Friday, December 4, 2015



What is Your HERS Score?

At CHB Homes tremendous efforts go into making our homes energy efficient and we are extremely pleased with our HERS rating scores. The HERS rating score has helped us become the premier Green Builder in the Georgia and North Florida area for new custom homes. The HERS rating score is mentioned and utilized throughout our planning/design and construction processes, so for those of you who may not know what a HERS score is we have provided more details below.

The RESNET HERS Index is the industry standard by which a home’s energy efficiency is measured. The HERS or Home Energy Rating System was developed by RESNET and is the nationally recognized system for inspecting and calculating a home’s energy performance. Certified RESNET Home Energy Raters conduct inspections to verify a home’s energy performance. Tests include verification of density of insulation, vapor & air barriers, blower door tests (to check the house leakage), duct system performance testing, and many others.

A code built home has a HERS score of 100. CHB Homes new custom built homes have been averaging HERS scores in the low 50’s, which means our homes are typically 40%+ more efficient than a code built home.

Our new build home scored a 49, meaning an overall $2,965 savings annually for our clients. It also means a tighter sealed home with less draft during uneven temperatures, therefore simply more comfortable overall.

RESNET explains a HERS score in the 40’s  is a very good score indeed! RESNET states a builder has done a lot of the right things to make this home more energy efficient, like using energy efficient lighting systems and installing efficient heating and cooling equipment.

Do you know what your HERS score is?

Sunday, July 12, 2015


These are a few steps of many that we take to build the best high performance home with the highest value that our clients will enjoy for a long time.

Our homes appraise higher than any new or existing home in Thomasville and South Georgia. Our home in 202 Stallion Cir. is for sale at $279,900 and Appraised at $302,000. Have a real builder build you a real home.


Tuesday, December 30, 2014

Neighborhood 'steering' is not OK

Here are many types of Real Estate Steering:

1) When your agent tells you a house is overpriced. An agent is not an appraiser.

 2) When your agent tells you they do not have any info on a house that is for sale by owner, because there is no commission.

 3) When the agent is unaware on how to explain a green home, so they do not show it, so not to look clueless.

 4) When your buyer's agent only shows you homes with 3% commission and with a kickback bonus.
5) When your buyer's agent only shows you homes from their brokerage office only or their own listing first.

6) Local Realtors Steering new buyers to new homes being built on small lots. This was recently stated to us by a new home buyer. (So new home buyer's BEWARE of local agents showing new homes on small lots.

Q: How should a person handle it when a Realtor steers them to a particular neighborhood? (This happened to someone I know.) He wanted to see all of Las Vegas, was prequalified for $200,000 but the Realtor would only show him (homes in) Summerlin? -- Debbie H., Las Vegas

A: First of all, let me just say that what you're describing, if proven to be true, is not acceptable behavior for any real estate agent in Nevada or anywhere else. Such "steering" is a violation of federal fair housing law, which is investigated and regulated by the federal department of Housing and Urban Development.

Since they receive training in this area and deal with fair housing issues in their profession, Realtors really should know better.

A violation of fair housing standards can also be a violation of state law -- not to mention violation of the code of ethics all Realtors swear to uphold. Consequently, if a member of the public has such a complaint, he or she should report it to the three entities that oversee real estate transactions. They include Housing and Urban Development, the state of Nevada's Real Estate Division and the Greater Las Vegas Association of Realtors.

Besides being unethical, illegally steering a potential homebuyer to one home, one neighborhood or one particular home builder is also bad for business. Worse yet, it reflects poorly on the overwhelming majority of Realtors who follow the rules and live up to the highest ethical standards in our profession.

That being said, if you feel the agent was purposely not showing you other parts of the city or other properties you wanted to visit, then I suggest you bring it to the agent's attention.

Not being able to speak to the agent to determine his or her motives, there could be several reasons for an agent to focus on one area. Having worked in this industry for the past two decades, I can envision a scenario where a client seeks out a Realtor who is the "neighborhood expert."

