We've had this topic before and things got a bit out of hand (not like that!) because many confused Transaction Broker with Dual Agency, which is NOT the same, no interchangable terms. I'm in Florida, Dual Agency is illegal, Transaction Brokerage is not.
I'm not sure about other states...if your state allows for Transaction Brokerage, do you sell your own listings?
I have done it twice so far. Both on mobile homes on rented land (our office is licensed for it). It never crossed my mind that I would NOT be on neutral ground. I have limited fiduciary duties to both parties. I always require my sellers and buyers to NOT tell me their bottom line.
The latest "two sided" transaction is pending right now. Two weeks of negotiating, I'm not kidding! I never once gave a personal opinion about asking price or the offer. Of course the buyer asked me if his offer was fair. I asked him if it seemed fair to him. He said yes. Voila! Seller did the same thing. I asked her if her asking price was fair to her, she said yes, voila. Dead deal! At this point in time I told the buyer that we can always shop for other mobiles in the area and I told the seller that other buyers would come along. Yes, I could have pushed both of them because I want to get paid but I wasn't hired to get paid. I was hired to sell the sellers mobile and find the buyer a mobile he wanted, which happened to be the seller's mobile. I didn't call the buyer back, HE called ME! "Let's give this another try!" he said. Alright! I tell the seller that the buyer is asking her to reconsider his offer. She takes two days and comes back telling me she would. We negotiate again. He wants to move in before closing date, she refuses. I deliver messages, not my personal opinion. He asks me why a seller would refuse letting a buyer move in prior to closing. I explain to him there might be liability issues; what if he breaks something? Who will pay for it? Etc. He nods and understands what I mean. Next, we're still in disagreement over the sale price. He wants to pay less than she's asking for. Not ever would it occur to me to talk him into offering more and I would have never told her "well, your asking price is a bit too high" - just to get the deal done.
If either side nailed me down on giving an opinion I would present them with market stats for mobiles in the neighborhood. This is what's selling, this is what's not. I still don't give an opinion, just the facts. Both parties would see the exact same stats. I would tell both sides to take a good look and then make a decision based on the facts. I've done the exact same thing before and it worked great. I'm the expert, I have the knowledge. I pass my market knowledge onto both parties and ask them to make a decision. I don't coach, push, or suggest anything. We're on a tennis court and I sit on the net. My feet never touch the ground (I know, sounds uncomfy but it works).
Once buyer reaches a decision I ask: What do you want me to tell the seller? I deliver the message and ask the seller what she wants me to tell the buyer. Deal? That's great! No deal? That's fine too, both parties move on - either way.
I'm a Gemini and maybe that gives me a bit of an advantage because I have no problem being two things at the same time. It's like switching roles or being two agents in one. If I had two children, would I love one of them more than the other? No! Same principle!
And just for kicks, if I had a dollar for everytime a cooperating agents tells me "Uh, my seller will take less / my buyer will pay more!" I could retire. No kidding, few weeks ago a buyer agent told me "My buyer can make up the $5.000 and go full asking price!" Funny, how they always add "...but that's between you and me!"
It's not! It's between them and their ethics!
Greetings, Andrea Mills - sleeping well at night!
www.millsrealestate.net
This is so good. Everyone should read it. Glad it's featured.
"I still don't give an opinion, just the facts."
If only more agents would learn that lesson. I've read through the real estate laws, codes, statutes of Maryland and Virginia many times and I can't find "opinions" there as a duty of a licensee.
However, over the years, I've seen far too much of undisclosed dual agency, which is fraud, practiced by many agnets who claim that all they have to be is "fair". The nice thing about being a fiduciary is that I don't have to be fair.
Thanks for getting the gray matter stirred this morning.
"...but that's between you and me..." It doesn't matter what type of transaction or agency relationship you have, these statements violate so many issues. I like the Transaction Broker platform, unfortunately NY stands on agency; buyer, seller or dual. Dual agency doesn't benefit anyone.
