case law of torts has substantially undermined the doctrine of caveat emptor, so we disclose more now than we ever have before. But even now, we are obliged only to disclose matters of material fact. We often buy an appraisal for high-end listings, but we will only disclose it if it works to the seller’s advantage. An appraisal is an opinion, not a fact, and for me to disclose it without explicit instructions from the seller would be an agency violation — a violation of my fiduciary duty to the principal.

      (Note that, if I entered into a dual-agency with a buyer for that home, I would have to disclose that appraisal to the buyer, even though doing so would damage the seller’s interests.)

      > Greg, you simply have not explained how real estate agency is so different from brokerage

      Pure brokerage may create an agency relationship, but anything beyond simply introducing buyers to sellers certainly does. As an example, when you refer a customer to a driver, that may be pure brokerage. But if you make that referral knowing that the driver is blind drunk, you have deliberately misled your customer, and I would regard that as a violation of the implied agency you created by engaging that customer.

      > repping or jobbing or any other sort of business representation.

      Until the idea of buyer brokerage was invented by the NAR to shield listing brokerages from the vicarious liability of sub-agency, all salespeople worked only for the seller. This remains true for every type of sales except residential real estate sales — even though buyer brokerage is in most ways a sick joke — as is documented in my essays on the Divorced Real Estate Commission. When you talk about salespeople who think or act as if they are working for the buyer, you are describing agency violations. Those salespeople are employed by the seller, not by the buyer.

      > Who does a travel agent represent

      Airlines and hotels. Not travelers.

      > Why are there so many brokers in the world?

      To increase the number of salespeople working for sellers. This is why it was done that way in real estate, too, until the dipshit brokers got tired of being sued for undisclosed dual agency.

      > I’m pretty sure we agree about map/territory stuff basically.

      I’m not. Every time you use the word “optimal,” you are describing a mental state — your own — not a matter of fact. As soon as you say the words, “Optimal to whom?” — the error is exposed.

      > why is it impossible for an honorable, capable person to represent both the buyer and seller of a piece of real estate?

      That is not impossible. What is not possible is to do so in such a way that you can assure yourself and both buyer and seller in advance that neither party will feel cheated by a perceived partiality on your part by the end of the process. The transaction that seems optimal to you is almost certain to seem sub-optimal to the buyer, to the seller, or both. This is a matter of existential fact: Dual-agency is by far the most common impetus to lawsuits over residential real estate transactions, and far more buyers and sellers feel aggrieved by dual-agency than ever bring suit over it.

      > FWIW, if I have an attorney, that attorney exists (in the legal context) in my stead. He speaks for me, as me.

      That’s the law of agency in real estate. Qui facit per alium facit per se (who acts through another acts for himself) and respondeat superior (let the master answer). Doesn’t matter if your representative is an attorney or a real estate agent.

      There is simply no way to effect a dual-agency without one or both parties concluding that you acted unfairly to the advantage of the other — because you will have done this, many times. For that reason, dual-agency should be avoided where there is any possibility for the parties to have independent representation.

    33. Greg Swann January 18th, 2011 8:28 pm

      > I’ve personally closed dual agency deals and was honest with both parties to the transaction.

      Me, too, although we stopped doing disclosed dual-agency in 2005 as a matter of brokerage policy. There simply is no way to effect a dual-agency without advising each party, in turn, in ways that disadvantage the other party.

      > In conclusion, dual agency or non dual agency, the same problem can still remain.

      The essence of that matter, for me, is this question: In what light would a plaintiff’s attorney seek to portray this fact pattern? Just because it looks dirty, that doesn’t mean it is dirty. But if it looks dirty, it will be very easy for your client — and a jury — to conclude that your conduct really was dirty. By contrast, by being very publicly scrupulous about putting the client’s interests first, we not only remove suspicions about our motives, we endear ourselves enduringly to our clients — and all their family and friends.

