It’s been two weeks since I posted anything on Tuesday, due to a combination of my biting off more than I can chew (trying to write a piece about NYC Infrastructure) and being legitimately too busy to spend an hour putting pen to paper (or fingers to keys?) to write about anything at all.
I’m not complaining -- far from it. I’ve hit benchmarks I didn’t expect and my business is growing in exactly the ways I want, even faster than anticipated. But it’s definitely a work in progress, balancing working ON my business (writing, outreach) with working IN my business (the nitty gritty of actual transactions).
I’ve also been fighting with Mailchimp, who seem to have made it their personal mission to block Compass agents’ emails by suspending our accounts. I’m heavily #teamunsubscribe from broker spam, but I don’t think my monthly newsletter to 300 family members, clients, and friends qualifies as such. So I haven’t been able to send anything out, either!
All this to say I’m back, I’m a little less busy, and I’m writing about something that I hold near and dear, but that many agents (wrongly) don’t concern themselves with: dual agency.
All real estate transactions involve two sides: landlord and tenant, or buyer and seller. You can’t sell something to no one, and you can’t buy something from nowhere. Even new development is sold by an owner, just not a prior homeowner.
Sometimes each side is represented by an agent, each owing their loyalty and fiduciary duty to their client alone. But sometimes only the landlord, seller, or buyer is represented, and the other side comes to the table without their own agent. Or sometimes the buyer’s and seller’s agents work at the same brokerage firm on the same team. In these instances, the same agent/team represents both sides in what is known as “dual agency.”
If you’ve worked with me, at some point I’ve given you the below form (either buyer/seller or tenant/landlord). It’s a standard NY state disclosure explaining where my loyalties lie. You’ll notice that dual agency comes with the phrase “advance informed consent,” and this is where most problems arise.
This article recently published in The Real Deal explores cases of lawsuits over sales deals where a client wasn’t accurately informed of the agent’s “agency,” or loyalty. In one instance, members of the same team represented buyer and seller, and the team member encouraged his client to place a bid above ask. That's a tricky situation, because you have to separate your allegiance to the buyer and your allegiance to the seller, making sure you are not disclosing too much on either side. The issue of the case isn’t this suggestion the agent made, however, but the way he didn’t appropriately fill out the form or supply it to the client in a timely manner.
The sales situations in that article are big enough deals to warrant major lawsuits, but the practice of not correctly disclosing dual agency is much more common in rental deals where the client comes directly to the landlord’s agent. It’s understandable -- although you’re supposed to supply that form after “the first substantive contact,” you don’t want to shove a piece of paper in the face of everyone who views the apartment, when 99% of them you will never see again. So many agents wait until the lease signing, meaning they aren’t giving the tenant a chance to have “advanced informed consent,” and are springing it on them at the last moment. It’s not usually malicious, but it’s not by-the-book. My personal strategy is to supply the DOS form with the application materials, because at that point you know the person is at least serious enough to apply, and you’re alerting them of your loyalties in advance of any acceptance or lease signing.
The law of agency takes up two chapters of our Real Estate School textbook, and is the majority of the subject matter for the biennial continuing education we have to take to keep our licenses current. It’s a big freakin’ deal, and as a stickler for making sure everything is above board, I dig that. I always want my clients to know where I stand, because I base everything on referral so why does it serve me to screw someone over in the short term just to make a buck?
Maybe this is rambling; it’s been two weeks so my word-vomit needed to escape. But the long and short of it is this: when you are involved in a real estate transaction, I always recommend having your own advocate over selling your home yourself or going directly to the agent representing landlord or seller. However, if you do decide to go it alone, make sure that agent seems trustworthy, responsible, and look out for an agency form. Because balancing the needs of two sometimes opposing clients isn’t easy, and not all agents are up to the task.