Dual Agency Smack-Down: Collective truth? Fifty million Frenchmen can be as wrong as one . . .

by Cathleen Collins

Realtor, Staging Consultant

Author website

I doubt that even Jeff realizes this, but I am the provocateur of the Titans’ duel over the pros and cons of dual agency. It started when Greg and I met Russell Shaw. The man is a font of knowledge, and he’s very very generous with sharing the “secrets” to his success. Already we have been enriched by his friendship. As we discussed the different aspects of our industry last Tuesday night, conversation led to our stand on dual agency, which I am largely responsible for.

Dual agency has not even been an opportunity for me yet… so far I haven’t had a buying client who would have been interested in any of my listings. But I’ve seen Greg serve as a disclosed dual agent, and as promised by Russell and Jeff the successfully closed transactions were probably more successful for his clients because Greg handled both sides. In all but one of the cases I can think of, the buyers and sellers were investors. The exception was with an extreme pet lover who needed an agent to find her a buyer without using the MLS (someday Greg will have to write this Realty Reality story). But then we had the dear friend failure and when we evaluated the philosophy of dual agency, we established our No Dual Agency policy.

This policy has not been easy on us. It certainly hasn’t given us a market advantage, because the typical home buyer or seller doesn’t pay that much attention to the philosophy of our industry. In fact, we end up shedding prospects who come to us through avenues that other brokerages use to drum up new clients. When I hold open houses in areas where open houses actually bring in potential buyers, I always try to find an agent from a different brokerage to sit the open house with me, so that agent can try to turn visitors into clients. When we get sign calls, we’ll show the house, but when the prospect starts making buying signs, we’ll suggest that they get an agent to represent them or offer to refer them (and we won’t take a referral fee on the transaction). Then there was the time when a client hired us to market his house, then after a couple of weeks and our typical traffic of more than a hundred visitors, he took advantage of our firing clause and hired a limited service lister to glean the prospects from visitors who we had introduced to the house. At first we thought this was a real boon for us, because we could circle back to try to pick up the buying side, which was getting a bigger piece of the commission pie than the listing side. But then we realized that it would be nearly impossible for us to represent the buyer as completely as we wanted without betraying the confidential knowledge that we had regarding the seller’s motivation and the appraised value of the house.

Plus, our policy forces us to stay small. We can’t expect to bring more agents into our brokerage, which would multiply the potential for dual agency, and ask the agents to walk away from prospective business, when that business would put the brokerage into a dual agency position.

So I have actually been hoping to be convinced through reason that dual agency has a place in our business. I agree with our worthy opponents that legislation prohibiting wrong acts in order to stop people from doing the wrong acts that they already are supposed to not be doing is a farce. It’s not the gun that kills, it’s the murderer; and making guns illegal will only mean that people who care about the law won’t have guns, but the murderer still will. Back to dual agency… unfortunately, this means that good people will be hurt by unscrupulous agents who practice dual agency wrongly, then those good people will blame our industry in general. And maybe they should…

But I am looking at this issue more narrowly… what’s the right thing for BloodhoundRealty.com to do? When I’m representing a seller, I want to use every weapon in our arsenal to get that house sold for as high a price possible in the client’s timeframe. And if refusing to practice dual agency limits market exposure in any way, am I doing right by my seller-client? I believe that our system of referring prospective buyers to buyers’ brokers usually lets me answer “yes” to that question, because the market is no longer narrowed; though as I’ve already noted, it doesn’t help our business. But I recently had a potential for a disclosed dual agency that would have been impossible for me to avoid. I listed a property that I thought would be ideal for my brother-in-law as an investment. Fortunately, the property sold before my brother-in-law ever pursued the opportunity. But if he ever wants to buy a property I have listed, what is my recourse? It would be wrong for me to interrupt a chain of events that might result in my seller-client’s property being sold if the buyer-client is a relative of mine (who by nature of our familial relationship is my de facto client), just because my brokerage’s policy forbids dual agency. Now that’s between a rock and a hard place!

I hope you understand that I truly want to be convinced that because it’s legal in Arizona, dual agency has its place in BloodhoundRealty.com. In fact, the other evening I was about to give in. If this is legal, and it’s the way everyone works, and most clients don’t even care, why shouldn’t we permit dual agency? Perhaps we should just explain the pros and cons of dual agency, and then let the client decide whether to allow/ask us to enter it if we have a prospective match for them. I was about to give in. But then serendipity stepped in. When we finished work one evening this weekend, we sat down to watch our new DVD of The Fountainhead.

Though I don’t remember the quote, I’m sure Jeff is correct, when he attributes to Ayn Rand,

If the results you wish continually fail to materialize – check your premises.

But I think the Objectivism philosophy more germane to this debate is addressed in The Fountainhead. That is, collective “wisdom” is no substitute for the fully awakened, reasoning, rational mind of the individual. Then when I saw Russell credit Peter Keating, of all people, with having thrice solidly articulate a defense of dual agency, when all I saw were Keating’s loquacious defenses, I was stopped cold. I do want Jeff and Russell and others of similar thoughtfulness to be correct, because that would be easy. But what I want — and the way the mob runs — doesn’t answer the paradox Greg pointed out today.

I might wish that we had some of the advantages that are apparently enjoyed by agents in Georgia, Florida and Washington. But we don’t. And the way I understand it, agents in those states are able to practice dual agency more easily than agents in Arizona and California, because the former states don’t assign fiduciary duties to their agents. I’m not sure that’s much of an improvement, but it sure seems more straight forward to me… easier.

And I might wish that one of the powerhouse agents in dual-agency states could make the argument that I haven’t yet seen… I concede that dual-agency is better for a brokerage’s business. And I concede that this is the way most other agents, both ones with integrity and those without, work. But I still don’t understand how agency which includes the duty of fiduciary can be served in a dual agency situation, without taking away some of the zealous representation a client should have right to expect. But I realize this is my problem, not yours. So I thank you, Russell and Jeff, for taking the time to try to help.

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