As such, the client could expect, ask or even demand that the Realtor show them what they believe to be the best neighborhood in town for that particular buyer. If, however, you do speak to your Realtor about your concerns and he or she is still uncooperative, you should report the situation so it can be investigated fully. These things can be very subjective. It can sometimes be a fine line between "steering" and giving clients what they want. In the end, that's why it's so important for Realtors to continue their education and training. They must meet their fiduciary responsibility to all parties, while satisfying their legal and ethical responsibilities.

For more information on such issues, consult a qualified local Realtor or visit

Rick Shelton is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for 20 years. GLVAR has 12,500 members. To ask him a question, e-mail him at For more information, visit Questions may be edited for space and clarity.

Published by a local Licensed Real Estate Agent in Thomasville, GA


Monday, December 22, 2014

Buyer and seller beware: Your agent may not represent your best interests

Homebuyers sometimes gripe that their real estate agent seems more interested in closing a sale and collecting a commission check than in helping them find the right home at the right price.
Sellers, too, may feel pressured by their broker to make price reductions or accept an offer that’s less than what they’d hoped to receive for their home.

What buyers and sellers alike may not realize is that, in many cases, real estate brokers and agents actually have no legal obligation to look after their best interests. This is 100% true when it comes to working with a dual agent, Georgia is a dual agency state.

Laws in 25 states now allow brokers to provide services to buyers and sellers as "transaction brokers" or "facilitators," without traditional fiduciary duties of loyalty and obedience. The state of Georgia is one of those state. "Buyer Beware'

All 50 states also provide avenues for brokers to "double end" a deal, working with both the buyer and seller in the same transaction and avoiding the need to split commission income with a cooperating broker. In such instances, neither the buyer nor seller is fully represented, critics say. The state of Georgia is one of those state. "Buyer Beware'

Because they rely on referrals and repeat customers for much of their business, scrupulous real estate brokers and agents strive to provide a high level of service, whether they are representing clients individually in "single agency" relationships or double-ending deals. Not True in South Georgia and ThomasvilleGA "Buyer Beware'

See related report:
Beyond Dual Agency
But consumers shouldn’t assume that their broker or agent is obligated to represent their interests, and their interests alone, until they have seen a written disclosure describing the agency relationship under which services are being provided to them. This form is not truly explained to a buyer or seller in South Georgia and ThomasvilleGA, leaving buyer's and seller's on aware of what they sign. "Buyer Beware'

Homebuyers and sellers looking to negotiate the best commission rate, obtain the highest level of service, and protect their legal rights in the event of a dispute can start off on the right foot by making sure they understand the form of representation their broker or agent is providing.

Agency relationships
Agency relationships are created when one person agrees to act on another’s behalf, or represent them in dealings with a third party.

Once an agency relationship is established, agents owe their clients "fiduciary duties" of loyalty and obedience. They are typically required to place their clients’ interests ahead of their own, providing services with honesty and good faith while avoiding conflicts of interest or "self-dealing."

But the rules governing agency relationships between consumers, real estate brokers and their agents vary from state to state, and all have been rewritten in the last 25 years.

Depending on the laws of the state they are licensed in, brokers can provide services in one of six relationships:
Single agency: A broker or agent represents the interests of the buyer or seller alone in a transaction — either as the listing agent or as a "buyer’s agent." Consumer advocates and agents who work exclusively with buyers say single agency is the best form of representation.

Designated agency: One broker designates two of their agents to represent the buyer and seller separately. When states require that brokers implement safeguards to protect clients’ confidential information, designated agency is the next best alternative to single agency, academics and consumer advocates say.

Disclosed dual agency: A lone agent provides services to both the buyer and the seller in a limited agency relationship, without an obligation to represent the best interests of either. "Buyer Beware'

In states with no provisions for designated agency, when two agents affiliated with the same broker represent both sides of a transaction, the broker may be considered a dual agent.

