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Well yes. All of this is easily fixed. Simply require the brokerages be run by their broker who is personally responsible to review and approve every transaction.
Given the normal ken of an individual perhaps 10 agents max?
Then we can simply ban dual agency as never being required.
Note that law firms would have lots of problems if one firm did 50% or more of the business in a given area.
Perhaps we simply need to ban brokerages of more than 5 agents. Get back to the original intent.
But given the 1000 plus brokerage of current milieu perhaps better to develop a reasonable way of doing designated agency.
Note that if the Brokers authority is actually designated to the two agents it should not cause any conflict. However I find that clearly designated only in Canada. In the US the brokers obscure the issue.
Designated agency isn't legal in NJ - nor should it be. It doesn't eliminate dual agency - the broker supervising the agents is still a dual agent and the BROKER not the consumer may get to select an agent for the buyer and seller.
The broker cannot review anything. It's too late. The agent is already in the field gaining and violating confidences and motivations long before the broker will ever see the contract. The solution is for agents to act ethically and never attempt to represent both sides of a real estate transaction. Simply refer the client to another agency, and DO NOT COLLECT A REFERRAL FEE. Simple. All it takes is integrity, and a decision.
Then the broker has too many agents and has basically agreed he is unable to supervise them. It is of course a violation of the law. But it is also standard operating procedure is it not?
Sorry. You want to fight the less important battle. The real truth is that the Broker is quite unable to supervise his agents...
But I would think one of the things he can do is designate an agent to take his role on. Probably works better than the existing way.
Why do you object to the referral? I don't personally ever go dual but I have collected a couple of referral fees. Be interested to know why you find that unethical.
Designated agency isn't legal in NJ - nor should it be. It doesn't eliminate dual agency - the broker supervising the agents is still a dual agent and the BROKER not the consumer may get to select an agent for the buyer and seller.
That is what makes the world go round. Most of us in the west think the east is a vast intellectual waste land dedicated to extorting money from the consumer.
I suspect eastern brokers may disagree.
And we are off in to the wonderful land of theory...where we Real Estate people should never go.
The thought of designated agency is that in fact the Broker is conflicted. So he designates two agents to act as "broker" in this transaction. So as long as the real broker stays out of the transaction every one is clean. I have now down well over a hundred of these and they are not a problem other than theoretically. I like and trust my corporate ilk probably less than those of other brokers. I tend to know how my local brethren sin...while giving the benefit of the doubt to others.
Again the obvious answer is do away with large houses. The RE business presumes personal responsibility upon the brokers part while allowing conditions where that is obviously absurd. So stop that...
So as long as the real broker stays out of the transaction every one is clean. I have now down well over a hundred of these and they are not a problem other than theoretically.
If 'the broker' is less than altruistic the problem is real and much more than theoretical.
1. The conflict exists.
2. The consumer does not get to pick 'their' agent. The broker does. I, for one, would want to be free to vett and choose 'my agent' to ensure they are working in my best interest and have the skills to do so.
(For those who may not know: The Broker is the person running the office and that is obligated (under NJ law) to supervise the real estate activities of the agents operating through that office. )
If 'the broker' is less than altruistic the problem is real and much more than theoretical.
1. The conflict exists.
2. The consumer does not get to pick 'their' agent. The broker does. I, for one, would want to be free to vett and choose 'my agent' to ensure they are working in my best interest and have the skills to do so.
(For those who may not know: The Broker is the person running the office and that is obligated (under NJ law) to supervise the real estate activities of the agents operating through that office. )
#2 above makes absolutely no sense. Of course the consumer gets to pick their agent. The consumer meets an agent, talks with an agent, asks questions of an agent, decides whether they want to work with that agent. It's very rare that a broker "picks" an agent to represent a consumer. And even in those rare cases where it does happen, that consumer is always free to decide they don't want to work with the agent, for any reason.
Then the broker has too many agents and has basically agreed he is unable to supervise them. It is of course a violation of the law. But it is also standard operating procedure is it not?
Sorry. You want to fight the less important battle. The real truth is that the Broker is quite unable to supervise his agents...
But I would think one of the things he can do is designate an agent to take his role on. Probably works better than the existing way.
Why do you object to the referral? I don't personally ever go dual but I have collected a couple of referral fees. Be interested to know why you find that unethical.
