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CO did! We have Designated agency and Transaction Brokerage for cases when we are the listing broker (with a seller agency relationship) and the selling broker (with a buyer agency rep.)
There was a brief discussion today of whether or not AZ might follow Colorado in going with transaction brokerage, and the class conductor who is also involved in deciding policy for the ADRE said that AZ wouldn't go that route because it has not proved successful in CO.
So . . . please fill me in. What exactly is Transaction Brokerage and Designated Agency. We have neither in AZ. In the "real world" how do these work? What are some of the issues that arise in these transactions?
There was a brief discussion today of whether or not AZ might follow Colorado in going with transaction brokerage, and the class conductor who is also involved in deciding policy for the ADRE said that AZ wouldn't go that route because it has not proved successful in CO.
So . . . please fill me in. What exactly is Transaction Brokerage and Designated Agency. We have neither in AZ. In the "real world" how do these work? What are some of the issues that arise in these transactions?
We are all brokers - no salesman licenses. The managing broker no longer has imputed knowledge. You should understand that is huge. What the client tells me is no longer assumed to be known by the brokerage. I am the designated broker on the buyer or seller listing contract. In theory my managing broker is there to supervise, not advise. The buyer or seller choose agency or no agency - no agency is transaction brokerage. The broker does what is need to manage the transaction as long as the buyer or seller want to pursue it. Think of it as clerking. Do what's needed and necessary at the direction of your client.
I have only worked as a TB for attorneys and other brokers (commercial brokers, who pretend that res sales are beneath them) or new to my area brokers who want access, but not advice.
If I have an agency relationship with a seller and you work in my firm and have an agency relationship with a buyer who wants to buy my listing...everything proceeds as if we were in different firms. Each one of us remains the designated broker for our clients. There are exceptions. Except if I am related to you or one of us is the managing broker, then the rules change.
If I have a listing agreement with the seller and the contract says that I have a change of status if I also have a contract with a buyer - then there is a disclosure form for the change in status from client to customer. Never had to do that. But I can see if I was working for a buyer and I had a call to list a property I thought was perfect...how that could easily happen. Ad & sign calls are handled with the seller being the client and the buyer the customer - we have a disclosure form for that.
A very smart buyer would call the listing broker and demand a one time showing agency agreement to level the playing field for that property. They don't know what they don't know...
As far as it being unproven? It's been years since we changed. No real big issues that I am aware of.
We are all brokers - no salesman licenses. The managing broker no longer has imputed knowledge. You should understand that is huge. What the client tells me is no longer assumed to be known by the brokerage. I am the designated broker on the buyer or seller listing contract. In theory my managing broker is there to supervise, not advise. The buyer or seller choose agency or no agency - no agency is transaction brokerage. The broker does what is need to manage the transaction as long as the buyer or seller want to pursue it. Think of it as clerking. Do what's needed and necessary at the direction of your client.
I have only worked as a TB for attorneys and other brokers (commercial brokers, who pretend that res sales are beneath them) or new to my area brokers who want access, but not advice.
If I have an agency relationship with a seller and you work in my firm and have an agency relationship with a buyer who wants to buy my listing...everything proceeds as if we were in different firms. Each one of us remains the designated broker for our clients. There are exceptions. Except if I am related to you or one of us is the managing broker, then the rules change.
If I have a listing agreement with the seller and the contract says that I have a change of status if I also have a contract with a buyer - then there is a disclosure form for the change in status from client to customer. Never had to do that. But I can see if I was working for a buyer and I had a call to list a property I thought was perfect...how that could easily happen. Ad & sign calls are handled with the seller being the client and the buyer the customer - we have a disclosure form for that.
A very smart buyer would call the listing broker and demand a one time showing agency agreement to level the playing field for that property. They don't know what they don't know...
As far as it being unproven? It's been years since we changed. No real big issues that I am aware of.
Thanks for that info, 2b - it's always nice to hear how things work from a practical standpoint. I think the individual brokers representing their individual clients sounds wonderful! It could even lead to a better business model I would think.
The part I really, really don't like is the client/customer representation. To me, dual agency would be preferred (although definitely severely lacking) because I see the buyer getting screwed on that one. I moved from a state with designated agency (wasn't in the business then - didn't realize that's what it was) - it definitely creates a "buyer beware" situation. At least with dual agency, theroretically, neither the seller or the buyer would have an advantage. With the designated agency, the seller always has the complete representation while the buyer does not. And how many buyers call the agent whose name is on the sign and are clueless? As we've seen from many posts on the R.E. forum, some buyers even think they'll be getting a better deal by using the list agent!
In an ideal world I would love to see us all be brokers representing our individual clients. That makes sense to me. Then no dual agency or designated agency allowed. (The listing agent would be required to refer the buyer to another agent.) Each party would then have complete representation. And if the buyer didn't want any representation, they could go hire an attorney or a flat fee real estate transaction firm to handle the paperwork on a fee/form basis.
In an ideal world I would love to see us all be brokers representing our individual clients. That makes sense to me. Then no dual agency or designated agency allowed. (The listing agent would be required to refer the buyer to another agent.) Each party would then have complete representation. And if the buyer didn't want any representation, they could go hire an attorney or a flat fee real estate transaction firm to handle the paperwork on a fee/form basis.
Unfortunately, that would be restraint of trade. Designated agency works fine - so does disclosed dual agency (or duel agency, as I often explain to the buyer.)
