This lawsuit is why you need to understand single agency...
by Erin Salem
on Tuesday, December 4th, 2018 at 11:34am.
In a case filed this year against one of New York's most prestigious Real Estate companies, Houlihan Lawrence, plaintiffs are arguing that the brokerage duped them into signing dual agency forms. Dual agency is when a Real Estate agent can represent both the buyer and the seller in a single transaction, which means that neither party has the benefit of full-disclosure, loyalty, or confidentiality. The agent is working for the deal, not for the people involved. The law in New York states that both the buyer and seller must be fully informed if a Real Estate agent is acting as a dual agent. While the case is still pending and it's possible the plaintiffs did sign documentation that their agent was acting a dual agent, it doesn't mean they understood the repercussions of dual agency.
Dual agency is actually illegal here in Florida, but acting as a transaction broker is not illegal. Similar in some ways to dual agency, a transaction broker is one who only represents the transaction or a customer in a limited capacity (whether for the buyer or seller) and is not legally required to disclose anything except material defects in a home not readily observable (latent) or act as a fiduciary in any capacity. The customer gives up their rights to the undivided loyalty of the real estate agent, and the agent is not required to maintain confidentiality within the transaction. The agent is only there to ensure a legal transaction closes.
So what does this mean for you?
It means that like a dual agent, your transaction broker is not required to disclose everything to you! Other than material/latent defects that are not readily observable that could affect the value of a home, a transaction broker doesn't have to tell you anything!
Single agents, on the other hand, provide confidentiality, loyalty, and a fiduciary role to their clients, agreeing to only what he/she knows is in the best interest of their clients (which sometimes means walking away from a deal and not making any money). Not all brokerages allow their agents to act as single agents. In fact, less than 3% of agents in Florida can be single agents. Round Table Realty encourages its agents to work as single agents whenever possible (and in most cases, it's perfectly possible).
Here's where things get even stickier.
Most agents don't even know the difference between transaction brokerage and single agency! When they learn about the difference, they often tell us, "Well, I do all that for my clients anyway!" <gasp!> It is not legal for transaction brokers to act as single agents without documentation. Not only are they stepping out of their lane when they act as single agents, but they could also receive a huge penalty from the Florida Real Estate Commission were someone to report them! And besides that, buyers want someone who is going to keep them informed about everything that affects their best interest. (And most buyers think that's what they're getting.)
Before you buy or sell a home, educate yourself about what kind of contract you're entering into with your Real Estate agent. If they're not acting as a single agent, ask why. Ask them to transition to a single agent if their brokerage allows it. Or, if it doesn't, consider finding an agent who is willing and able to represent your best interests and only your best interests during a transaction. Don't sign anything you don't understand, and if you ever have questions about your contract with a real estate agent, call a Round Table agent if it's allowed. Not only will they answer your questions for free, but they'll also help you understand the arrangement that will most benefit you. (That's right. Our agents will help you even if you don't hire them. Because no matter what, they're all people before property.)