MY AGENT SAYS HE WILL BE DOUBLE DIPPING - THAT SOUNDS GROSS

First-time buyer – My agent showed me a house that I like and for which he is the listing agent.  I heard him use the term double-dipping. I know you’re not supposed to do that with chips and dips, but what is that all about in real estate?

Answer - Double dipping at the chips and dip station is a nasty party etiquette faux pas and it can be a nasty real estate practice too, involving not so much etiquette as ethics. Some states have enacted real estate laws and practices to limit the practice or at least to bring full transparency to it. Michigan is what is called a Designated Agency state. That means that we have laws that define the agency role and responsibilities when a Realtor signs a client up to be their listing agent or their buyer agent and it requires a clear definition and agreement with the client about what role the agent is playing.  The cornerstone of the concept of agency is the agent’s fiduciary responsibility to the client.

Curt Vonnegut used to do a commercial for TIAA-CREF, the retirement programs people, in which he had fun with the word fiduciary. It does sound funny. 

From Wikipedia comes this definition of a fiduciary –

A fiduciary is a legal or ethical relationship of trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person.  In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. A fiduciary duty is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): such that there must be no conflict of duty between fiduciary and principal, and the fiduciary must not profit from his position as a fiduciary (unless the principal consents). This also goes for Realtor working directly with a local builder. This is also called double dipping and when that Realtor/broker is part owner of new homes being built and sold by the same agent, that's illegal.

So, when a client signs up with a real estate agent to list his house, the agent takes on a fiduciary role with that client. That means that the agent may learn things from the client that the client does not want to others to know, such and how much he’d really sell the place for. The agent is bound by his fiduciary relationship not to disclose that to a buyer. The agent owes his loyalty to the seller.

So what happens when that same agent signs up a buyer couple and starts looking for houses for them. He owes fiduciary loyalty to the buyers and shouldn’t disclose things like how much the buyer is willing to pay to any sellers. So far, so good.

Now, suppose that the agent is sending the buyers listings and they happen to see one of his listings and want to see it. Even worse, they love it and want to put in a bid on it. Where do the agents loyalties lay now? Can that agent serve two masters? Some states allow that to happen and some put some pretty good restrictions on what the agent can do and what level of transparency has to be maintained for both parties to the deal.

Michigan requires that the agent get the written permission of both parties before he should even show the house to the buyers. That written permission should state clearly the compromise that the agent will have to make if placed in this position. The things that need to be dealt with in that document include what the agent can and cannot disclose to either side and includes a strict prohibition against sharing any secrets or confidences that either party has already shared with the agent. Potentially a bigger issue is the fact that the dual agent can no longer negotiate for either side. If having the agent there to handle the negotiations was important to either side, that is gone if the agent is allowed to become a dual agent. Some states, like California, that don’t have designated agency laws in effect, are currently dealing with dual agency cases in their court systems that could have major impact across the country.

So, what’s the double dip thing? That means that the agent is going to receive both sides of the commission – double what he/she would normally make – thus a double dip into the commission pot. That’s not an illegal things or necessarily a bad thing, but is does provide the motivation to perhaps not render as much fiduciary responsibility as is still possible. The agent may become more motivated by the opportunity to double dip that to protect the interests of both parties. Money tends to corrupt like that.

How can you protect yourself against the potential problems that could be caused by dual agency? The simple answer is not to allow it. Since the agent needs to have your permission in most states to act in a dual agent role, just tell them that you’d prefer not to do business that way. Ask them to have a different agent represent the buyer or you, so that each of you has an agent who can give you the full fiduciary attention and responsibility that you should have. In states that don’t have Designated Agency laws that may mean finding an agent in a different company.  

Your agent may refer you to another agent and it is perfectly legal for him/her to get a referral fee for doing that. That way you are still rewarding the agent who worked for you and found you the house that you want, even if he/she can’t be there with you through the sale. If your agent refuses to do something about the dual-agency issue, then fire that agent and find another agent. He/she was more interested in double dipping that in making sure your interests were properly served.

