Hating the Tree
This week I was delivering a lecture on Agency Law. For those who have read my posts before, you know that to say I’m not a fan of Dual Agency, is to put it mildly. My warnings against this type of practice are founded in the overwhelming evidence that it’s an open door to litigious pursuits, as well as personal convictions that it is rarely in the client’s best interest. At the end of this lecture several agents thanked me for the risk reduction ideas and the evaluations were great – however, there was one (there always is) agent who was very offended. She has been practicing real estate for nearly as long as I’ve been alive and was very clear that many steps are taken to insure that could represent both sides. She advised me that it was agents, such as I, that were ruining this business and were making it too complicated.
At the end of the conversation, I could feel my frustration with the industry start to swell. I began to write a ranting post about the simple-mindedness of some agents and how I can’t wait till they… Well, you can imagine what I was going to write.
Then I remembered this quote from Malcolm X from 1965: “You can’t hate the roots of a tree, and not hate the tree.” Oh how often I’ve hated the tree’s root. However, the real estate industry has given much to me and my family. Our clients often become friends and repeat clients. We love most of the people we work with both as clients and other practitioners.
The Vocal Minority, Is Still a Minority
It seems to me that many of us who blog about Real Estate take aim at the agents who think differently than us. We often talk about agents in the collective, as if we weren’t part of the industry. However, my experience has been that most agents try hard and work for their client’s best interest. It’s those who do not put their client’s interests first or refuse to change with the industry that happen to stand out. They are the agents who refuse to learn technology, current trends or embrace change. They will always be there but, their voice and influence is diminishing.
Other agents may rant against the more progressive agents, as they play solitaire on floor duty, spend their day gossiping with other agents and wondering why they no longer have the market influence they once had. So why then, do we spend so much time worrying about this group? Because, they can make us look bad, they can be a barrier to us serving our clients well and they can be annoying.
Continue To Be Industry Changers
In the 90’s there was a great commercial from Apple about “Think Different”. I know that many of us have had Brokers or other agents, maybe leaders; who looked down upon us for our thoughts about the industry. I’m not thinking just of the technology or Social Media. Maybe it’s your own thought of how to market, agency issues or brokerage model. Maybe it’s your stance on single agency, presenting your own offers to the sellers of that new al la cart ting you’ve just started. Whatever it is, stick with it until YOU’RE satisfied that it’s not effective. The greatest changes in society and world have come from those who didn’t think as the rest.
Matthew Rathbun is a Virginia Licensed Broker and Director of Professional Development for Coldwell Banker Elite, in Fredericksburg Virginia. He has opened and managed real estate firms, as well as coached and mentored agents and Brokers. As a Residential REALTOR®, Matthew was a high volume agent and past REALTOR® Rookie of the Year & Virginia Association Instructor of the Year. You can follow him on Twitter as "MattRathbun" and on Facebook. Matthew's blog is TheAgentTrainer.com.

Mark Greenfield
November 15, 2009 at 8:44 am
I love Dual Agency! Agreeably the MLS is the most important aspect of our business, however I don’t understand why are you opposed to keeping all of your commission on those rare occasions? I’ve only been in the business since 1993, but with over 100 DA closings I’ve never had an unhappy DA client (to my knowledge). In fact I think most seller prefer DA since they have a better idea who the buyer is, and negociations dont get bogged down in translation.
Jim Duncan
November 16, 2009 at 1:35 pm
A quick question – is your market rural or (sub)urban?
chris johansen
November 15, 2009 at 10:12 am
I could not agree more, I too sense a change in the way Realtors will be doing business and generating income. Watch out Realtors if you’re not up for the changes the world is going to pass you dinosaurs by. In my office some agents think this “social networking” is a waste of time, online property videos are a pain in the butt, and things are fine just the way the are…. I can’t wait for the future – bring it on! There’s got to be a better way to sell real estate, I wish I could figure out!
Chuck G
November 15, 2009 at 10:22 am
“She advised me that it was agents, such as I, that were ruining this business and were making it too complicated.”