Congratulations and continue to sell you listings. I will sell mine and make sure the clients and customers understand the agency relationship.
Have a fantastic day,
Catherine
Yes Andrea, transaction agents are legal and used a lot in Florida. I have my personal issues with it and feel it is very difficult to represent both sides fairly. Since I work with a full time partner, I normally have one of us handle one side and the other the other side. Works much better for us.
The problem that i have with dual and/or transactional agency is that the seller didn't hire you to be "fair". The seller hired you to advocate on their behalf. The buyer didn't hire you to be "fair"... they, too, hired you to be a bulldog advocating on their behalf. Each of them hired you, in part, to get them the highest/lowest price with the best terms.
And you described it well... as a transactional agent, you've been reduced to answering in "therapeutic" terminology. "I don't know... how do YOU feel about our offer?".... "I'm not sure, what do YOU think we should do regarding the cracked foundation".
Yes, you can manage, with some effort, to be fair and impartial... but that's not what each side hired us for. And for our now "limited" value in this transaction... we now get both sides of the commission.
In Illinois, we have "designated agency" which allows, that if we find ourselves in that position we can designate (choose) a different agent in our same office, or elsewhere, to represent the buyer. We hand the buyer away, and allow them to be fully represented, indeed vigorously represented. We're still allowed to accept a referral fee for handing the buyer away, but at least now they can get appropriate advice on all issues large and small.
We don't have transactional brokerage in NY- we have to disclose dual agency. Some agents are not comfortable with dual agency, others are. I fall into the latter group.
That said, just because you sell your own listing doesn't make you a dual agent. The buyer has to be a client first, and if someone calls on your sign or realtor.com listing that doesn't make them a client. Most times that I have sold my own listing I simply disclosed that I worked for the seller.
I do everything as a transaction agent..
With in our firm we use a 500 designated agent. Transactions when you are both sides can get sticky and your post points out some of the potential pit falls. We justr check the box to say who we represnet and offer designated if the other side is uncomfortable with this
This is the first time I even heard of transaction agency. In North Carolina we have dual agency but I discourage it in my firm. I personally don't do it. I represent the seller if it's our listing and the buyer can either be unrepresented or hire a buyer's agent. I personally think dual agency is impossible and should be eliminated from our business.
Handling both sides of the transaction can be done as described, but I wonder if the seller and buyer are best served in this manner. They're both sort of on their own instead of having a knowledgeable counselor and advisor to guide them.
Sure, you give them the facts, but sometimes it takes experience in the field to be able to analyze the facts and really understand them.
I've handled both sides of the transaction a few times and prefer representing either the seller or buyer, but not both.
Here in Arizona we have only Buyer's Agents and Seller's Agents. Usually when I tell a Buyer (who has called on my listing) that I have a fiduciary (and I explain what that is) responsibility to the Seller, they ask for their own representation. However, if that happens to be anyone with my brokerage (and we have some pretty big ones with thousands of agents) it is still dual agency.
My experience has been to make sure the buyer understands as much as possible and let them decide. I have done successful dual agency transactions. Most of the time the buyer was an investor who buys regularly and understands the contracts. It's all about communication anyway. Informed Buyers and Sellers make smooth transactions.
If I were a buyer (or seller, for that matter), the transaction would seem of far higher value to me if I had an advocate- transaction broker or dual agency seems to create difficulty with a value perception in paying a real estate agent at all. Those practicing this, in my opinion, should charge significantly less than an agent that is earning the money (and respect) of their client via the goal for the "best possible outcome (price)"- a "customer" level transaction would seem to offer far less value- shouldn't it cost a buyer or seller less? Opinion.
Morning Andrea, I've done some transactions where I represented both sides. Fair to say that I learned something on each one. I always try to be extra careful not to " tilt " the deal or create an advantage either way. Hopefully both sides could step back and see the fairness.