I object to the referral fee because I am defeating the purposes of having a different agent represent the consumer. Those purposes are independence and undivided loyalty. A buyer and seller have opposite interests that need to be negotiated with full loyalty and commitment through their representatives. I cannot claim undivided loyalty if I am paying my adversary a fee to complete a transaction in which we both benefit.
And I do understand that use of term adversary implies hostility and nastiness. That is not the case in most transactions (though it does happen in some). In fact, many transactions complete with general equanimity and congeniality. Nevertheless, the vital economic interests of buyer and seller are often contraposed. And each buyer and each seller needs to have certainty with regard to the motives and loyalties of their representative. Those loyalties can certainly be clouded where the agent attempts to represent both sides of the transaction. But they can also be clouded if one agent refers to another and gets "a piece of the action" in the form of a referral fee.
In fact, an agent facing duality should not only refer the transaction to another agency, but should also have no say in selecting the agent who gets the referral.
As to your earlier point regarding broker supervision, it does not apply. The problem isn't supervision, it is loyalty and confidence and economic benefit. The Broker still gets a double economic benefit in a dual agency, while the firm represents both ends of the transaction. Yes, two different humans represent the buyer and the seller. But the firm still is representing both sides, and getting paid a double fee to make sure the transaction reaches a closing. That is not a pure and good situation for the consumer. Furthermore, within a single office, there is no confidence or security with regard to protecting the motivations of either party. Paperwork, contracts, and disclosures are kept in unlocked files that are commonly available to all the agents. Phone conversations are made in the open without regard to others who might be listening. Discussions and gossip flow freely. The buyer and seller should not have their representation residing within the same firm, but certainly not within the same office.
And none of this is a problem except for naked greed. The real estate industry has become accustomed to this and is jaded and doesn't see it rationally or morally. However, overhauling the industry is not necessary. Each individual agent can make a decision for himself that he will make sure that his clients are properly represented. In some cases that will mean losing a double commission, referring the buyer or seller to another firm, and being happy with undivided loyalty and a single commission. It's really easy, if everyone follows basic common sense morality.
Last edited by Marc Paolella; 03-19-2012 at 07:38 AM..
And even in those rare cases where it does happen, that consumer is always free to decide they don't want to work with the agent, for any reason.
The fact is that every time an agent must be 'designated' it is because the agent the person had previously chosen (and has probably spent a lot of time with) would otherwise be representing both the buyer and the seller. So, the person the consumer chose to represent them - can't.
That is what makes the world go round. Most of us in the west think the east is a vast intellectual waste land dedicated to extorting money from the consumer.
I suspect eastern brokers may disagree.
And we are off in to the wonderful land of theory...where we Real Estate people should never go.
The thought of designated agency is that in fact the Broker is conflicted. So he designates two agents to act as "broker" in this transaction. So as long as the real broker stays out of the transaction every one is clean. I have now down well over a hundred of these and they are not a problem other than theoretically. I like and trust my corporate ilk probably less than those of other brokers. I tend to know how my local brethren sin...while giving the benefit of the doubt to others.
Again the obvious answer is do away with large houses. The RE business presumes personal responsibility upon the brokers part while allowing conditions where that is obviously absurd. So stop that...
We do not need to get rid of large real estate companies. We only need individual agents to behave morally and do the right thing.
Of course, consumers can also protect themselves: by always insisting on their own representation. If you visit an open house, make sure that you inform the agent running the open house that you will utilize your own representation should you decide to make an offer. If you work with a buyer's agent, make sure that you inform him that you will utilize your own representation if you decide to make an offer on one of his listings. If you call the "agent on the sign" or "on the Internet" to get information about a house, always inform the listing agent that you will use your own agent in any transaction. And of course, the consumer should never divulge ANY personal information to any agent other than his own.
The fact is that every time an agent must be 'designated' it is because the agent the person had previously chosen (and has probably spent a lot of time with) would otherwise be representing both the buyer and the seller. So, the person the consumer chose to represent them - can't.
That's an entirely different circumstance, which only occurs when an agent becomes the agent for a property & a potential buyer for that property. This is the case of dual agency that I believe is not possible to be carried out properly, as one person cannot properly and to the best of his ability advise opposing sides of a single transaction.
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