    34. Dan Connolly January 18th, 2011 9:27 pm

      In case anyone missed it, most of my dual agency is at a reduced commission, not really self serving at all. Generally in the 55% range of the original fee. Just a way to serve the interest of my seller and actually sell the property. Takes my interest off the table when it comes to assigning blame or pointing fingers. What do I have to gain? Increased liability and not any significant increase in pay. Shines a light on the fact that it is not really in the Seller’s best interest for me to bring in another agent with his hand out just to protect me from the possibility of a lawsuit. The way I see it I am actually fulfilling my fiduciary duty this way.

    35. Greg Swann January 18th, 2011 10:29 pm

      > In case anyone missed it, most of my dual agency is at a reduced commission, not really self serving at all.

      I did understand this, and my belief, based on the comments you have posted here over the years, is that you are a man of honor in everything you do.

    36. Dan Connolly January 19th, 2011 7:41 am

      That is quite a compliment Greg, thank you!

    37. Jim Klein January 19th, 2011 8:22 am

      I think we’re done arguing. Your point is clear and it’s a simple one—the agent’s knowledge of information that can be beneficial to one party can be detrimental to the other and hence there’s a necessary conflict of interest in representing both parties. That’s a fact and I don’t deny it…it’s one of the reasons brokerage between two parties can be so difficult in any situation. It’s also the reason an honorable broker can be so valuable.

      So you see, I do understand what you’re saying. And I agree that dual agency can be a rotten practice. Now all I ask is that you make a sincere effort to understand what I’m saying. I could go long and deep on this, but in the end it rests on the question you asked—”Optimal, to whom?”

      I covered that from the beginning, in various rewordings:

      >> “Actual propriety” in this context would be rendering service to a party that’s as capable as any other.

      >> That context/goal is success of the sale or purchase, with “success” being measured by the values of the parties involved.

      >> I’d take the point as “serving the principal’s best interest,” and for this I’m even willing to stretch it to, “serving the principal better than the principal could possibly be served in any other manner by any other person.”

      This is what “optimal” means in this context, with extra focus on the middle quote. It does NOT mean “in accordance with a particular set of rules,” nor does it mean “in such a fashion that I can believe that I have done a perfect job by standards that exist only in my mind.” You could argue that the act of being the agent himself does involve this last, but as you so frequently note, that’s not the standard that counts when it comes to agency.

      I’m sorry, but it remains that you have been arguing the map throughout and I have been arguing the territory. The territory is the sale or purchase of real estate and doing it optimally is doing it optimally. You have been making irrelevant distinctions between the “introductions” of one broker and the “agency” of another broker. This is just false-to-fact. In all of these cases the broker is using his knowledge to effect an optimal transaction for both parties. Some manufacturer’s reps even run the invoices through their own office. Point being, the action is much more than “introducing” two parties. Same with car brokers, same with travel agents. You say the travel agent represents airlines and hotels, but not travelers. That’s absurd—the whole point of a travel agent is to arrange things for a traveler that he couldn’t otherwise arrange, whether tour packages or whatever. He receives his monies from the vendors, sure, but he’s representing the traveler and this should be plainly obvious. And of course, he’s also representing the vendors.

      Let’s not forget that in ANY transaction, there is only one source of cash…the buyer. You’ve made this point yourself, but not with the conclusion that therefore the listing agent is representing the buyer.

      The travel agent represents BOTH parties, and does so successfully for both parties. The manufacturer’s rep represents BOTH parties, and does so successfully for both parties. The car broker, the jobber, the bookie who lays off to the casino…all of these are middlemen who add value to the interests of BOTH parties. Some are more direct than others, but the point remains—it is possible for a person to have sufficient knowledge of a particular industry, and hence the transactions instantiated in that industry, to beneficially serve both the buyer and seller of a particular product or service.

      That’s my point, that’s always been my point, and it remains my point. And it remains TRUE, as evidenced by the multitude of instances that exist. I concede everything you say about fiduciary duties, conflicts of interest, problems of disclosure and so on—and I’ll note that these problems exist in every one of the industries enumerated above. Your point, apparently, is that real estate is so complex, so major, so important, that these challenges render the proper operation of dual agency impossible.