Andrea- I just commented on dual agency on another post yesterday. It seems very contradictory and I am glad we do not have it in Florida. Transaction Broker seems to work as long as the agents follow the rules like you. Thanks for posting.
Hi Andrea,
I think Transaction Brokerage can serve both parties well. When both parties have given and taken a bit, and an outcome is reached that is acceptable to everyone, then it has been a success. I don't think that one side or the other needs to "win"...if it closes, and everyone's happy, then that's a win for everyone involved. I live in Colorado and am fortunate enough to have taken many classes from Oliver Frascona, who is one of the original proponents of transaction brokerage. It is fascinating to hear his case (horror) stories!
Don't fool yourself, Tina. Transactional is just dual-agency with a different name.
In both versions, you cannot advise either party in a way that would give either an edge. You can't advise as to pricing, or inspection issues. And you are effectively reduced to working for "the transaction".
Andrea: In our office, once we start as a designated agent.. we stay designated. If someone calls me to see one of my listings.. I let them know I represent the seller. I can still show then and write the offer. They just agree on the confirmation of agency that I represent the seller. If not, I can refer them to another agent that can represent them.
Andrea-- I've done a few transactions where I represented both sides. But, Ireally found it hard...working for both sides.
As I said in the beginning, I'm in Florida where every licensee is presumed to be operating as transaction broker, which since last summer doesn't required specific disclosure anymore (not sure if that's a good thing or not, still thinking). I understand each state is different and transaction broker might have different duties in TN or might be no different from dual agency in AL.
While I do understand that not everyone is familiar with transaction brokerage in Florida, does that still mean it is impossible to accomplish, simply by sticking to the rules?
Andrea, Transaction Brokerage isn't used in very many states, I think. Colorado uses it and maybe California also? The advantage is for the broker because there is less liability, less lawsuits. We have sold our listings on a couple of occasions. As long as you are disclosing equally to both parties, you can disclose what you think the property is worth based on your market analysis to both buyer and seller.
"Opinion" is a no win situation in real estate. Opinions are what you give about draperies and paint colors, but facts and information are the earmark of a true professional.
As far as dual agency, it is such a slippery thing. While it is perfectly legal in Ohio, and I have agreed to it in numerous transactions, it still makes me uncomfortable, as I want to be able to do my BEST for a client and it seems with dual agency that I am an unwilling onlooker. Very uncomfortable.
I agree with Alan, "Transactional is just dual-agency with a different name."
I have always had a problem with "Transaction Brokar" and that's why I refuse to do represent either side that way. Clients hire us believing that we'll represent their best interests and my personal opinion is that you can't do that acting as a facilitator just to get the deal to closing. It always seemed to me that "TB's" could get trapped looking out for their own interests versus the people we've been hired to represent (it's an ethical issue for me). I don't begrudge anyone who conducts business using TB - to each your own.
Dual agency here very much resembles what I see others call Transaction - (and the name here was recently changed to multiple representation).
When we are working with a buyer for one of our listings, regardless of what we are calling it, we are not allowed to discuss motivation or bottom line. We do present the facts and we do ask each party to verify with their solicitor (here, both parties have to use a solicitor to close the deal, so they can use them right from the start of the negotiations, if they so choose).
I, however, have never felt comfortable being put in that position; so if buyers contact me directly, I will do my best to refer them to another agent, because my original contract was with the seller.
I just believe that I can protect my client's best interests in this way.
If you can represent both sides and do it ethically, and both sides believe their best interests were protected, then good for you.
I've never done transaction brokerage, but I did sell one listing where the buyer came in without an agent and insisted on representing himself, so he became a "customer." It was still twice the work for me. If I hadn't (with the seller's full permission) helped him through every step of the way, we'd still be trying to close it!
