RealTown's RealTalk

I find this discussion quite interesting regarding dual agency. In California agency law was changed in 1988. One represents the buyer, the seller or both. We do not have nor do we require designated agency although my limited understanding of fascinates me. Some people (not from what I see here) are under the impression that dual agency is when the same agent represents both buyer and seller. I explain in my classes agency rests with the brokerage and for the new people it's an eye opening experience when I explain that to them. By the way, in California, the repercussions of undisclosed dual agency are; either party can rescind the transaction, the agent can be forced to repay the commission, and the agent could lose their R.E. lic.

Now regarding representing two buyers on the same property. It appears that many here seem to think their EBA (Exlusive Buyers Agency?) and other dislosures would cover them. Well how about this scenario. The same agent represents buyer #1 and #2 on the same property having written offers for both. The listing is from another agency. There are only two offers both from the same agent. The agent tells buyer 1 and 2 that he/she their company or other agents may show this property and make an offer(s) and leaves it at that and does not reveal to both buyers the agent has an offer pending on the same property to both of them (the question is would you or wouldn't you?) Because it is a multiple offer situation the price gets bid up so the agent is actually bidding against each of his buyers. After several counter offers the seller and buyer #1 agree to a price that is $25,000 over asking price. Buyer #1 is happy to have gotten the home and escrow closes. Fast foward some time later buyer 1 and 2 find out that the same agent was representing them and did not specifically state so, just had them sign the disclosures and basically told them there may be a possibilty of more than one buyer. Now what? Is the agent guilty of misrepresentation? In this case is the disclosure enough or should have the agent told each buyer he/she was actually representing both buyers on the same property? In my opinion if this were an ethics case and I was a panelist I probably would find the agent in violation in at least Articles 1 and 2. The agent should have stepped out of one the offers and referred it out until the negotiations were completed and then could have taken over if the referred buyer got the house. What do you think? Would your EBA and other disclosures cover you? I'd like to know everyone's opinion.

Do consumers really understand this stuff?  Do licensees?  Aren't there conflicts of interest that continue to exist, despite what legislatures may pass into law?  Are those conflicts required to be disclosed, or is it just left up to the conscience of the individual licensee? 

Brokers who own firms often create incentives to bring transactions together, in the name of profits.  Are these incentives required to be disclosed to buyers and sellers, by law, or is it left up to the brokerage policy or, again, the individual licensee? 

If one of fifty state legislatures passes a law that says two plus two shall hereafter equal five, does that make it true?  What if a legislature redefines all math according to its own unique view of mathematics?  Can you imagine how that would impact on commerce between the states?  Doesn't law really need to make sense?

It sure seems to me that issues of representation have been divorced from reality, just as the creation of an alternative mathematical system would interfere with the natural order of things. 

Why was designated agency created?  Was it more for the benefit of consumers or licensees?  What problem did it solve for consumers that was not already addressed under the previous law? 

Sam W.

consumer.  author.  experienced licensee.

Judy, I appreciate your honesty with the buyers. My only problem is that when I come into this situation (and it is extremely rare), I recommend an excellent agent OUTSIDE the firm. I don't buy into the designated agency theory and it is not how my state does it anyway. Understand that two buyers wanting the same house is not dual agency. But it is conflict of interest in an agency relationship and has the same ramifications. I won't run one buyer against another. And this is clearly spelled out in my buyer agreements. We do the first to make offer (first in, last out) scenario. Buyers do appreciate the honesty that goes with this approach. And so would your broker as there have been some recent court cases involving this conflict of interest. Steele V. Propp Foreclosure Specialist Schatz Group GMAC Minneapolis, Mn