Although controversial even among real estate brokers and agents, disclosed dual agency does present opportunities for experienced sellers to negotiate discounted or "variable rate" commissions in advance.
Transaction brokerage: One agent or two agents at the same brokerage may provide services to the buyer, the seller, or both, in a non-agency relationship, owing no fiduciary duties of loyalty and obedience. Georgia "Buyer's Beware"

In addition to having the same disadvantage as dual agency — neither the buyer nor seller can expect an agent to represent their interests during negotiations — consumers served by transaction brokers have little leeway to file claims for professional negligence. Georgia"Buyer's Beware"

Provision of "ministerial" services to unrepresented "customers": A listing broker may avoid splitting a commission with a cooperating broker by providing limited services to an unrepresented buyer. Georgia "Buyer's Beware"

Every state in the union provides avenues for brokers and agents to "double dip." Of the eight states that ban dual agency outright, four allow designated agency (AlaskaColorado,Maryland and Texas), three allow transaction brokerage (FloridaKansas and Oklahoma), and three allow both (AlaskaColorado and Texas). Georgia "Buyer's Beware"

Subagency: The listing broker represents the seller in an agency relationship. "Selling agents" who work with buyers are "subagents" of the listing broker. All of the agents involved in a transaction owe their allegiance to the seller, and buyers are unrepresented. So TRUE in Georgia"Buyer's Beware"

Although subagency was a standard industry practice for most of the last century, this form of representation has largely fallen out of favor because of legal risks for brokers and sellers. NotTRUE for Georgia "Buyer's Beware"

Click the map image below to view an interactive map describing states’ varied real estate representation options:

During the matchmaking stage, brokers who are hoping to double-end a deal may attempt to steer buyers to listings they represent. Or they may fail to aggressively market their sellers’ listings in the hopes of limiting the pool of buyers to those they will represent. Very TRUE inGeorgia "Buyer's Beware"

Brokers may offer incentives, such as higher commission splits, to agents who sell in-house listings to their buyers. Extremely TRUE Georgia "Buyer's Beware"

Agency relationships and commissions
The Consumer Federation of America advises consumers to always negotiate commissions with real estate brokers, using agency relationships as a starting point.

Buyers and sellers should insist at "the first substantial contact" that brokers disclose whether they will represent their financial interests at all stages. If not, the group advises, consumers should ask whether the broker will represent the financial interests of the other party, or simply serve as a facilitator or transaction broker.

Sellers should try to "knock one percentage point" off the standard commission right off the bat, the Consumer Federation of America advises, and "insist that if their broker double dips, the commission be reduced another percentage point or two."

Search and negotiate
Of all the services that real estate brokers and agents provide for their clients, two of the most important are "matchmaking" — connecting buyers and sellers — and negotiation. Agency relationships can come into play during both stages.

"My broker doesn’t endorse this practice (of offering such incentives), as it may lead to an agent ignoring the best interests of the client in favor of the best paycheck," said Chris Dowell, an agent at Re/Max Premier Realty in Prairie Village, Kan., a Kansas City, Mo., suburb. Dual agency and several other forms of representation are permitted in Missouri"LUCKY YOU'Georgia "Buyer's Beware"

"There is a large, local brokerage that pays a significant bonus for selling in-brokerage listings, and because of that, faces … lawsuits, as well as a buying public that is very cynical toward that brokerage’s actions." Extremely TRUE Georgia "Buyer's Beware"

During the negotiating stage, brokers and agents working with the buyer and seller in the same transaction may disclose confidential information — such as how much the seller is willing to accept — in the hopes of moving a transaction along. "Extremely TRUE Georgia "Buyer's Beware" I can't STRESS this how TRUE it is.

Michele Guss, an agent at Thompson’s Realty in Phoenix, said that in her brokerage, agents don’t "sit around gossiping about their clients and transactions." Not all offices have the same practice. Georgia "Buyer's Beware"

"With that said, I will say when I was with (another brokerage), agents were always telling other agents what listing they had and what a seller would be willing to accept. This is not OK. Agents are not authorized to give any (information) unless the seller or buyer specifically authorizes them to do so," she added. Common practices Extremely TRUE Georgia "Buyer's Beware"

Boost for brokers, but at what cost?
The California Association of Realtors, in soliciting contributions to its Realtor Action Fund,claims that the lobbying it has done to preserve dual agency in the state "saves" Realtors thousands of dollars each year. Extremely TRUE Georgia "Buyer's Beware" More many in the realtors pocket. and buyer's and sellers with no representation.

