Real Estate Agents and REALTORS®

My wife and I have owned over a dozen residential properties during our marriage. Only twice was Dual Agency a part of the documentation we had to acknowledge and sign, oddly, our last two home purchases. One where Dual Agency became an issue, and our most recent transaction, a new construction home, where we had no issue.

Even after Dual Agency was explained to me by the REALTOR®, in later research, I found the REALTOR® had made my understanding of this murky subject even murkier, so I realized I wanted to know more.

After lengthy due diligence about Dual Agency, I found the general public does not clearly understand this practice, or the differences between real estate agents and REALTORS®.

Dual Agency is when the listing agent represents both the seller and the buyer in the same transaction. Hence the photo of an agent or REALTOR shaking hands with himself.

Dual Agency should not be legal. It is a conflict of interest. The seller wants to sell the home for as much as possible, and the buyer wants to pay as little as possible. Also, buyers and sellers are often not familiar with what is involved in buying or selling a home, especially first-time home buyers. They rely on agents and REALTORS® to educate and assist them in the process!

There are two sides to every transaction in real estate; the seller side, and the buyer side. The seller usually pays the commission to the listing brokerage, or if there is another agency involved, the commission gets split with that cooperating agency.

In a Dual Agency situation, the entire commission will go to the listing brokerage. The agent or REALTOR® becomes a messenger between the buyer and the seller. For this, the agents, or REALTORS®, who promote Dual Agency do less work, give up much of their value to their seller, and deprive both the buyer and seller of full representation, but they are paid a higher commission. That is the motivation, money, for an agent or REALTOR® to want to engage in Dual Agency.

If you are selling a home, insist your agent or REALTOR® only represents you in the transaction. Likewise, a buyer can and should have their own representation. Even though agents and REALTORS® tell you this is how everyone does it, don’t allow it. Again, this is a conflict of interest and unethical. If they hesitate, because they hesitated, you might consider looking for another agent or REALTOR®.

Some agents or REALTORS® who engage in Dual Agency do lower the commission when they “represent” both parties, however, they are still legally limited to being messengers for much of the transaction.

An agent or REALTOR® is prohibited from helping to negotiate for either the seller or buyer in a Dual Agency transaction. The agent or REALTOR® is also not permitted to help determine what a buyer should ask the seller to repair from the home inspection report. The buyer and seller are on their own as far as negotiations and home inspection notices.

In states where Dual Agency is not legal, agents and REALTORS® “get around” the illegality by saying they are ‘working for the transaction.’ That’s a way real estate agent, REALTORS®, and their attorneys, have figured out how they can represent both a buyer and a seller in the same transaction, still be “legal,” and collect a higher percentage of the commission.

Agents and REALTORS® may get signed, informed consent to Dual Agency documents, but the client still couldn’t explain Dual Agency if asked, because of the way it may be glossed over or justified.

In my state, Dual Agency is allowed. Check with your state on the rules and regulations. This is an informative website: listwithclever.com/dual-agency/#dual-agency-by-state.

Now, the difference between an agent who is not a REALTOR® and an agent who is a REALTOR® is simple.

A REALTOR® belongs to the National Association of REALTORS®, their state’s association, and their local association. These are the professional associations for the industry. As members, they have to abide by a Code of Ethics. Agents who are not REALTORS® do not. This logo for a REALTOR® will be on business cards, websites, and social media sites.

Apparently, there are two main reasons for not being members of their professional organization, the costs involved, and too much oversight.

REALTORS® are fiduciary agents. They should act on behalf of their clients by putting clients’ interests ahead of their own, with a duty to preserve good faith and trust.

The National Association of REALTORS® Code of Ethics contains 17 articles. These address everything from Duties to Clients and Customers, Duties to the Public, and Duties to REALTORS®. The Code reads, in part, the REALTOR® may represent the seller and buyer in the same transaction, but only after full disclosure to, and with informed, written consent of both parties.

I believe it is better to use a REALTOR® because they should adhere to this Code of Ethics, and if they don’t, they can be held accountable. Agents who are not REALTORS® are not accountable to any ‘Code of Ethics.’

IMHO...