When and how to use Dual Brokerage can be confusing. Let’s break it down.
RMAA Policy Does Not Allow Dual Brokerage
First, RMAA policy does not allow dual agency where one Agent represents both parties in a real estate transaction without prior written approval by the Broker.
Potential Dual Agency situations can occur when (1) a buyer comes to the listing Agent’s open house, (2) an agent is an on-site builder representative, (3) the listing agent receives a direct solicitation from a potential buyer from a sign-call, ad-call, or other similar contact, or (4) a buyer is interested in a for sale by owner. In situations like 1, 2, and 3, the Associate involved will represent the seller as a client, and in situations like 4, the Associate involved will represent the buyer as a client. The other party in these situations would be treated as a customer, and no dual agency should occur.
Should the other party insist on client representation, RMAA’s preferred policy is to assign another agent from our office to work with that party. Any compensation sharing between agents should be agreed upon in writing in advance and a copy should be given to the office. With this preferred policy, different agents affiliated with our office act as Designated Agents to exclusively represent different clients in the same transaction. The office has the right to assign such agents in order to have a designated agency situation rather than dual agency situation. Each agent so assigned shall ensure that they each represent their respective clients in accordance with BRETTA, as well as the respective brokerage agreement. Regarding designated agency, the Company has adopted a policy that the Associate identified in the listing agreement is automatically assigned to represent the seller as a client and that the Associate identified in the Buyer Brokerage Agreement is automatically assigned to represent the buyer as a client.
Exceptions for Unique Situations
Sometimes the preferred method of Designated Agency is not appropriate. An example would be if the agent has executed client relationships with both the buyer and the seller. That is, a buyer that is looking wants to make an offer on a property listed by the same agent. In that case, an exception can be made so long as one of the Broker Team approves the Dual Agency and both the Buyer and the Seller consent to the Dual Brokerage. Consent to Dual Brokerage is generally not included at the time Brokerage Agreements are entered because it is not an allowed type of agency allowed by RMAA. Therefore, both the Buyer and Listing Brokerage Agreements would have to be amended for the clients to give informed consent to Dual Brokerage.
Do It Right
NAR’s Code of Ethics and Standards of Practice offers guidance for conducting a lawful and ethical dual agent transaction. Articles 1-12 and 1-13 state that agents should discuss with clients even the potential of circumstances for a dual agency situation to arise, well before it ever does. Because the RMAA policy is not to use dual representation, it should be discussed as a unique situation that requires additional permission from the RMAA Broker Team and marked on the Brokerage Agreement as an agency that RMAA does not offer. However, if it is required in those limited circumstances, the Brokerage Agreements can be amended to include it.
Disclose, Disclose, Disclose.
Disclose everything you can, to both sides, so they know exactly what you can and cannot do in a Dual Agency. The GAR Brokerage Agreements include specific language that should be discussed with the client:
Dual Agency Language in the GAR Agreements
The GAR language includes that the client is aware that Broker is acting as a dual agent in this transaction and hereby consents to the same. The client must be advised that:
(1) In serving as a dual agent, Broker is representing two parties, the seller and the buyer, as clients whose interests are or at times could be different or even adverse;
(2) Broker will disclose all adverse, material facts relevant to the transaction and actually known to the dual agent to all parties in the transaction except for information made confidential by request or instructions from either party which is not otherwise required to be disclosed by law;
(3) The client does not have to consent to dual agency. The consent of the Client to dual agency has been given voluntarily and the client has read and understands the agreement.
(4) Notwithstanding any provision to the contrary contained herein, the client hereby directs Broker, while acting as a dual agent, to keep confidential and not reveal to the other party any information which could materially and adversely affect their negotiating position except as required by law.
(5) Broker or Broker’s affiliated licensees will timely disclose to each party the nature of any material relationship with other party other than that incidental to the transaction. A material relationship shall mean any actually known personal, familial, or business relationship between Broker and a party which would impair the ability of Broker to exercise fair and independent judgment relative to another client. The other party whom Broker may represent in the event of dual agency may not be identified at the time the client enters into this agreement. If any party is identified after the agreement and has a material relationship with Broker, then Broker shall timely provide to the client a disclosure of the nature of such relationship.
(6) Upon signing this brokerage engagement with the dual agency disclosures contained herein, Seller’s consent to dual agency is conclusively deemed to have been given and informed in accordance with state law, provided that the client has consented to Broker acting in a dual agency capacity.
Confidentiality Must Be Maintained
The RMAA Policy on Confidentiality follows BRETTA. As required by the Brokerage Relationships in Real Estate Transactions Act (BRETTA), Associates must maintain confidentiality of all personal and financial information and other matters identified as confidential by the client unless otherwise required by law or if the buyer permits disclosure of the information by subsequent word or conduct. An Associate should treat as confidential any information provided by the client that may reasonably be expected to have a negative impact on the client’s real estate activity. Licensees should pay attention not to make unauthorized or offhand comments about a client's situation or property in a way which could be considered a violation of the duty of confidentiality. Four areas considered of importance are:
Publicly Available Information is Not Confidential
Agents can still counsel their clients based on publicly available information. If information is in a public record, or it’s anything that the buyer or seller says can be shared, then that information is not confidential.
Confidentiality Can Be Hard!
Buyers and Sellers can be relentless! They’ll beg you to reveal the other side’s position. If the information is confidential, you can’t do it!
Real Estate News, Brokers Blog & More