Agents double-ending: ethical?

Question

A strategy that I have used, & others have advocated is to approach a listing agent & offering to allow him/her to represent me as the buyer.

By doing so, the agent gets both the buyer's & the seller's agent commissions, & my offer magically seems to move to the front of the line or gets "sold" a little more to the seller.

Now, my question is, if I was the seller, would this still be in my best interest?

Taking it to another level, if the seller was a bank/REO asset manager, does it change your opinion as to whether it's still in the seller's best interest?

Dale Osborn · Answer

Many states have barred dual agency since by definition an "agent" is someone representing someone else and owes that person 100% loyalty. Even in the Bible over 2000 years ago it stated that "You cannot serve 2 masters at the same time" It is impossible to give 100% loyalty to 2 different people - the Buyer & the Seller. Anytime they bring out a dual agency agreement - I always refuse to sign it! Ethically, there seems to be a conflict of interest as well! Listing agent and Buyer's agent privy to private information from both sides of the table?? Only in realtor land!

Will Barnard · Answer

Loc,
Any transaction where an agent had a dual rep. with seller and me, the bank approved the list price and my offer was for full list pirce (or more accurately, what was going to be the list price. Since my offer was for full price and submitted the day the list price was approved by seller, the agent DID look out for the sellers best inyerest, in fact, he got them an immediate full price offer!

In other circumstances, a broker may "push" my offer over another without dual commissions but the reason given is the history of my performance, all-cash, quick close, no contingencies and that makes my offer more attractive to the seller.

Mike McKinzie · Answer

I have always thought of an "agent" as a "retailer", like Wal Mart.  The retailer is between the seller (manufacturer) and the buyer (the end user).  Contractually, the seller pays the commission, but in reality, the seller pays the commission with the money the buyer gives him/her.  As the retailer, you have responsibility to BOTH parties.

A real estate transaction is not a courtroom with a defendant and a plaintiff, where one wins and one loses.  In a real estate transaction, both parties should feel like they "won."  If one agent does that for both buyer and seller, they should be no problem.

Steve Babiak · Answer

Not an agent myself.  But every time I have used dual agency, the agent clearly stated and disclosed that they represent the seller. If you encounter anything else, then certainly there is good reason to suspect conflict of interest - and as the buyer you should be careful because your interest is not guaranteed to be served.

Joel Owens · Answer

Real Estate State commission laws vary by state.We don't need to be doing blanket statements on here.

Some states DUAL AGENCY is against the law and is not permitted period.

In my state of Georgia it is allowed.If you are practicing dual agency and it is legal in your state you have a fiduciary duty to BOTH of your clients NOT just the seller.

You can still in many states get paid both sides of the commission not practicing dual agency.Simply in your contract state that you represent the seller and NOT the buyer.You can  perform what most states call ministerial acts for the unrepresented party.

These ministerial acts will be defined by your real estate commission in writing.If you deviate from providing what is written you can create "implied agency" without even knowing it.

So you can usually fill in a purchase price or other items in a contract for a buyer.If they ask things like why is the seller selling or how motivated are they etc. you can't share those items unless you have permission in writing from the seller.

Jake Kucheck · Answer

Technically when you "double-end" or are acting as a dual agent, you still have a fiduciary to the seller.  What that means is you have to keep their interests above all others, including that of the buyer you are also representing.  That doesn't mean you behave to the detriment of the buyer, but it does mean your obligation is to the seller, so things like what Calvin mentioned are DEFINITELY both unethical and illegal.

With a multiple offers situation what should be done is as follows:

If the highest offer is over the listing price, all other offers should be countered at or above that price.

If the highest offer is at or below the listing price, all other offers should be countered at the price the seller would like to counter at.

The reason you hear "highest and best" a lot is because there are so many offers, and so many of them suck, that it it is a shortcut for the Asset Manager; as Anson pointed out, they are already swamped.

As the main takeaway: Not submitting a bona fide offer to your seller, to whom you owe a fiduciary, is both unethical and illegal.  Persuading your seller to choose the offer that allows you to double end the commission (perhaps by reducing your total commission for that offer) is not illegal, or unethical in my opinion.  It is a win-win.

Calvin N. · Answer

Getting both sides of the commission is not an ethical issue.  It is legal, ethical, fully disclosed and common in many cases.

As a Realtor if I "hold" an offer that I may only receive the listing commission side to submit another offer that I may receive both listing and selling sides of commissions then that is not only unethical, it is definately not in the bank's best interest.

Anson Young · Answer

its a grey area at times.  The bank does want the highest price possible of course, but also the lowest days on market.  Since its unlikely that you got a huge discount if the property was listed for less than 30 days (most banks have a 95% rule for first 30 DOM), then if the agent double ends the deal, the bank gets close to what they want in price, and low DOM.  Everyone wins, so to speak.

Believe me, asset managers dislike highest and best and multiple offer situations, due to the extra workload.  Imaging having 4-500 files, then having even 150 of those with 3 offers a piece?  450 offers to sift through?  no thanks.