      My point is that you are making a class consisting only of map distinctions and not territory distinctions. And my point is further that there exist people who can honorably, properly, beneficially and optimally overcome these so-called conflicts of interest and thereby serve both parties better than the parties could’ve been served by any other person in any other fashion. That’s all—of course there has to be disclosure; of course the parties should understand the position of the agent. Of course, of course, of course. Obviously YOU shouldn’t be a dual agent, and you’ve explained why that’s not for you. But I don’t think it’s right to pre-emptively deny that another person maybe could do it properly, and thereby serve the interests of all parties involved. I have always taken your claim that this is a metaphysical impossibility, and that’s the claim that I believe is false.

      I’ve spoken my peace and I trust you get my point. I’ll be grateful for you noting whatever errors of fact you think I’m making, because I don’t want to walk around holding any errors. But other than that, you’ve made your position clear and I’m sure you will again. I think that renders us done on this. Forward!

    38. Robert Worthington January 19th, 2011 2:12 pm

      See what you started John Rowles!! (smile)

    39. John Rowles January 19th, 2011 3:42 pm

      @RW: Yeah. Who knew?

      For the record, the Woman who stood up and declared her intent to dis-intermediate RE brokers was Tina Fine who has a PhD in Economics from Columbia, and the company is called HomingCloud.com

      According to the cached “About Us” page on Google , Dr Fine’s dissertation was on…”how technology could change competition in the Residential Real Estate Brokerage Industry…By 2009, a perfect storm was brewing to put that vision into action.”

      After several searches in other markets turned up nothing, I found that 10 people appear to have used the good Doctor’s site in NYC, where she is based.

      The current About us page omits the mention of Dr. Fine or her dissertation…

    40. Daamon January 21st, 2011 12:33 pm

      I was expecting more about real estate.

    41. Greg Swann January 24th, 2011 7:55 pm

      > the agent’s knowledge of information that can be beneficial to one party can be detrimental to the other and hence there’s a necessary conflict of interest in representing both parties.

      Representation is not just knowledge, it is knowledge coupled with advice.

      Brokerage is the introduction of buyers to sellers. If brokerage can be distinguished from representation, then brokerage must concern itself solely with existential facts: You want shoes? Mary-Ann and John both sell shoes. As soon as you qualify that information in any way — by commission, as in noting that Mary-Ann is cheaper but John is a chiseler — or by omission, as in failing to disclose that Mary-Ann’s shoes are crap or that John pays you a spiff for referrals — you are engaged in representation, and your behavior should be judged according to the principles of agency.

      > brokerage between two parties

      As long as you fail to distinguish mere brokerage from representation, you’re going to persist in making this error.

      I can name two benefits to quoting any text of mine that you propose to disagree with:

      1. When the language if right there in front of you, you’re apt to see that you don’t disagree at all.

      2. You are far more likely to avoid repeating past errors or making new ones.

      It is not my purpose to be rude, but we’re going over the same ground again and again, even though I’ve said everything I want to say with painstaking — even pain-inducing — precision.

      > but in the end it rests on the question you asked—”Optimal, to whom?”

      Yes, which you will catch onto in the fullness of time.

      >> “Actual propriety” in this context would be rendering service to a party that’s as capable as any other.

      In whose opinion? “Capable” is evaluation, an artifact only of the mind — some one particular person’s mind. Likewise “propriety.”

      >> That context/goal is success of the sale or purchase, with “success” being measured by the values of the parties involved.

      “Success” — also an evaluation — in sales is not simply the achievement of the primary objective, but the satisfactory — also an evaluation — achievement of all of the principal’s objectives. A buyer or seller can get the price he wants and still feel he was cheated. Your evaluation of the transaction might be “success” or “satisfaction,” but one or both of the principals might evaluate matters differently.

      >> I’d take the point as “serving the principal’s best interest,” and for this I’m even willing to stretch it to, “serving the principal better than the principal could possibly be served in any other manner by any other person.”

