L9/C3: Role of an Agent in a Real Estate Transaction/Dual Agency

What are the disclosure obligations when it comes to designated agency?

As with dual agency, designated agency must be disclosed, explained, and consented to up front in an agency disclosure discussion before the client enters into a contractual agency agreement.

Although Agent Sally brought both the buyer and the seller to the brokerage, Broker Jenny assigned Sally as a designated agent for the seller and assigned a different agent to the buyer. What is the most likely explanation for Jenny's actions?

Broker Jenny likely chose to establish designated sales agents to give both clients at least some degree of individual representation in the in-house real estate transaction.

agents who knowingly practice undisclosed dual agency could:

Lose their license Lose their commission Have legal action taken against them

Dual agency can jeopardize agents and result in unhappy, underrepresented clients. So as a new agent, what should you do?

Make sure you know your brokerage's policy regarding dual agency. Make sure all parties agree to the dual agency relationship in writing through informed consent.

Forms of Dual Agency

One Agent, Two Principals Two Agents, Two Principals (ex. in house transaction)

Why does the fact that a seller wants the highest sale price possible while the buyer wants the lowest sale price possible create a potential issue in dual agency?

That a seller wants the highest sale price possible while the buyer wants the lowest sale price possible is an example of conflicting interests that can exist between two parties in a dual agency transaction. This can make it difficult, if not impossible, to serve the best interests of both.

Dual Agency: What NOT to Disclose

The other party's willingness to pay more or take less for a property The other party's motivations to buy or sell a property The other party's willingness to accept different terms than appear in the offer The financial condition of the other party

Advance Consent to Dual Agency

The seller or buyer agrees to dual agency before it occurs by indicating the same on the agency disclosure form. the customer is entering into a single agency relationship but agrees to dual agency in the future, should that opportunity arise.

Designated Agency

an agency arrangement wherein both parties to the transaction are represented by their own agent, but both agents are employed by the same brokerage. By necessity, each client enjoys an agency relationship exclusively with the named agent within the brokerage.

Dual Agency (AKA divided agency)

an agency relationship wherein both the buyer and the seller are represented by the same broker in an in-house real estate transaction.

Why is consent especially important with dual agency?

because client representation is compromised, specifically regarding the fiduciary duties of full disclosure and undivided loyalty.

Why must an agent be vigilant about dual agency?

because even when a license holder works for a brokerage that allows dual agency, that agent doesn't necessarily go into a particular agency relationship knowing dual agency will come into play in that transaction. Sometimes it comes as an unfortunate surprise.

Undisclosed dual agency is ___________

illegal

Dual agency is ________ in Georgia

legal

In a dual agency, what are both parties legally required to do?

to consent to dual agency in writing for it to be legal.

What is the best that a broker can commit to in a dual agency?

to making sure the transaction is conducted in a fair and impartial manner, with confidentiality preserved in such a way that neither party obtains an advantage over the other.

Implied Dual Agency

when a party assumes consent to the relationship based solely upon inferences formed by the actions, conduct, and words of either or both parties.

Undisclosed Dual Agency

when both parties to a real estate transaction are unknowingly represented by the same broker.

Is designated agency allowed in Georgia?

yes under BRRETA