Not having to split a commission with a cooperating broker provides a boost to the bottom line.Extremely TRUE Georgia "Buyer's Beware"

CAR spokeswoman Lotus Lou said the group currently estimates that preserving dual agency generates $1,873 in annual savings for the average agent and $4,627 per brokerage, but was unable to provide specifics on how those estimates were derived.

"Each agent and firm makes that additional amount, respectively, because of dual agency," Lou said.
The jury is still out, however, as to whether buyers and sellers are at a disadvantage when they agree to dual agency or other forms of limited- or non-agency representation.

A study of 4,154 repeat sales in the Memphis, Tenn., market from 1997 through 2003, "Homeowners’ Repeat-Sale Gains, Dual Agency and Repeated Use of the Same Agent," found no convincing effects of accepting dual agency for buyers or sellers.

Another study of 1,334 Utah home sales in 1999 and 2000 found that the impact of agency representation varied by property size.

For small- to medium-sized homes, buyers represented by their own agents paid about 2 percent less than those who were represented by the listing agent, or who were unrepresented "customers" of the listing agent.
But the study found that the benefit of working with a buyer’s agent could easily be canceled out by generous commission-split offers.

That study, "Agency Representation and the Sale Price of Houses," revealed that sellers of medium- to large-size properties agreed to larger price reductions when the buyer was represented by a designated agent.
The authors of the study theorized that listing agents might be more likely to pressure sellers to agree to a price reduction if an offer was coming from a buyer represented by another agent at their firm.
More recently, an analysis by technology-based real estate brokerage Redfin of 230,000 home sales in 22 markets around the country in 2011 concluded that sellers represented by dual agents agreed to larger discounts from their asking price than sellers represented by single or designated agents.
Redfin — which primarily represents buyers in single-agency relationships — acknowledged that sellers represented by dual agents may have been able to negotiate commission discounts.

Legal liabilities
Despite more than two decades of tinkering with the laws, regulations, customs and practices governing Realtor-client relationships, real estate brokers still view agency issues as theirgreatest potential legal liabilityGeorgia "Buyer's Beware"

NAR’s latest survey of members showed 18 percent of Realtors practiced transaction brokerage in 2010, up from 10 percent the year before. The percentage of Realtors practicing buyer and seller agency with disclosed dual agency dropped from 41 percent to 32 percent. Our area inGeorgia it is up in our area by 99% "Buyer's Beware"

Statistics provided to Inman News by four of the nation’s largest multiple listing services show declines in same-broker or same-office transactions during the last decade. Our area inGeorgia it is up in our area by 99% "Buyer's Beware"

At the largest MLS in the Northeast, Rockville, Md.-based Metropolitan Regional Information Systems Inc. (MRIS), for example, 21.7 percent of transactions in 2002 were handled by an agent or agents working out of the same office. 99% of sold listings in Georgia are sold and listed by same agent. with no protection to the buyer or seller and full commission to the listing agent. "Buyer's Beware"

The percentage of same-office sales dropped to 15.8 percent in 2009, a low for the decade, before rebounding to 16.4 percent in 2010. Our area in Georgia it is up in our area by 99% "Buyer's Beware"

Roselind Hejl, an agent at Coldwell Banker United Realtors in AustinTexas, said she believes that dual agency is becoming unacceptable to consumers in an era of increasing transparency. In Georgia it is the only agency sought out by local Realtors. Dual Agency in Georgia is sought out by local realtors for the full commission. "Buyer's Beware"

"I think (dual agency) is a holdover from the days when both agents represented the seller, and the buyer was technically not represented. It was customary to ‘double dip’ and earn both sides of the commission," she said. "Buyer's Beware"

"In today’s world, agents may get away with this once in awhile, but dual agency is rapidly coming to an end. The public wants more information and transparency. It is up to us to respond to that." They get away with it everyday in Georgia. "Buyer's Beware"

Kansas agent Chris Dowell, meanwhile, said he believes the wealth of information available on the Internet has encouraged a "do-it-yourselfer" mentality, and that there is a "trend toward unrepresented buyers purchasing through listing agents directly." It happens daily in Georgia So"Buyer's Beware" An uneducated buyer is going to believe whatever their buyer's agent tells the buyer.

