Now, this is all discussed up front which is the law in New York. If a buyer is calling on one of my listings, I show that property first and offer to show others of course. If they like my listing, I remind them that they may use another agent to represent them in this transaction. But usually people will continue to work with me because I am being honest and up front with them. I never divulge my clients personal info unless they tell me to, and if I need to convey buyer customer (not client) info to my seller client, I remind the buyer that since I work for the seller, I must share.
Since the commission is a written agreement between the seller and my company well in advance of the transaction, no reduction of commission is required. It is whatever it is.
If all of this is confusing to US, you know our clients and customers must also get confused. I will remind them from time to time who I represent whether they are a client or customer.
Honesty applies to both clients and customers. If you are treating everyone with honesty and full disclosure (in writing), they will likely not complain about representation.
If the referral is within the same brokerage, how representative is everyone being? To me there is still the potential for a conflict of interest because the agents have even more pressure to make the deal go through (because of referral - etc) when someone within their office sent the client. I know some agents get a better commission if the brokerage double ends the transaction.
If we are really concerned about the client's representation, seems to me we should remover ourselves completely from the equation and therefore advise the client to find a representative for their best interest.
If an agent is getting a referral fee, I am not sure it isn't just one step below representing both. If they are truly advising the client on representation, it is quite another situation.
Thanks for the answers.
I sometimes wonder if a seller is very happy with getting $500K (Hypothetically, of course) for his house. So he does not quite care even if he might be able to get $520K for the house if it is on open market.
The listing agent brings him a buyer for $500K (who is very happy to get the discount). The seller loves the fact that he does not have to prepare the house for sale and put up with inconveniences of showing the house, and is thrilled with getting a $200K instead of $220K profit, then what;'s wrong with putting the two parties together and make a winning sale?
Who are we to say that this is not the best deal for both? - After you disclose everything, including explain to the seller that you might be able to bring a better offer (or not) should the house go on the open market, of course.
Just curious, what's everybody's thought on that? Too bad this is in Agent2Agent. I'd love to have some consumer's feedback.
Personally, I will advoid it in the furture- refer to another agent and take a referral fee. However, the TRUE definition of DUAL agent would be you and ANYONE else in your brokerage. So that even if I did refer it to someone in my office, DUAL agentcy would stll be in play.
As the second part of your question, IF I have found the buyer to one of my listings, MOST if not all sellers will expect me to cut my commission - however I would only do so IF it was going to benefit both parties-- as in both parites got a $1000 credit.
So, a dual agency is created when both sides are represented by the same brokerage, which is quite common in my company - we have 500+ agents and 25+% of the market so it's difficult to not bump into another agent from the same company, one represents the buyer, the other represents the seller.
There is a CAR Dual Agency Disclosure advising the clients on their rights and what not.
The real problem with dual agency is when a single agent represents both the seller and the buyer, then there is a risk of which side gets the benefit and best representation.
I have never personally done this because I disagree with the concept. However, I have seen it handled different ways - 1) refer the one transaction another agent (the listing agent gets the referral fee if the offer is accepted and went into escrow) but still retain the clients or 2) have the manager sit in and negotiate the contract for the buyer but the contract was still submitted by the listing agent
I had one client who told me in no uncertain terms that he does not want me to do dual agency when we first met and signed the contract (not that I wanted to anyway). However, after he got to know me, he told me that he'd love to have me being the one who brought in a buyer because he thought I'd be honest and that I really deserved the whole commission.
I thought that's quite a compliment. :-)
How can we, in good conscience, tell our seller that we will bring them the highest offer we can, and then suddenly when we have the buyer as well, tell the buyer that we'll get them the lowest possible. It's impossible to serve both mistresses.
In addition, now since we have to be totally neutral, we can no longer advise either side regarding negotiations, we can no longer advise regarding inspection issues, or any other issues that arise along the path to closing. How many times have we all had a buyer-client panic, and ask whether or not they should walk away from the deal. We need to be able to advise them without bias.
Buyers and Sellers both hire us, in part, due to our expertise, experience and negotiating ability. To suddenly take that expertise away from them, and tell them that we're now required to be neutral (even as a transactional agent, in those states that don't have dual), and for that privilege of no longer having our expert opinion, we're coincidentally going to be getting BOTH sides of the commission...
to quote my father-in-law, who was born in the wonderful city of Savannah, Georgia... "it just ain't right".
I respectfully beg to differ... there IS such a thing as "implied agency"... I don't know if New York has rules that state that "no agency can exist unless written"... but read the following from "about.com". But even if it didn't exist, I'd think that ethically it should.
