Thursday, February 21, 2008

Salesperson Cannot Represent Competing Purchasers Continues

Last week I summarized a Montana court case where an agent had represented two competing buyers on the same property. The buyer, who failed to get the property, claimed that the agent had failed to fulfill his duties and did not act in his best interest by representing competing bidders. The real estate brokerage and association argued that it was possible to represent both, since agents were trained in dual agency, and the agent had not done anything to adversely effect the outcome of the bidding. The winning offer was accepted based solely on own merit and the agent did nothing counter to the losing buyer's interests.
This topic spurred lively debate at our Tuesday morning Area Properties staff meeting and also brought an interesting perspective from a blog reader, Steve from Massachusetts. Most of my agents are suspicious of dual agency, sense its pitfalls and, in the past several years, have represented either the buyer or seller, but not both. They asked how can one effectively advance the positions of two of opposing forces? Likewise the question was raised whether the agent in the Montana case had disclosed his intention and obtained permission to represent multiple parties? It was assumed that this was not done and therefore, more than anything, evoked the ire of the losing bidder. Steve from Massachusetts contributed that agents in Massachusetts represent sellers only and disclose that information to buyers. He reminded me that single agency avoids the issue. Therefore the agent has no particular duties to buyers aside from honest and fair dealings unless otherwise hired by them. It reminded me of the old days in Oregon before dual agency when buyers felt totally without representation.
In the Montana case, as I read the article, the court narrowly sided with the plaintiff. The court felt it was not enough to sit on the sidelines or do nothing adverse while the forces duke it out. Rather, agency means taking an active role in promoting your client's position. This the court felt was not possible when representing competing clients on the same property. This, of course, says the same conditions are true when an agent represents a buyer and a seller on the same property. Even though dual agency is allowed, it is limited in scope and contradictory in nature. How many consenting sellers and buyers understand that maybe half a loaf isn't really bread at all? Lee

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