Worries about legal liability aren’t the only factor that may be contributing to a general decline in double-ending.

The role of real estate websites
Consumers today are likely to start the home search process on websites like, Zillow and Trulia that feature advertisements or lead forms for brokers and agents who are seeking to represent buyers in their market.

Those advertisements — typically worded as an offer to provide more information about a particular property that has come up in search results — have been controversial with some listing brokers, who want inquiries from prospective buyers funneled to their agents.

Critics say listing brokers who object to the ads are worried that they are losing out on opportunities to double-end transactions.

Some brokerages — such as Minnesota-based Edina Realty Inc. — have pulled their listings from "third-party" sites that send business to their competitors over concerns about ads and lead forms that appear next to their listings.

The nation’s fourth-largest brokerage, Pittsburgh-based Howard Hanna Real Estate Services, recently took another tack, entering into marketing agreements with and Zillow to prevent competitors’ advertisements from appearing next to the company’s listings.

Third-party sites not only provide listings data, but statistics on market trends and neighborhood demographics, crime and schools, so consumers are no longer reliant on real estate agents as the primary source for community, neighborhood and home information.

Tuesday, September 9, 2014

Dual Agency is "Bait and Switch."

There is a new found medical term in the Real Estate industry call “Selective showing” just like Selective memory “Selective showing” is a rare symptoms found only when working with a dual agency. For some reason the agent is only able to remembers to show the buyer the listings that are ether listed by the same agent and office or where the most effective commission is available. There is a cure for these symptoms, and it’s to work with a buyer’s agent. A dual agent is counting on the buyer thinking that they are going to get a better price by working with the same listing agent. NOT TRUE!

Dual agency is a way for brokers to unfairly get paid double. It is most prevalent at large brokerage firms (we recommend avoiding these). Commissions are already arguably too high and savvy consumers can avoid paying a double fee while also preserving their right to representation.
Dual agency occurs when real estate agents from the same firm claim to represent both the buyer and the seller in the same transaction. Representing adversarial interests at the same time is a legally impossible situation ("serving two masters") and is illegal in every other profession. Worse, brokers are incentivized with a double fee if they manipulate you to agree to this.
Dual agency (also known as Designated Agency) is often  branded (even marketed) to consumers by large brokerage firms as a thing of value - it is not. Although the term “dual agency” seems to infer an important relationship of trust and reliance, dual agency is a betrayal in which the firm becomes a secret double agent that only gets paid double if they can convince you to do it.
In order to avoid dual agency, seek out smaller, highly qualified and independent brokerage firms that understand and agree to other more favorable relationships such as Exclusive or Single Agency representation.
Negotiating Tip: Sellers, instead of negotiating a bundled commission, negotiate each part of the commission. Do it yourself ("unrepresented") buyers typically receive no financial benefit for their work. Instead the listing broker confiscates the entire amount (a hogger). So instead of negotiating a 5% commission, negotiate how much your listing broker will get (2% for example), negotiate how much will be offered to buyer brokers and do it yourself buyers (3%). When buyers are searching, yours will stand out because buyers stand to save 3% only on your house by doing it themselves. Listing brokers should not care whether the 3% is paid to buyer brokers or buyers. If they claim that they have to do more work, then keep shopping until you find a listing broker that is willing.
Looks like this:
Listing Broker: 2%
Buyer Broker or Do It Yourself Buyer: 3%

Bait and Switch
Dual agency is potentially one of the worst “bait and switches” possible because it involves the “switch” (abandonment) of a trusted advisor and advocate. Even with disclosures, consumers rarely expect the change in relationship (and often never even know that it occured) that comes with dual agency and they are almost never prepared for the complete abandonment that defines dual agency. And despite the degradation in the level of services in a dual agency situation, the client ends up paying double.

