Are Dual Agency Transactions Going to Stop in the Future

Are Dual Agency Transactions Going to Stop in the Future

 

 Kristinhamilton@kw.com Mobile- (909) 557-6966 BRE-01492138

There is a case currently in the California Supreme Court involving a major brokerage. An agent listed a large home in Malibu and there was some question as to the square footage of the home; title report vs. owner. The listing agent took the word of the seller and then an offer came in from another agent in the same office. During the transaction, there was never any mention of the square footage discrepancy.

After the sale was closed, the new owner was doing some renovations and found that the title showed the house a lot smaller than he had been lead to believe. 

This case is now in the California Supreme Court and one of  the issues here is the Dual Agency of the broker. NAR is against Dual Agency and has filed a brief as a "Friend of the Court" and C.A.R. is involved but on the side of the Defense as they support Dual Agency.

You can bet many states are watching this to see how the Supreme Court rules. 

Many banks do not allow the same agent to do both sides on Foreclosures and Short Sales as they see a problem with it. When I sold REO's, the banks would not allow same agent but would allow another agent in my office to handle the other side. 

Is there any states out there without Dual Agency?

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I've lived in Southern California all my life. I love this area in the Inland Empire and I enjoy sharing. My many years here have given me the expertise as a REALTOR® . If you need real estate information for to sell or buy in the Inland Empire...please give me a call.

 

 

Kristin Hamilton, Realtor

Keller Williams Realty

301 W 3rd Street, Redlands CA 92373

Email- Kristinhamilton@kw.com

Mobile- (909) 557-6966

BRE-01492138

 

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Comment balloon 26 commentsKristin Hamilton CA Realtor • May 14 2016 10:27AM

Comments

Kristin Hamilton CA Realtor Some agents selling own listing to earn full commission might cause of a possibility dual agency might stop in California.

Posted by John Pusa, Your All Time Realtor With Exceptional Service (Berkshire Hathaway Home Services Crest) over 1 year ago

Kristin, I read about this case, and it seems that the issue is really the square footage, and it's the kind of thing that could happen whether or not dual agency iis involved.

I am not a fan of one agent or two agents on one team pretending to represent two parties in the same transaction, but I don't see problems with intra-company transactions, especially when the agents involved work in different branch offices.  I hope that when a case comes to the courts that will impact dual agency, that the issues are created by dual agency, and not the measurements of the seller vs. whoever the official measurer might be.  

Posted by Patricia Kennedy, For Your Home in the Capital (Evers & Company Real Estate, Inc.) over 1 year ago

In Colorado, we are known as a "Designated Broker"... which simply means... we are designated as how we represent the client / customer by the brokerage firm. This is made possible by a few things... first, the State of Colorado has made certain relationships in violation of the law ... like "dual agency" and "sub agency".  So, now that those elements are removed, we are then defined as "designated brokers", no such thing as licensed salespersons... must be licensed broker.  The brokerage firm where you hang your license, will define how you would prefer to represent a potential client, either by "agency" or "non-agency" working relationship.  Non-agency = Transaction Broker.  Our contracts, define that relationship chosen by broker and client.  You conduct your representation is either an agent (fudiciary liability) or transaction broker (no fudiciary / vicarious liability), more as a mediator to facilitate the transaction.

This allows you to sell your own listings, and elevate your working relationship to a "transaction broker" status for the seller and that same status is for the buyer.  Thus, eliminating the "agency" rules, such as: confidentiality.  Why is that?  To have an agency relationship, you must have ALL the elements of Fudiciary responsibility.   Not sure how that happens in Dual Agency, unles you are some kind of secret spy.   Because ONCE you eliminate the responsibility of "confidence" as an element of "agency"... you then have NO AGENCY relationship.

Lengthy explanation to handle your situation.  Each individual broker, in our state, is responsible for their actions based on their "working relationships" with their client / customer. NOT the brokerage firm, per se.  I would hope that CA has their own state approved form to disclose how they came up with the square footage for marketing purposes.  If the listing broker defined how that square footage was determined, public records, old appraisal, measured it themself, or whatever... that is disclosed and if it is a concern to the buyer, they should have their own means and ways of measuring it, too.  SO, in this case, the selling broker (working with buyer), may have more liability than the brokerage firm and listing broker.  Especially, if representing the buyer in an agency relationship.

Good news for Colorado... we no longer practice "dual agency" since 1994.  Plenty of time has passed to learn the right ways of working with agency vs non-agency relationships.

 

Posted by Dan Hopper, Denver Realtor Advocate/Short Sale (Keller Williams Realty Downtown LLC) over 1 year ago

Dual agency is allowed in Pennsylvania as long as proper disclosures are signed  and all parties  agree

Posted by Hannah Williams, Expertise NE Philadelphia & Bucks 215-953-8818 (Re/Max Eastern inc.) over 1 year ago

Dual agency is allowed in Arkansas.  I frankly don't recall reading of any issues with an agent who had a dual agency sale.