The people who hire us, or chose not to hire us, make the decisions. Some folks always buy new cars from a dealer, others from an auto broker, still others never buy new...who is right? They all are. Some folks don't want or need the representation of a broker. Some should have hired a better broker. Some folks do fine all by themselves. It may not be "best" but it is "right."
Before designated agency, I had a sign call while I was on floor. I showed the property twice to them. Got them qualified with a local lender. Sat down with them to write the offer - I explained dual agency up front (first showing) and again, in writing at the offer - I filled out the state approved forms as they requested. Then when it came time to sign they asked me for a cup of coffee - ok. I told them I'd have to make a fresh pot at 8 pm, they said that's ok. I excused myself and said I'll be back in 5 minutes - but when I came back they were gone, along with the copy of the contract. The listing broker called me the next morning and I explained what happened. My calls to the buyers were not returned. Two days later, the listing broker gets an offer almost exactly like mine, except that it was written by a limited services broker. The seller countered and buyer's accepted. There were inspection issues that the limited services broker wasn't negotiating to the buyers liking, so the buyer terminated. The biggest item was the peeling paint. The buyer wanted it repainted. The seller was willing, but wanted the piddly items removed. (One of them was to replace the hardware on the doors to match, this was a house built in the 1930's and some of the doorknobs had been replaced.) It was an FHA loan. The appraiser would have required the Seller to repaint prior to closing. But the buyer didn't know that. A week later they submit a second offer, this time with an attorney, but they are too late. A second buyer swooped in, paid cash...Seller didn't have to repaint after all.
How do I know all this? Buyer filed a complaint. Explained all the above in the complaint letter that I received a copy of. It's my fault, they said, that they didn't get the house. I should have immediately referred them to a competent real estate broker not in my office, instead of explaining dual agency and showing them the house myself. Real Estate Commission sent me a letter asking me to verify the "facts" and never heard a thing more about it.
2B - I'm sorry you got burned. I agree dual agency is a bad thing. But I really believe buyers are clueless about what a lack of representation means to them. I could almost guarantee that if buyers really understood either dual agency or designated agency, they would never call the name on the sign.
I have known so many buyers (myself included) in my former state that were burned by designated agency . . . and in that state it was always designated agency because the theory was if the seller pays the commission then the agent always works for the seller, regardless of the listing company (sub-agency).
Any time a buyer does not have (competent) representation, they're going to lose out. I can only think of a couple of investors that would be able to negotiate hard, get a really good deal, and know enough about inspections and escrow not to get burned. However, you're always going to have that handful of egotistical buyers who are so sure they know everything there is to know, and they'll want to insist on going-it-alone because they're so sure they're saving money. In that case - more power to them. Here's the list of attorneys and paper processors. See you at the negotiation table!
Designated agency is not sub agency. I am sorry if I did not explain it well.
The brokerage is not the agent, a licensee is. If both the buyer and the seller have listing contracts with the brokerage firm, it plays out as if they were from different firms. No sub agency involved. Agency does not follow compensation.
It does get challenging if the brokers are related, or one is the managing broker...but otherwise all is good with designated agency.
I think it makes more sense.
Now as far as those people who didn't listen, and tried to get something for nothing, don't you think they got what they deserved?
Sorry, 2b, I should have said that my former state was probably sub-agency. I think the transaction process played out similarly as far as the buyer was concerned - buyer was simply a customer, without full and complete representation. Isn't that what you have with designated agency when the agent is handling both sides of the transaction. The buyer is always the customer and the seller is always the client? Or am I confused about that? (And that it's only considered designated agency when the agent (broker) is handling both sides?)
Yeah Gretchen you have me confused to. There is no "dual" down side to designated agency in Nevada. I treat another agent from the brokerage the same exactly as I would from another brokerage. I can't tell them difference between designated and single agency. I change nothing in what I can do or say. No subagency.
There are some instances where this may not be true...I would think involving a dispute where the broker needs to referee. But that is really way down the list. And mostly those would work out OK. There are seldom disputes that require the broker to get partisan in such a matter.
In AZ, we use a form "Consent to Limited Representation" where there will be an agency relationship with Buyer and Seller
This form clearly spells out the limitations in the duties owed to the parties including the inability to disclose if a seller said they would take less or a buyer said they would pay more - things like that -
In AZ, we use a form "Consent to Limited Representation" where there will be an agency relationship with Buyer and Seller
This form clearly spells out the limitations in the duties owed to the parties including the inability to disclose if a seller said they would take less or a buyer said they would pay more - things like that -
Obviously this (Greatday's post about dual/limited representation) is what I'm familiar with because that's what we have here in AZ, but only when the buyer and seller are both being represented by the same agent or agents associated with the same brokerage (even a separate location of that brokerage).
So here's my question about designated agency (since I'm totally unfamiliar with that as it's not an option here in AZ):
Is it considered designated agency in NV and CO when an agent is handling both sides of the transaction? In that case am I correct in understanding that the buyer is always the customer and the seller is always the client?
Am I correct that there's no designated agency in a transaction involving a buyer's agent and the list agent?
Please ignore my comment about my previous state and what I assume was sub-agency in that state. I was only thinking that the buyer's representation would be limited just like in designated agency situation.
Okay - set me straight here.
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) - it definitely creates a "buyer beware" situation. At least with dual agency, theroretically, neither the seller or the buyer would have an advantage. With the designated agency, the seller always has the complete representation while the buyer does not. And how many buyers call the agent whose name is on the sign and are clueless? As we've seen from many posts on the R.E. forum, some buyers even think they'll be getting a better deal by using the list agent! 
