A Very Good Case for Outlawing Dual Agency?

Small Towns Are not immune, in fact are more likely to have the virus.

There has been a lot of buzz on the Internet, and here at ActiveRain, about the 'evils' of dual agency. While some agents seem to have no issues with it, all you have to do is run a quick search on the subject and read some of the comments on blogs about it to see that many agents do. Now, it's hard to have a good discussion on dual agency over the Internet because the fact is dual agency means different things depending on what state you're in and the laws concerning it.

In NC, dual agency is created at the company level. This means that if I am the listing agent and a fellow Century 21 American Home agent has a buyer client (signed agreement) making an offer on it, we are BOTH considered dual agents in the transaction.

Many people have questioned how an agent can effectively "represent" two opposing clients via dual agency. A recent Charlotte Observer article, N.C. Realtors protesting part of rule on disclosure brings to light another issue with dual agency as well.

The article states that 3 of the state's largest area metro REALTOR® associations are actively protesting a 2008 rule that requires a buyer's agent to fully disclose the amount of compensation that they might receive if they sell a particular home. Full disclosure shouldn't be an issue, so why is it? Well, those companies that are making the biggest stink about it are pushing "in-house" sales. That's sales where the listing and selling agent work for the same company. They push these sales by offering bonuses to agents that sell in-house listings.

What I find most shocking in the article are comments from the leading agent(s) promoting this protest. "...the rule requires burdensome disclosures for potential "in-house" transactions..." and "We don't believe in-house compensation is a disclosure issue," Really? REALLY?

I find it hard to believe that an experienced agent, a person that has spent years in the business, truly believes that it shouldn't matter to a buyer if their agent (or agency) is getting a specific bonus or extra incentive to sell THAT home possibly over another property. I wish I could say I am shocked by that, but truthfully, I'm not. I can say that I am a bit ashamed to have to be associated with them, however remotely that may be.

What those supporting this protest are saying is that, as the disclosure laws stand, they are forced to disclose the 'seller's side' of the commission to the buyer and that the buyer should not be allowed to view that information. HELLO! Unless there are some pretty unusual circumstances, the seller usually 'pays' ALL the commission (and bonuses). There is no seller side and buyer side commission (and that's another post entirely).

Clearly, I'm not a big fan of dual agency, especially as it's defined in NC. I think that dual agency should legally be defined as ONE agent (vs the agency) acting as both listing and buyer's agent, and I think that dual agency should be illegal in the state. Would it stop bonuses and in-house sales? Probably not, but it would solve the issue of disclosure pretty fast. Your Thoughts?

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