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty AR LLC) over 1 year ago

Kristin- not an agent so don't know all of the issues but it would seem that this makes full disclosure even more important. 

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) over 1 year ago

Interesting that square footage is connected to dual agency. It could have happened, as Patricia Kennedy said even it wasn't a dual agency. Here in AZ square footage is estimated and it's up to the buyer to verify all facts and figures. I am personally not a fan of dual agency as it really does ties the and of both sellers and buyers behind their backs. At some point I do believe it will be gone in AZ as well.

Posted by Anna Banana Kruchten,CRS,CRB,GRI, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 1 year ago

Kristin, Still dual here in Ohio as either the same agent, or two agents in the same brokerage.  I think in the days of mostly virtual agents, two agents from the same office probably isn't the same risk as single agent dual situations.  I just had a contract with another agent out of our office and frankly I wouldn't be able to pick the other agent out of a police lineup because prior to this we've had zero interaction.

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) over 1 year ago

I totally agree with Patricia Kennedy 's answer, as well as with Liz and Bill Spear 's response...I am not a fan of dual agency at all, although we'll never really know what dual agency costs clients in the long run because most issues don't end up in the court system.

Posted by Susan Haughton, Susan & Mindy Team...Honesty. Integrity. Results. (Long and Foster REALTORS (703) 470-4545) over 1 year ago

Kristin, We do Designated Agency on every transaction. That means that there can be two agents from the same company in the transaction. The agents do not share info on their clients and robustly represent each of their clients. It works well. We do not do dual agency.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) over 1 year ago

I was looking for your current blogs. I hope all is going well for you.

Posted by Roy Kelley, Roy and Dolores Kelley Photographs (Realty Group Referrals) over 1 year ago

It is a tight rope we walk when we are on both sides of the transaction, I try not to be but it happens once in a while and I go overboard to make sure everything is fair and equitable to both buyer and seller... will it stop... I do not have a Chrystal ball, Endre

Posted by Endre Barath, Jr., Realtor - Los Angeles Home Sales 310.486.1002 (Berkshire Hathaway HomeServices) over 1 year ago

Hi John Pusa 

Regulations are probably going to change soon regarding dual agency here in CA. I know many who only sell this way which is probably why the laws are changing.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Patricia Kennedy 

It started out as a case involving the sale of a home and both agents were from the same brokerage but has evolved into a huge fight. When I sold REO's my banks did not allow me to be on the opposite side but another agent in my office could represent the buyers. I still sort of think the way the bank does but when a dual agency with me representing both, I do it but have to wear two hats and go back and forth. I understand that some buyers might be suspicious of dual agency.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Dan Hopper 

I like the system in Colorado and CA is on the verge of a change soon I think? Yes, I agree with you that the buyer's agent might have more liability as if there was a question or he knew something, he should have helped his clients to figure it out. Listing agent has 3 choices when putting a listing in the MLS; Appraiser, Assessor, or Client. I always go with the Assessors office and then if there is an exception, I write it in in description or agent comments.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Hannah Williams 

I think your state and mine are pretty much the same for now. Hope all is well with you!

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi James Dray 

I suspect there are other cases but may not hit the papers and social media sites and are quickly resolved.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Kathy Streib 

You are so right as full disclosure is so important. If buyer changes their mind, then they will cancel and find another house and same for seller as many buyers looking.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Anna Banana Kruchten 

This case snowballed and now there is changes in the works. Normally an appraisal is done so if there is a sf discreptancy, they find it first and then there is much discussion between parties and agents. In case deals without an appraisal, things like this can slip through the cracks.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Liz and Bill Spear 

We have 220 agents signed up in our office and I do not know all the new people so if I did a deal with one, I might not even see them the entire transaction. Always important to be accurate and disclose.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Susan Haughton 

I agree too and if it went away tomorrow, I would not be upset.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Debbie Reynolds 

I think Designated Agency sounds more safe than Dual Agency. Protection of the clients is so important.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Roy Kelley 

I had been busy on two trips and moving again. All is well and I am again blogging daily when possible.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

Hi Endre Barath, Jr. 

I like your answer and feel the same.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

We also have designated and dual agency Kristin Hamilton CA Realtor  I really do not see a problem with this type of representation when it is disclosed to all parties

Posted by Hannah Williams, Expertise NE Philadelphia & Bucks 215-953-8818 (Re/Max Eastern inc.) about 1 year ago

Hi Hannah Williams 

I agree but apparently there is problems with agents who do not disclose but of course if you choose not to follow the rules here, probablly not following the other real estate rules also. Why should all be penalized for a few who choose not to! This is a big disagreement between NAR and CAR in our state.

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) about 1 year ago

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