Dual Agency Life in the Fast Lane…whoa…gotta slow down a bit.
Understanding what Disclosed Dual Agency is and is not is crucial in today’s ever changing real estate market.
In a previous blog I talked about Reasonable Care one of the Fiduciary Duties a REALTOR® owes to their clients. I explained that the easiest way for me to memorize the fiduciary duties I owe my clients is this way…OLD CAR.
O…Obedience
L…Loyalty
D…Disclosure,full
C…Confidentiality
A…Accounting
R…Reasonable Care and Diligence
I also learned to memorize what is compromised or limited in a dual agency situation, remember that Dual Agency is legal in many states including New Hampshire, I know it may not be so in your state but up here it is.
In fact in New Hampshire rather than joining the states that have banned or made the practice of disclosed dual agency illegal, N.H., has recently taken on changes that once approved would in fact make dual agency much easier to practice…much more in line with common practice.
Good -Bad or Indifferent…Disclosed Dual Agency, I think… is here to stay at least in New Hampshire. Which is why a good solid understanding of Dual Agency is a must both for the consumer and the real estate agent.
So lets look at it this way and hopefully this help you understand or be able to better explain it to your clients.
What is compromised or limited in Disclosed Dual Agency is the OLD part of old-car…Obedience, Loyalty and Disclosure.
O…Obedience, Lawful Obedience You can’t be 100% obedient an example would be that The Sellers instruct you to negotiate the highest price possible and the Buyers also instruct you to negotiate the lowest price. This is clearly conflicting instructions of which you can not obey.
L…Loyalty You can’t be 100% loyal as you now have two clients and you can not do anything to or for one that would put the other client at a disadvantage…imagine yourself walking a Razor Sharp Tight Rope as NAR’s legal council Laurie Janik once put it…one wrong move and you fall off. Or better yet imagine having 2 children both who you love equally and must protect equally even if one needs your protection more than the other…you can not advocate for the weakest child more so than the strongest one. Equal Care no matter what…this can be extremely difficult to do.
D…Disclosure,full This One is very hard…the best example I’ve ever heard is…You list a home, your sellers are your friends, you’ve known them a long time. They fall on hard times..job loss, illness and may lose the house and have not a penny to spare.
You have been working with buyers who are clients, you like them very much and they have become good friends.
Suddenly the buyers financial situation changes and they can increase the price limits and now want to look at your listing.
After getting informed consent from all parties you put the transaction together as a dual agent…all is fine till the home inspection. You attend it and can’t help but hear the inspector point out several items needing repair and you clearly hear the buyers say things like “No problem, I can fix that” or “No problem my brother is a contractor and he can fix that…I can get that done at cost” and “I’m handy that’s a piece of cake for me to fix” all in all a pretty good inspection and later when the sellers ask how it went..you tell them only that it seemed to go well, but until the report comes back and the buyers sign off you really don’t know.
Then the Buyers bring you THE LIST, the demands for repair or price adjustments to the tune of $25,000…your sellers cry when hearing this..they are devastated and need your guidance …and you know that your buyers really don’t need 25k and can do the repairs themselves for a lot less money than they are asking for… Suddenly the words Obedience, Loyalty, Disclosure and Confidentiality take on a whole new meaning!
Not only for the agent but for the consumer as well.
Remember…The CAR part of Old-car…remains unchanged in a dual agency situation.
C…Confidentiality…You still owe 100% Confidentiality
A…Accounting…You still have to account for all funds and for the property
R…Reasonable Care and Diligence…You still have the obligation of protecting the client and that includes making sure they understand the limitations of the dual agency situation.
Dual Agency is not easy and is not at all pretty. When you really think about it, it is most assuredly the hardest form of agency to practice and one full of hidden traps and with the most liability to the agent…a recent NH case resulted in a judgment in excess of $120,000…OUCH!!!
Dual Agency can be practiced successfully but only with Full Informed Disclosure and Consent in writing given by competent buyers and sellers and most importantly COMPETENT agents.
Monika McGillicuddy
Serving Southern New Hampshire and Rockingham County
Monika McGillicuddy Real Estate Training Website
Hampstead NH Real Estate
603-548-7728
About Monika McGillicuddy