Implied Agency: It is also possible to create an agency relationship by the actions of the parties. If a real estate agent takes on responsibilities that are normally those of an agent, but hasn't signed an agency agreement, she may still be considered an agent via implied agency. By the same token, if the customer asks the agent for advice or actions that are normally those in agency, then an implied agency could be created.
Some states have created specific legislation that states that no agency can exist without a written agency agreement. This helps to avoid accidental implied agency.
If I met with a seller who divulged personal info with me (i.e. they must sell due to a divorce) while on a listing presentation, and they chose to list with another company, I would still keep that info in confidence.
Let's say I bring a buyer to that house, the property itself has not changed, it's still worth whatever it's worth. For me to tell a buyer that "hey, you can get a great deal because the sellers are divorcing" is unethical. It also does not change the old roof or the updated kitchen, etc...
And as stated below, what happens if that listing expires and the seller hires me? If I shared that personal info with other agents, and THEY then brought a buyer, it can come back to haunt me in negotiation.
What would my buyer think of me? A person tells me something in confidence and here I am blabbing it away. How is my buyer going to trust me? Will my buyer then trust me when it comes time to sell his house (hopefully not in a divorce situation)!
I think agents get into trouble when they take their focus off the house. (Real estate is what we sell, save the gossip for TMZ.com!). We can't assume to really know anyone's motivation to buy or sell. Anyone who has been in this business for a while can probably testify to being fooled at least once by a seller or buyer.
If you are in this business for the long term, the trick is to be your clients' agent for life! Referrals are so valuable. Don't blow it over one sale.
Illinois does not have "same agency" dual agency.. we're only dual agents when one agent represents both sides of the transaction.
No, you did not understand me.
I always wonder if two parties are very happy with a certain price, then who are we, as agents, to say that this is not the best thing for the two parties.
Remember, we are discussing Dual Agency here, so you are dual agency in this case - unless you have a perfect world with a perfect price right to the penny; then you either have a buyer that pays more than the perfect price or a seller who accepts less than the perfect price.
However, if both parties are happy with the not so perfect price, then who are we to say that this is not a perfect price for them? Dual agency or not?
Glad you asked?
This same direct-buy mentality applys to other types of purchases; cars, cd's, clothes (ala-Amazon or BJ's). You think you are saving a lot of money by eliminating the sales clerk and the middle man but when you go into a store and realize that many times you could have got that item for the same price or less, you realize the genius of the retailer.
I have represented a buyer that bought a home that was listed by my broker (In De. that is not considered dual agency)and that was no problem at all. Agents are independent enough for it to not be a problem as long as they realize that as soon as they get near that situation with a buyer they need to keep all information about the transaction closed to other agents.
Now, lets sell some real estate!
I also agree with Christian that if all parties are happy, we are in the end doing the right thing. There are some great points from Sylvia about walking the tightrope transaction that is good for all.
I raised the question mainly because I see so many buyers on Trulia with issues where agents are trying to work the buyer side when initially they were the seller's agent. I am not sure if the TRULIA consumers were brought in on this discussion they would believe that we represent both sides equally or fairly based on their experience.
Great comments from all. Thanks for the thoughts.
OK, this is getting good! Keep on responding and offering your own opinions.
Without that honesty and candor from the seller, it's difficult to come up with a true market evaluation, and we don't want sellers to feel it necessary to "hide" information from us as we interview for listings. I think the same would apply to expired or cancelled listings, too Jim. Our agreement to "client privilege" doesn't end if we're cancelled or expired
What if the new guy got the listing because you demanded a price reduction which they almost agreed to but he was willing to list it at the old high list price?
Let me pose this one to all of you agents:
What are you to do when you go on a listing appointment, discuss confidential and financial information with the sellers, they sign disclosure understanding that you are talking to them as a disclosed sellers agent. Then, you don't get the listing. 2 weeks later, you are showing homes to a buyer and acting as a buyer's agent with signed disclosure as such. They call you and want to see the house that you did not get the listing for.
How are you supposed to handle Agency Disclosure and how are you legally supposed to act in an agency relationship? How will the seller react when you make an appointment as a buyer's agent for your customer? How does your State Real Estate board view this?
I'd love to hear your viewpoints.
We have a local independent brokerage who used to take out 1/4 page ad on the front page of Real Estate section in the local paper. One of those, in a nutshell, says that he will match sellers with buyers so the sellers do not have to prepare the house for sale.
Sure enough, next thing you see on MLS is a new sold listing with him representing both buyers and sellers and comment (enter for Comp purposes only). I have to presume this is what the seller and buyer wanted.