Should Less Service Equate to a Lesser Fee?
The Consumer Federation of America came up with a recommended fee schedule that suggests a sliding downward scale to align the degradation of services that results from dual agency with a lowering of the fee Realtors charge.  According to them, less service should translate into a lower fee. 
It is Illegal for Attorneys to Practice Dual Agency
It is illegal for attorneys to engage in dual agency in adversarial relationships. Yet, attorneys possess far higher entry level licensing standards and education requirements than do Realtors.  In addition, attorneys are trained in how to manage conflicts of interest. Realtors are not.
Attorneys must have a post graduate doctorate degree and pass a State Bar Exam in order to become licensed. They also have a meaningful Code of Ethics that provides substantial and public penalties for infractions. Even with their thorough training in agency relationships and conflict management, attorneys avoid dual agency because it places too much risk on their clients.
Licensing requirements for real estate agents are essentially non-existent.  The minimum standard to obtain a real estate license in the United States doesn’t even require a high school diploma and an individual can often obtain their license after taking only a 30 hour class on how to pass the exam.  And their "Code of Ethics" is designed to protect Realtors, not clients and is enforced by peers who are members of their trade association and all decisions are kept private.  Real estate licensing laws are typically lax as is enforcement of those laws.
There really is no comparison. Realtors do not possess the necessary training or education to engage in such a complex relationship as dual agency.
Despite the complete lack of minimum standards and the incredible complexity and danger of dual agency, it is now legal in most states for Realtors to practice dual agency.
Attorneys run conflict checks to avoid dual agency and have for the most part bifurcated their profession into plaintiff and defendant firms. Nothing like that system exists for Realtors. We believe that it should. To make matters worse, Realtors don’t understand dual agency, they have little training in conflict management,and disclosure forms are misleading and inadequate.  Consumers don't understand it, are highly vulnerable and typically rely upon their Realtor for skewed and inconsistent “advice” about dual agency.  And to totally drive the malfeasance home, Realtors are financially encouraged to practice dual agency and fondly refer to the bagging of dual agency clients as a “hogger.”

The Worst Kind of Swine Flu 
Dual agency (aka "Hoggers") exist to enable real estate brokerage firms to grow to enormous size and to unfairly collect double commissions.  It's greedy, dishonest and anti-competitive.  Similar to theft by swindle, dual agency is highly profitable and relies upon the vulnerabilities of its victims to succeed.  We call these double agents "predatory fiduciaries" because their practices differ little from those of the predatory lenders. Ironically, dual agency was a response to an innovative entrepreneurial business model called exclusive buyer agency that was quickly gaining market share and improving the real estate marketplace. Exclusive buyer agency offers a legitimate and substantial benefit to consumers in that agents refuse to expose clients to dual agency and offer only exclusive loyalty their buyers. 
Exclusive buyer agency still exists and is promoted by a trade organization called the National Association of Exclusive Buyer Agents ( We have a list of Exclusive Buyer Agents listed in our Service Providers section in the upper right sidebar of this page.

Excessive Realtor Lobbying Power
The National Association of Realtors is the post powerful lobbying group in the United States. They claim that 97% of the legislators they support get elected. It is considered political suicide for legislators to go up against this group. Add in the lobbying power of its sister and subservient industry groups and you will understand why it is a truthful remark to state that, "No real estate related law will get passed unless the Realtors sign off on it first."  

Legalizing dual agency allowed the Realtor Associations' membership to get paid double while betraying their own clients. Legalizing dual agency is akin to legalizing fraud. In fact, the courts describe "undisclosed dual agency" as fraudulent conduct. We find it incredulous to even try and state that consumers receive dual agency disclosures even close to what the common law requires of other professions. Consumers certainly are not giving their informed consent (another common law standard).

Without an all powerful lobbying group behind them (National Association of Realtors “NAR”), it never would have been possible to legalize conduct that is more accurately described as a betrayal. The common law standard to permit dual agency requires a full disclosure of all the material conflicts of interest (an almost impossible standard) and the informed consent of the client (another almost impossible standard). Rather than adhere to these common sense standards, Realtor Associations across the country changed the law so that they could double dip. They amassed a colossal lobbying effort to rewrite state laws to allow for dual agency. In one lobbying effort they defiled two hundred years of common law and eliminated an important and already successful point of redress for consumers who were harmed by dual agency – class action lawsuits.