You hit it right on the head. There’s definitely a palpable fear of the unknown in this industry, and it seems that anyone who tries something new (and worse yet, is effective at it) becomes an outcast…instead of being embraced for charting new territory for others to follow. For all of the outstanding and forward-thinking agents who read and contribute to AG, I have think we’re still very much in the minority right now.
It will change in time, but this industry is notoriously resistant to change.
Ken Brand
November 15, 2009 at 10:27 am
Amen. As per your advice, it works exactly like this…..
“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. ” — Arthur Schopenhauer
Cheers.
Matthew Rathbun
November 15, 2009 at 2:03 pm
Mark: Here is a good post the Jim Duncan wrote on VARBuzz and sited some of the reasons that I’ve given in the past. If you search AG.com you’ll find lots of good posts discussing the virtue of Single Agency: https://varbuzz.com/time-to-look-again-at-agency-in-virginia/
Chris: I’m with you “Bring it On!” We may not always like the changes either, but the consumer is in more control than they have been before – so in some ways we (as consumers) will benefit from the changes.
Chuck: Many are afraid of change because it pushes them to have to learn differently. I often think that this fear is a result of laziness.
Ken: GREAT quote!
Benjamin Ficker
November 15, 2009 at 2:30 pm
What are your thoughts on Dual Agency in a Short Sale situation? In that case, the highest sales price is not your responsibility. Your fiduciary responsibility to your clients would be to get the home sold before a foreclosure sale (sellers) and the lowest sales price (buyers). When you are the only point of contact for the bank, sellers, and buyers, the negotiations go much smoother. Thoughts?
Matthew Rathbun
November 15, 2009 at 2:54 pm
Benjamin: I understand your point, but disagree that selling before foreclosure is your only or even primary goal. Not all Short Sale Sellers are at risk of Foreclosure. Regardless if they are or aren’t limiting their damages are also an important fiduciary duty.
Some of these Short Sales are recourse loans and the Seller still maybe on the hook after closing for some of the deficiency. You’re still inherently left with a buyer who wants the lowest cost and the seller who wants the most. Moreover, many of these sales still have other contingencies and negotiations to deal with.
I think if anything, a distressed sale is more litigious an a dual agency situation. The real question is what is the REAL benefit to the client in Dual Agency of any support. Your Short Sale negotiations may be simpler, but everything else is still dealing with those who have conflicting needs.
Divorces are simpler with one negotiator, but how many couples hire the same attorney?
Here’s an example of just one potential conflict in a Short Sales (this is dependent on your state law). Let’s say you’re representing a buyer and seller. Some as basic as an escrow deposit could be a conflict. As a buyer agent I never want to commit my client more than I have to in a Short Sale because we only have a 65% closing rate regionally (my company’s success is much higher). For a buyer I would recommend that we not deposit the escrow until the Lien Holder has given actual written approval of the short sale. However, as a Listing Agent, I don’t want the house under contact without actual money in the bank. To even give recommendations like these could be a breach of undivided loyalty. To not give that advice to both clients would be a breach of giving them my best advice…
Let’s do one more: In Virginia the pursuit of a Short Sale is “confidential fact” and only disposable with written permission of the Seller. What if the Seller declines to give that consent and you are also representing a Buyer?
There are many, many more examples…
Great question!
Benjamin Ficker
November 15, 2009 at 3:23 pm
In AZ, when a home goes to foreclosure the bank can not come back for more money. Since that is the case, we can almost always negotiate the deficiency away.
The only lien holder who can come back to the seller’s for more money is a HELOC. Since they are usually second position, and most homes around here are ~$100k underwater, a price difference of even $50k wouldn’t make a difference because the first (who has no recourse) would get it. Obviously, there are some exceptions.
In 99% of the cases I’ve been involved with, the final sales price has never been of consequence to the seller.
Also, when we list short sales we have very specific terms that must be included in an offer for our sellers to accept, which include a portion of their earnest money to be non-refundable for the first 90 days. This keeps buyers from walking after 6 weeks.
The examples you gave deal specifically with your state laws (as they should). Our state is much more open in their disclosures (the short sale has to be disclosed in the MLS). I have yet to see a short sale where DA caused the deal to fall apart, but I have seen many short sale deals not work because other agents not knowing what is happening.
