Hi folks. OK, today, I’m going to write about one of my favorite topics…..Agency. This post was inspired by Bill Robert’s post “What do we owe our clients”. If you haven’t read it yet please pop over and do so. Bill understands agency and fiduciary and his post is very comprehensive on the topic.
As way of disclosure, let me say that I am writing this as a Florida Broker who practices Transaction Brokerage(TB). However, TB has only been around in Florida for about 11 years or so. Prior to that I practiced as a single agent to the Seller. Also, at that time we could act as a “dual agent” although I never did.
Now folks I have written numerous posts on Transaction Brokerage so don’t really want to rehash that here. Here’s a link to my previous articles on transaction brokerage. The one thing I do want to reiterate is that when functioning as a Transaction Broker we NEVER represent the transaction. We are in fact representing the Seller or the Buyer or both albeit in a limited capacity. So let’s be clear on that, we do NOT represent the transaction. If you need more clarity click on that little link up there and read those posts.
What I want to write about here is why I feel Agency and Real Estate do not mix well. I’m writing from the perspective of a REALTOR® who is bound by our Code of Ethics(COE).
This is what our COE states:
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly.
What this means is that whether we are working as an Agent or a non-agent we are to treat people honestly.
Agency creates a fiduciary. “A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom they owe the duty (the principal): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents.”(Wikipedia)
So here’s my issue. I feel a fiduciary is too high a standard for most REALTORS®. I believe there are too many REALTORS® who by lack of knowledge, ability, financial constraints, or simply, lack of caring are not able or willing to uphold their end of the bargain in a fiduciary relationship. Example: “Did you know fiduciary is forever?”
Another example is Dual Agency. In my opinion, there is NO advantage to the consumer in Dual Agency. The only reason it even exists is so an “agent” or brokerage can two side a transaction. Dual Agency is a joke.
In order for a true Agency/fiduciary relationship to work Dual Agency would need to be abolished completely. Brokerages would have to choose to work only one side of the transaction as an agent. And agents would have to truly understand the level of trust placed on them by having a fiduciary responsibility.
The consumer would have to know, without a doubt, that their agent is working for them with the client’s interest being the motivating factor. If agents, themselves, don’t understand agency then the consumer doesn’t have a chance.
Until this happens, Agency needs to be removed from Real Estate.
This post is only scratching the surface of my thoughts because I really want to hear yours. So someone explain to me, for starters, how an agent who is having financial difficulties and hasn’t closed a deal in months can “not put their personal interests before the duty” AND how can an agent, working as a dual agent “be extremely loyal to the person to whom they owe the duty (the principal):
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