Is your agent a spy? What kind of question is that; it's an important question spawned by the constant controversy and confusion about AGENCY. Who does an agent represent and how do they represent them? The answer to that question can mean thousands of dollars in or out of a buyer's pocket.
I try my best to illustrate the nuances and various types of Agency to consumers on my website, but no matter how I explain the differences, I find most people just don’t get it. However, I really don’t blame them because it is the real estate industry that prefers to keep the smoke screen smoldering to allow for maximum personal gain.
The organization I belong to, The National Association of Exclusive Buyer Agents (NAEBA), continues to lobby for a clearer definition or distinction and separation between those agents that proclaim loudly that they can represent buyers as exclusive buyer agents, yet under their breath slide in the disclaimer or, more appropriately, the caveat, “with the right to transition to dual agency”. That is where the true distinction lies and dual agency is the problem. Attorneys and those in the know think dual agency is a double standard and fertile ground for suspicion and potential favoritism ultimately resulting in litigation. Some states already prohibit the practice of dual agency.
I was reading an article in a trade news publication where a consumer was buying a home and wanted to know how the process would work if the home she was interested in was being offered by a real estate agent who would be working as what the buyer ironically called a “double” agent? In other words, working for both the buyer and the seller. What was really interesting was the choice of words since what she was talking about was a “dual” agent. Subconsciously, she viewed the agent as a double agent. The definition of double agent is “A person pretending to work as a spy for one government (company, etc.) while actually working as a spy for another government (company, etc.).
To pull this back into the real estate vernacular let’s look at this as what is called single-agent dual agency, that being a relationship where one agent represents (?) both the buyer and the seller in the same transaction. That agent can no longer offer the same fiduciary responsibilities to either party as if they were representing one exclusively. The dual agent cannot provide Undivided Loyalty. This is an important point because as a client fiduciary an agent representing a buyer or a seller exclusively is sworn to treat the client’s best interests above their own. Other obligations that cannot be met in a dual agency arrangement are Obedience, Reasonable Care and Diligence and Full Disclosure. The dual agent is required not to disclose any confidential information about both parties. But let me ask you this; in 99% of cases, who do you think the (seller) agent has had the longer term relationship with? You, the buyer or the seller they have the listing agreement with? As a buyer, did you tell your agent the maximum amount you are willing to pay for the property or any other tidbits you would not want to the seller to know about you? Do you think the seller told their agent what their bottom line is or why they are selling? If the agent divulges any of that privileged confidential information without authorization, it is an actionable offense. There is one important point to note and that is that you as a buyer have the right to say no to dual agency when signing an exclusive buyer agency agreement, but that means your buyer agent cannot show you properties listed by their broker agency. The same holds true for a seller.
Most people entering into the Martha’s Vineyard real estate market do not live here and are usually from another part of the country. They know nothing about this market and if they are wise they realize they will need help, not just with looking for the right property or formulating a negotiation strategy, but most importantly with all the due diligence that is essential between the Offer to Purchase and the day of Closing. They need to be exclusively represented 100% of the time.
NAEBA continues to advocate for a clearer explanation of the differences so the public can be better protected. I was speaking to a web advertising sales representative yesterday and asked him why they cannot change the category headings in the real estate agency listing section to read SELLER AGENCIES and BUYER AGENCIES, instead of SALES AGENCIES and BUYER AGENCIES. Wouldn’t that make a little more sense? I doubt we will ever see two distinct categories --- BUYER AGENCIES and EXCLUSIVELY BUYER AGENCIES, because the National Association of REALTORS® continues to allow for the oxymoron labeled as Exclusive Buyer Representation with the right to transition to Dual Agency, but Brokers who believe in my business model will continue to educate the public about the advantages of being represented “Exclusively”.
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