 "Dual Agency is a Totally Inappropriate Agency Relationship"
Hypocritically, it should be noted that the National Association of Realtors previously took the position that, “Dual agency is a totally inappropriate agency relationship for real estate brokers to create as a matter of general business practice…The disclosures and consents necessary to make a dual agency lawful are so comprehensive and specific that a typical real estate broker cannot undertake them as a matter of routine.” Taken from “Who Is My Client? *– A Realtors Guide to Compliance with the Law of Agency” 1986 National Association of Realtors. See attachment below.  The Executive Vice President of the Association also wrote a letter about the topic.

 Dual Agency Should Be Banned
CAARE’s position on dual agency is that it should be banned. It is an insurmountable conflict of interest that results in the abandonment of the client when they need their agent the most – right when they find the property they want. We believe that banning dual agency is possible with enough public support. We have drafted petitions and have lots of information to help provide imepetus for this change. At the very least, investors who loan mortgage money should forbid dual agency in their transactions. In addition, HUD should forbid dual agency on all federally funded loans that involved especially vulnerable distressed home sellers (short sales). When mortgage fraud is rampant, consumers need more than ever to be able rely upon their Realtor for exclusive representation and unbiased and untainted advice. We would like to see the elimination of disclosure statements that disclose bad conduct like dual agency and see in its place the elimination of bad conduct like dual agency.

*The National Association of Realtors' Official position on dual agency in 1986, "Dual agency is a totally inappropriate agency relationship..."

Friday, September 5, 2014

Never Agree to Dual Agency

Dual agency means serving two masters.  No other profession is permitted to routinely engage in this practice that most professionals feel should be banned (see our attorney survey on this topic).  No other profession has special laws written for them that automatically reduces their liability in these relationships. And real estate agents are perhaps the least qualified to handle this conflict.  Dual agency occurs when real estate agents represent both the buyers and sellers on the same transaction.  When that happens real estate brokers collect a double commission and  they are prohibited from doing anything to the detriment of either party.  That means that they can not help you negotiate price or terms of your real estate transaction.  It means that they are getting paid twice as much for doing a tenth of the work.  

Dual Agency is a conflictive relationship that strips buyers and sellers of service to a level that can best be described as abandonment. Dual agency arises when the real estate broker is representing both the buyer and the seller. It is illegal in every other fiduciary profession except under the most extreme circumstances. It is routinely practiced in residential real estate where there is the least amount of training. When a real estate broker engages in dual agency they may not work to the advantage or the detriment of the buyer or seller. In other words, all the reasons you hired your broker vanish - often with little warning.

Dual agents are legally prevented from negotiating price or terms (two of the most important reasons consumers hire Realtors). And perhaps the biggest problem with this betrayal is that it usually presents itself with little warning to the client - it is a bait and switch. The broker could be acting in the client's best interests all the way up to finding the house that creates a dual agency. At that point the buyer or seller are on their own.

In a dual agency, brokers don't have to share the commission with other brokers so they make twice as much money. They profit greatly from this practice. Realtors, who typically have no understanding of the legal ramifications of their own fiduciary relationship with their clients, often illegally counsel their clients of the so-called "benefits" of dual agency. We're here to tell you that there are NO benefits and that you should NEVER agree to dual agency. Find a small brokerage firm with highly qualified real estate agents and demand that they not engage in dual agency. The likelihood of dual agency arising with a smaller firm is far less than with a large firm.


Would you hire the same Divorce Attorney that is representing your ex partner?
Why would anyone think they are getting a better deal when their Agent also represents the seller?
Back in the Day…

Back in the day, when interest rates were 18%, and the MLS consisted of a huge 3-ring binder, agents and brokers mostly represented sellers, but the public didn’t exactly understand this. They would call up an office, or a listing agent to see a home, write an offer, and assume that whoever wrote that offer, was representing them. They had no clue that the listing company and agent were actually representing the seller!
Over the years, and many lawsuits later, the evolution of agency has emerged. And to be honest, the public still doesn’t get it, and neither do many agents.  The National Association of Realtors has released their Bi-Annual Legal Scan, and while agency in and of itself isn’t the leading cause of disputes, dual agency came out as a high ranking issue.
What is Dual Agency?
Dual agency occurs when one agent represents both the seller and buyer in the same real estate transaction.
When a potential buyer sees the advertising for a home for sale and calls the listing agent, the listing agent has a choice to show the buyer the home but only represent the seller or to convince both parties to agree to dual agency.