The agent might take the position that he can represent only the seller but can still do the paperwork and put the deal together. Listing agents who meet unrepresented buyers at open houses in their own listings often take that approach. You’ll need to decide whether you feel comfortable with that and whether you are concerned that the agent may already know enough about your and your wherewithal to put you at a disadvantage in the negotiations – people do tend to talk at open houses, especially to the friendly, nice man that showed them through. You can see how hard this can be to keep straight. Double dipping has been a fairly common practice in many places and is a favorite with many agents for obvious reasons; but, the bottom line is that it’s up to you and you need to feel completely comfortable with the representation that you will be getting in the deal. If you are not, remember the advice that you used to hear about drugs or teenage sex, just say no.

 http://normwerner.realtytimes.com/advicefromagents1/item/28614-my-agent-says-he-will-be-double-dipping-that-sounds-gross

 

Should A Home Buyer Use The Listing Agent?

Double Dipping

Home Buyers should be aware of what Dual Agency means specifically to them and the purchase of a house or condo.   In the real estate business we refer to this as “double dipping.”

It has been written about for years that when a listing agent also represents the home buyer, it either means no one gets represented fully where the real estate agent becomes neutral or the home buyer is left out in the cold with no representation at all. You need to remember that a relationship was established with the home seller long before the home buyer came into the picture.  In other words the fiduciary relationship was originally with the seller.  You can’t serve two masters fairly! And don’t let anyone try and convince you otherwise.

Dual Agency is Double Dipping

A definition of dual agency is “a breach of agency rules” which must be disclosed to the parties because the agent has a conflict of interest when representing both the buyer and the seller. That should tell you something!

I prefer an “arms length” transaction where I totally represent my client and I do NOT do dual agency. Anyone who says they can give both sides equal representation is fooling himself/herself as well as the uneducated client.

Do some real estate agents like dual agency, well sure they get paid twice. But, for the inexperienced real estate agent who thinks only of the double commission, they may find a lawsuit will eat up that double dipping!  The number 1 claim and complaints filed are about Dual Agency. More real estate complaints occur due to Dual Agency where the client’s did not feel they were fully represented.

These are the States that ban Dual Agency:

• Alabama
• Florida
• Kansas
• Maryland

Now, the uscrupuious listing real estate agent who has lingo down pat of, “I’ll give you your own PRIVATE showing.” Or scares the buyers into thinking they have to write a contract with the listing agent in order to get the house are all examples of an unethical real estate agent. The uneducated, naive home buyer is typically the one who falls for this lingo. And in the end, some of those very home buyers actually think they got a good deal…how sad!

Private showings are always the case whenever a home is shown unless it’s an Open House so don’t fall for the “private showing” gibberish. And scaring a home buyer into thinking they must write the offer with the listing agent in order to get the house is not only unethical, it’s a lie.  The seller will pick the best offer.  The seller only cares about how much money they will net.  So, don’t fall for that lie.

Do you double dip your chip in the dip? Then don’t be represented by the same real estate agent that represents the seller.  Some things are just not Kosher.  And if you have an established relationship with a REALTOR®, then by all means be loyal and don’t fall prey to ridiculous rhetoric from a listing agent.

In summation, this article is for all home buyers.  You have now become educated on the pitfalls of NO REPRESENTATION when going along with Dual Agency.  The first question an ethical REALTOR® asks is, “are you currently working with a real estate agent?”

A unethical agent never asks and ropes you in and hopes you fall for their tricks while smiling all the way to the bank.  Wise up home buyers and don’t be taken! When you go to that Open House without your REALTOR®, then take their business card with you and speak up…I have a REALTOR®.

http://sacramentorealestatevoice.com/should-a-home-buyer-use-the-listing-agent/#comment-44863

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