      If you want to quote me, then quote me. I never said “serving the principal’s best interest,” nor would I. A fiduciary duty requires the agent — or attorney or trustee or employee — to put the principal’s interests ahead of all others, including his own. “Best” again is an evaluation, and evaluations cannot shared from one mind to another. In cases where I cannot distinguish what serves or betrays the principal’s interest, I must seek instructions — the other meaning of “let the master answer.”

      Meanwhile, this

      > “serving the principal better than the principal could possibly be served in any other manner by any other person.”

      Is just more evaluation. You are in effect postulating an imaginary judge of “better” who gets to be a super-referee of “betterness.” This is reification — acting as if ideas have a non-subjective existence — and if you learn to guard against this kind of subjunctivity, you will achieve a permanent improvement in your thinking. There is simply no way — in reality — to say “better” without also saying, “better in whose opinion?”

      > This is what “optimal” means in this context

      “Optimal” does not mean anything absent a particular evaluator, who is himself governing his mind according to a particular, well-established hierarchy of values, none of which can be experienced introspectively by another person. That’s the territory, Jim. That’s the ontology of evaluation.

      > That’s absurd—the whole point of a travel agent is to arrange things for a traveler that he couldn’t otherwise arrange, whether tour packages or whatever. He receives his monies from the vendors, sure, but he’s representing the traveler and this should be plainly obvious. And of course, he’s also representing the vendors.

      This is all simply factually incorrect. Buyer’s agency in residential real estate is the only form of sales where an agent even pretends to represent the buyer. In every other form of sales, the agent always and only represents the seller. Where an agent betrays the seller in the buyer’s behalf — as in giving you a discount you do not qualify for, a very common form of corruption — the agent is actively betraying his fiduciary duty to the principal — the seller. If he’s the kind of oily bastard who will do something like that, he’ll tell you so himself, smugly proud of his lack of character.

      Salespeople are always helpful, Jim. They’re helping you buy the seller’s product. It’s what they were hired to do, and the person who did the hiring is the one to whom they owe a fiduciary duty.

      > Your point, apparently, is that real estate is so complex, so major, so important, that these challenges render the proper operation of dual agency impossible.

      No, the point is that, since the buyer’s and seller’s interests are not aligned, it is not possible to equitably represent both of those interests in such as way that neither party can conclude that the other party was not favored. To the contrary, it is much more reasonable to expect that both parties will determine, in the end, that each of them was cheated by the dual-agency. These would all be evaluations, and you can insist that they are somehow “objectively” incorrect, but the actual fact of human cognition is that you do not have the capacity to evaluate for anyone except yourself. That’s the territory, Jim. That’s the ontology of evaluation.

      > my point is further that there exist people who can honorably,

      Evaluation.

      > properly,

      Evaluation.

      > beneficially

      Evaluation.

      > and optimally

      Evaluation.

      overcome these so-called conflicts of interest and thereby serve both parties better

      Evaluation.

      > than the parties could’ve been served by any other person in any other fashion.

      A phantasmagorical pronouncement delivered ex cathedra: An evaluation that eliminates all concerns with other evaluators.

      > But I don’t think it’s right to pre-emptively deny that another person maybe could do it properly, and thereby serve the interests of all parties involved.

      Until May of 2005, I had done dual-agency several times, with no discernible dissatisfaction. My clients in those dual-representations were investors, very highly skilled at real estate transactions, and I compensated each with one-third of the buyer’s broker’s commission to make up for any perceived loss of zeal on my part. Doesn’t matter. The risk of failure is much greater than the chances for even a perceived success on my part, and my perception of success would be an side-effect, possibly, of the failure on the part of one or both principals to voice a complaint.

      > I have always taken your claim that this is a metaphysical impossibility, and that’s the claim that I believe is false.

      Then you have been arguing with a chimera, since I have never said anything of the sort. What I have said, always, is that it is not possible, as a matter of existential praxis, to effect dual representation in such a way that one or both principals cannot conclude, post hoc, that his interests were betrayed by his agent.