For example, a buyer wants representation by a REALTOR® while purchasing a FSBO. This can be confused with dual agency, and often is, but as both  parties are not represented (the seller is representing them self), there is no dual agency.
Some people may  not need to have representation. If we think of the experienced  investor, the lawyer selling a FSBO that only needs their house in the  MLS but is fine to handle negotiating, the contracts, and closing, or  possibly the buyer who has purchased before, and feels comfortable  enough to buy without the use of a buyer’s agent, but wishes that the agent  coordinates the closing details.

What are the Agents Responsibilities in a Dual Agency Situation?
If they are a REALTOR®, ethics says confidentiality for both parties   should be the norm. So even though the agent is working now for both   buyer and seller they have to provide fair business dealing to both.
However, the practice of representing both parties in a transaction  is  SLIPPERY.  One basic rule of agency requires maintaining   confidentiality.  When an agent represents both parties, the rules of   confidentiality essentially make the agent a document preparer at best.    They can’t share information about either party with the other.
For   instance, an agent representing both cannot tell a seller what the   buyer is willing to spend.  Conversely, the agent cannot tell the buyer   what the seller is willing to take.  Within the rules of agency   representation, it’s required that when an agent knows a material fact,   they must share that fact with their client.
The most important point for you to know about dual agency is that if   your agent is also representing the other side, your agent cannot advocate for you in negotiations or give you advice on pricing. This means that when you hit a stumbling block in the negotiations, your agent can’t fight for your needs.
 Let’s say that a buyer and seller are negotiating and they are $5,000 apart on purchase price. When we represent the buyer, our job is to convince the seller that our buyer will not pay more and that they should take our offer because it is the best they will do. As a seller’s agent, our job is to convince the buyer that the house is worth more than they are offering, and the seller won’t reduce the price any more.
 Dual agents can’t take either of these positions.
 All a dual agent can do is present to each client what the other side has responded, and ask if the offer on the table is acceptable or if they want to make a counteroffer.

 Who Benefits from Dual Agency?
 With real estate agents coining terms like Double Bubble, Double Dip, Me-Me it’s no wonder there is a perception that Buyers and Sellers don’t benefit from dual agency. 
The only person who benefits from dual agency is the agent.
Many agents are eager to act as dual agents because they get to keep the entire commission. When an agent is hired to sell a home, a portion of the commission paid to the listing agent is given to the buyer’s broker. If the agent represents both sides, then they get to keep the entire commission.
How do I handle Dual Agency Situations?

I don’t do dual agency except in rare situations.
I think it is a bad idea and not in my clients best interests.
If I have a listing and show the property to buyers without their own agent, I explain that I am represent the seller. I let them know that they have 3 choices if they like the property and want to make an offer:
  • I can assist with the paperwork  and the contract details just like a store salesperson can assist  the people that are purchasing products from the store. I represent  the seller and will encourage the buyer to accept the terms that the  seller wants. By the way, this is exactly what new construction  salespeople are doing when a buyer purchases a new home without a  buyer’s agent.  But this would be illegal when the Realtor/Broker is part owner of the construction company. This information must be disclosed to all buyers and when this information is not disclosed this would be considered a violation of license law. In this scenario you will end up losing more and paying more for your new home.
  • I can refer them to another agent  that can act as their buyer’s agent…an agent that can represent  just their interests.
  • They can find a buyer’s agent on their own, and have that  agent submit an offer on the house.
The next time you are in a market to buy, make sure you have your own agent.
If you discover a home through an ad or a yard sign, call an agent that you can trust and that will represent you– not try to sell you on dual agency. Rather than calling the agent working for the seller, and I can arrange a private showing for properties anywhere in Bloomington, Indiana.