Andrea, if transaction brokerage is the norm, and offered because other agencies are unavailable (buyer/seller), a person would have to offer their value proposition by excelling in some area (more a question than an opinion)- the advantage to one agency offering is that everyone is on a level playing field, buyers and sellers are aware of only one alternative, and like anything in real estate it's up to the agent to differentiate themselves somehow. My issue is in areas where both buyer and seller agency are the "norm", it would be counterproductive (opinion) to offer anything less that the best offering for the client. Which makes me wonder, in that scenario, why a dual agent, or transaction broker wouldn't simply charge by the hour, or some other form of payment that didn't represent "full" representation. It seems like the insidiousness is largely due to a failure to fully inform both parties, resulting in a "cheaper" experience for them overall.
A big difference with transaction vs. dual agency is that (my GUESS) no description of agency offerings is the word "fiduciary", which many states are straddled with when choices are made.
Andrea, it sounds like you're more impartial than 99% of the other agents out there - Because you're the 1% exception rather than the rule I still always advise my clients to get their own agent representing their specific best interest,
Dan
Andrea,
In my state of Tennessee it is legal to be a transaction broker but I believe we are moving to a time(2-3 years) that it will not be allowed in Tennessee and rightfully so.
Andrea,
It's hard to tell a seller, who hires you to sell their property, that you must change agency if the buyer appears on your doorstep. They don't quite understand agency as it has taken most of us years to understand ourselves.
Andrea, Yep...TB handled right is no big deal. Sellers just want to sell and buyers just want to buy. In my opinion Transaction Brokerage is the closest thing to what we truly do. And to help clarify to some of the commenters, TB is NOT an agency relationship, dual agency is.
Also, just because we are presumed to be TBs in Florida we can work as single agents. We can also represent the seller as a TB and not represent the buyer at all. We don't have to be a TB to both parties.
I'll believe in agency relationships when ALL buyer agents work under a Buyers Broker Agreement. Until that time it is just smoke and mirrors.
Good topic Andrea.
I am a transaction broker in Colorado and agree with every word. I am amazed at how often I hear the "make an offer, it is overpriced, they will take "X"", etc. I don't want to be in that group.
I'm in Illinois and (gulp) dual agency is still LEGAL! I never write a listing allowing for dual agency. I don't need to double dip, and I have no problem referring an interested party to a trusted colleague.
Kudos to you for handling things so well! Truth be told, I'm terrible with secrets... so I could never trust myself in that position anyway!
This is very good education ....
After reading Broker Bryant's explanation, I think I understand it better now.
Sounds as if you're under contract to the seller, but not in an agency relationship with the buyer (although the name, Transaction Broker AGENCY is misleading to me).
Here, we would say, we are offering Customer Service to the Buyer (we have not, nor will we sign a Buyer Representation Agreement with the buyer); however, we must still sign a Customer Service Agreement.
(These are recent changes and still very confusing for a lot of people, who don't realize they can deal with a buyer, NOW, without forming an agency relationship.)
Thanks for the education. It's very interesting to see how it works in different areas.
I'd liek to see these out in AZ. with soo many REO listings sold ( 60 % of the market ) and listings agents selling them by dual agency ( aprox 60% are dual ) a lot of them don't get to the market until they already have a contract ...
Short sales are different, since bank will not pay an agent for both sides.
I have never cared for dual agency. I believe the saying goes "No servant can serve two masters, because either he will hate one and love the other, or be loyal to one and despise the other." So, I am usually the listing agent or the buyer's agent and rarely both. In the past 100 sales, I can't name a single transaction where I acted as a dual agent. There are just too many potential conflicts and pitfalls. Different topic - but I feel the same way where the agent is also the loan officer. Oddly, although Missouri permits transaction brokers, I have yet to see an agent who was acting as a transaction broker on any of our deals. In fact, I often see 0% commission offered to transaction brokers in our MLS.
Elena, not sure about AZ, but we have plenty of short sales where the bank will pay the agent on both sides.
Ryan, in FL, we're all assumed transaction brokers. I don't think anyone would be willing to show a home if there wasn't a cobroke offered for transaction brokers.