I guess the answer to DA in short sales really depends on your state laws.
Matthew Rathbun
November 15, 2009 at 3:32 pm
Benjamin,
It looks like your state has taken a lot of steps to protect the buyer legislatively. We have “non-client” status where we can do ministerial acts that promise nor provide any opinion. The Buyer is on their own, but we can handle the administrative side of the transaction. It’s a much better option.
Ken Montville
November 15, 2009 at 10:41 pm
To your first point about Dual Agency: in the rare instances where an unrepresented buyer approaches me to assist with the purchase of a house, the unrepresented buyer usually has their eyes wide open and is dealing with the listing agent [me] with a specific goal – usually a lower price through a perceived willingness to lower commission to the seller and, thus, a lower or acceptable price/terms to the buyer. Alternately, they may just want an expeditious process. No matter what the situation I always disclose, in writing and verbally, to the buyer that I represent the Seller and the Seller’s interests. I really don’t think, in this day and age, that people go up to listing agent to buy a house thinking that *every* Realtor represents the Seller like the old days. Maybe a few.
In some other rare instances, I may be either the listing agent or buyer’s agent in a transaction where the other agent also works with the same Broker. This is what constitutes Dual Agency in MD. I always explain the pros and cons to my client and usually my client is motivated enough or trusts me enough to agree to Dual Agency.
To your larger point of thinking differently, outside the box or whatever else you would want to call it, I gently suggest that real estate law (which varies State by State) hamstrings a lot of this “creativity” I think your suggesting. Hell, just the advertising rules I have to follow in MD restricts me from all kinds of interesting marketing.
You are correct. We live in a litigious society. My Broker, the State Association, my local Association, the MD Real Estate commission and even the Federal Government are constantly creating a more and more restrictive environment all in the name of consumer protection.
My brain has enough to try and learn and retain to “stay out of trouble” to make this “Think Different”/Ignore the Rules thing a little hard to get my arms around.
Matthew Rathbun
November 15, 2009 at 10:51 pm
No one ever insinuated ignoring the rules.
Julie Emery
November 15, 2009 at 10:52 pm
Great post, Matthew! And love the Malcolm X quote. I hope you’re right about them being the minority. But if so, shouldn’t we be able to get dual agency outlawed?!
Mark, I’d take note of your comment “I’ve never had an unhappy DA client (to my knowledge)” What you don’t know can hurt you. I bought a house using the listing agent before I became a real estate agent. At the time I did not feel that there was any problem and was very pleased with the transaction. Over time I began to feel that my interests were not well represented. There was never any huge problem. But as I got older and smarter I saw the potential problems and felt differently about the agent.
Matthew Rathbun
November 15, 2009 at 10:59 pm
Julie,
Making single agent dual-agency a violation is well on it’s way, but it’s going to take a bit of time. Money is the root of this evil and we’ll need to find a equitable alternative before change can be made.
It took about 10 years from identifying that the sub-agency relationship was a problem until actually creating buyer agency. In Virginia we actually have a few alternatives, now it’s just a matter of teaching everyone who to execute those alternatives wisely.
Jim Duncan
November 16, 2009 at 6:53 am
The only way that agency is going to be revised/evolved is via a lawsuit from a consumer.
No Realtor group will do it. Ever.
Fred Romano
November 15, 2009 at 10:56 pm
I think real estate laws and procedures should be uniform for all states. I also believe a national mls would be beneficial to all Realtors. This would eliminate the middleman (local MLS’s), save us money in fees, and bring a standard system to all.
Doug Francis
November 16, 2009 at 9:07 am
I always mark in our listing agreements so that we (my brokerage) represent the client as a “designated agent” and that the client does not consent to “dual agency”. The agreement also shows that I am the “Designated Agent” – in Virginia.
Why do agents think they are the “dual agent”? You don’t sign the contracts… your BROKER is the one with the agency issue. Have an office meeting folks.
Did most of your commentors forget who the parties are listed on the top of every agreement they generate?