WatchWhen the seller's agent also acts as the buyer's agent in the same transaction, it's called dual agency and it's truly unbelievable that this legal. I've worked with listing agents before on short sales. In one case, the agent looked me in the eye and said, "I have no problem writing your offer letter, however, I am already doing this for other buyers already." How wonderful.
There is a good discussion about this topic on REDFIN:
http://forums.redfin.com/t5/Bay-Area/lose-bid-because-of-dual-agent/m-p/344226/highlight/true#M58933
Due to lack of laws and regulations, agents are welcoming this dual commission opportunity. So who are the losers in this type of a dual agency short sale transaction:
1.) The bank who owns the loan - The bank is a loser because the listing agent now has incentive to not take the highest offer and instead present the highest offer as coming from their own buying client. It is illegal to not present all offers to the bank, but the incentive for fraud is there and there are absolutely no paper trails of offers since the listing agent controls it.
2.) Other agents - Since dual agency is legal, any buyer who is smart will call the listing agent the day a short sale comes on the market. How can other agents even compete in this short sale situation?
3.) Buyers who are represented by their own agent. Forget it! It took me 6 months to learn that this doesn't work at all, EVEN when you have the highest offer!
In any case, what/who out there is responsible for keeping dual agency legal?
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jvolstad's website
A buyers agent represents the buyers best interests? Really?
A Realtor is a Realtor.
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BayArea says
Not true in a short sale. In a short sale, the listing agent works for the SELLER, not the bank, and in fact has no signed employment contract or any other agreement with the bank. The agent has a fiduciary duty to his client, the SELLER and owner of record. BayArea says
Once again, not true. Almost no banks will allow a double commission on a short sale, so part of the bank agreement letter, which comes out later, will cut the commission back to what the agent would have made with two agents in the deal. They won't allow buyer/agents to earn a commission on the transaction either.
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ptiemann says
Thanks for the correction as I pulled the def from the REDFIN discussion. What then, is the appropriate term for what I am describing above if one exists?
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ptiemann says
I don't know a single other agent at my company. I turn in all of my paperwork via the internet, and they send the checks to my house. I have to use my phone gps to even find my office on the rare occasions when I go there, so really how much difference does it make if the other agent is from my company?
You have to disclose dual agency, with a specific form that outlines what it is, and gets permission from the buyer and seller to allow it. So those who are saying it is illegal, you have an option to say, "No, I am not comfortable with this," right at the outset. Generally speaking, few laws are made that prohibit adults from doing things that are actually legal...
If I am as an individual advising both the buyer and seller, obviously i can't get the best price for one without misadvising the other, so I would become just a message taker between the two, and not advise either one on how much to offer, etc. I have never actually done this, I prefer to fight tooth and nail for a client