      The truth is, many of the agents I come into contact with cannot represent the interests of even one principal in a way that I would regard as being above reproach. This is why there are only two agents in my brokerage, myself and my wife. I will not deliver my clients to any agent I do not trust with complete confidence — which is itself an evaluation.

      > I’ll be grateful for you noting whatever errors of fact you think I’m making, because I don’t want to walk around holding any errors.

      As a personal observation, I’ve always thought you do better with me, when you run aground, in the long run, rather than in the immediacy of the fray. What I love about you is that you do continue to think about the things we talk about. I do the same with your ideas, to great profit. Until you are clear in your mind that simply introducing buyers to sellers is distinct from advising them on how to proceed with a transaction, you’re not going to get what I’m talking about.

    42. Jim Klein January 25th, 2011 8:34 pm

      Believe it or not, I’ve been trying to run aground! I’ll start with the last sentence:

      > Until you are clear in your mind that simply introducing buyers to sellers is distinct from advising them on how to proceed with a transaction, you’re not going to get what I’m talking about.

      I’m clear on that, and I get what you’re talking about. You’re very much about the representation in all this. That’s why you keep bringing up fiduciary duty, putting the principal’s interest above your own, standing in his stead and so on and so forth.

      Really…I get it. To the degree the agent is filling an attorney’s sort of role, this is all correct. And I’m not trying to prove that this isn’t going on. Obviously it is in various respects–the one missing respect being that it’s not an adversarial relationship–and obviously this is the part of agency that makes you soar. That’s a wonderful thing, and I’m not trying to say it’s anything but. Your purpose on Earth is to soar, and I want the winds to howl.

      But some of us–including many buyers and sellers–are much more plain than this. A seller wants his item sold and a buyer wants to buy. They will look at their checking accounts and not their ethical systems, to see how a transaction worked out. And even the ones who do look at their ethical systems, can be served by a single agent who represents both buyer and seller…if the agent is superlatively ethical.

      You already proved the point for me. You did it, all of your arguments notwithstanding. I don’t care /how/ you did it, who you paid, who got what…buyer and seller were both properly served and everyone came away happy. Q.E.D.

      And BTW, that your clients were “very highly skilled at real estate transactions” demonstrates a high bar to which you were held, not a low one. I could use /their/ judgment and write, Q.E.D.

      I don’t know why you think, “Buyer’s agency in residential real estate is the only form of sales where an agent even pretends to represent the buyer.” If you make a particular good and want to sell to certain large retailers, you are going to see one of a handful of manufacturer’s reps who handle those lines to the buyer. If that’s not “representing the buyer,” then I don’t know what is. When I contract a Driver, I am representing the buyer. The travel agent is buying what the buyer wants to buy, not selling what a particular seller wants to sell. And on and on.

      But that’s all getting off-track anyway. You are raising the subsumed details of a transaction to a higher status than the transaction itself. I’m sure you can talk about this error more eloquently than I…category error, maybe? If I arrange what the buyer wants to buy, then I adequately represented the buyer. If I arrange for the seller…

      You repeatedly knock me for evaluative comments as if I’m saying they exist like rocks. Naturally, that’s one mistake I don’t make. The standards by which the transaction can and should be measured, are the values of the participants. Period. I have explained this over and over, and see no room for quibble.

      Often, that standard is the bottom line. Leaving everything else aside…if a dual agent gets the seller 250K when you would’ve gotten him 240K, then he did a better job. Switch the numbers for the buyer. All I’m saying–and I’m saying absolutely nothing else–is that it’s possible that there could be an agent who can achieve these sorts of benefits for each party simultaneously. It wouldn’t be easy, and very few people could do it, but it /can/ be done and that’s the extent of my assertion. If that person is honorable, well-trained and extremely focused, it can be done to the satisfaction of both parties.

      We absolutely know this, because you did it. The fee arrangement is irrelevant; that just goes to show how inventive some folks can be. In the end, that was really my underlying point all along!

      > What I have said, always, is that it is not possible, as a matter of existential praxis, to effect dual representation in such a way that one or both principals cannot conclude, post hoc, that his interests were betrayed by his agent.

      So in your story, which principal concluded that you betrayed him?

      Or are you just saying, “can conclude,” speaking of the counterfactual? Well, could they have accurately so concluded? Besides, I’ve already covered how this is so, even in single agency. I’d guess it happens regularly, buyer’s and seller’s remorse and all that. In this world, who would they blame if not the agent?

      Lastly, I’ve been waiting for this the whole time…

      > The truth is, many of the agents I come into contact with cannot represent the interests of even one principal in a way that I would regard as being above reproach.

      Yes! This is straight to my point! Representing interests–and finding buyers and sellers–are themselves individual talents, and few people can do them skillfully and honorably. To the representational part of the transaction, I’m just saying that a person can be so superlative at this, that he can do it for both parties to a transaction, superlatively.

      And beyond that, to where a transaction is a transaction and not merely representation, a person can have sufficient wits and knowledge to bring together a buyer and seller in a manner that will serve both of them better than had either one of them had someone else representing him. That’s all. Obviously I agree that dual agency is extremely treacherous(!) territory. I wouldn’t recommend it for anyone I know and I think you’re right to rail against it the way you do, for the reasons you do.

      Maybe I’m just saying this. One should never sacrifice the good in pursuit of the perfect, but neither should one sacrifice the perfect in stubborn allegiance to the good.

      Or maybe this. Be glad I’m not a real estate agent, else this argument would never end until you drowned in testimonials. As you noted, I’m childish in many ways and too simple-minded to leave any of this to theory. Plus, I just love a business challenge…that must explain why I’ve had so many of them!

    43. Jim Klein January 28th, 2011 12:13 am

      I surrender, almost completely. A real life instance brought home the fact that in virtually any situation these days, an agent on both sides can’t possibly do a proper job. ANY aggressiveness on behalf of one party is necessarily betrayal of the other. And if I were to have an agent on my behalf, I’d surely want aggressiveness.

      I always understood that, of course. Maybe what I didn’t understand, but do now, is just how dog-eat-dog the current environment is. Sellers need to squeeze every last penny out of a sale and buyers ought to be vultures because there’s an even more desperate seller right around the corner. Hence it’s an environment that calls for extreme aggressiveness on both sides, an impossibility for a dual agent. In this manner, it is indeed more akin to an adversarial proceeding than (what I call) a business transaction.

      “Almost completely.” I can still imagine Splendor and I can still stipulate a context wider than the current mess. There can still be mutually beneficial transactions, even if they’re not to be found in the current RE environment. And more directly to the point I’ve had in mind, there can be unusual buying and selling opportunities that call for keen insight and knowledge of the sort of spirit that fits the item, not to mention knowing how to find the people that fit. This is the sort of thing that moves me as a businessman and in that sort of context, I can readily imagine an honorable soul as being perfectly capable of bringing seller and buyer together…representing both honorably and with full disclosure, and engaging in no breaches of duty at all to either party.

      So on the principle I’ve been arguing, I remain obstinate. But I admit that in this universe at this time, that would be a rare property indeed…and the chance that there exists both a willing seller and a gracious buyer of that property presently, is effectively nil. Hence any agent should take your words to heart and maybe one day we’ll again live in a world where both parties are truly moving forward.

      Contrary to what you argued, the manufacturer’s rep (or any broker) IS an analogous situation. There is always some range within which to deal, and whatever the broker ends up brokering, hurts the buyer and/or seller some degree of that range. This is superseded because of other benefits a broker brings, like the handling of cumbersome details. The point is, and always was, that a single party can bring these benefits to both sides of a transaction, and there is no existential basis for excluding real estate from the class for which this applies…any and all legal obstacles notwithstanding. I hope you get that, because this is what I’ve been driving at the whole time. But in this rotten environment, you win the argument…as you must since you’ve got to live it and you know what you live. To you, none of this is theory!

      Thanks for the indulgence.

    44. Tina Fine March 6th, 2011 5:23 pm

      To Jim Klein,
      Thanks for the award,
      Tina, lady in that start up homingCloud.com