Implementing Dual / Designated Agency (RE49R05)
Agency Expert Marcie Roggow will bring you the common sense approach to Dual and Designated Agency. It’s not complicated once you have the process in place! This step by step guide will take you through the legal aspects of Dual/Designated agency and then the most important part-walk you through the entire sales process applying what you learned in the first section. Finally someone who can really explain this so it makes sense. See course outline
“How to Implement the In-House Sale Legally”
What are we doing today?
- What is the history of agency in Massachusetts? (1990 1993)
- How do I apply this law?
- What is the correct way to fill out the forms?
- How can my actions cause problems?
- How does the Code of Ethics fit into the law?
- How do I get my questions answered?
6 Statutory Duties
- Full Disclosure
- Reasonable skill
- care and diligence
Duties to Customer Vs. Client
- Perform according to disclosure
- Reasonable skill and care
- Present offers
- Comply with law
- Disclose material Facts
How is Agency Established
Express Written or Oral Contract or Implied Agency through Actions
- How much is too much Disclosure?
- Buyer Representation
- Disclosed Dual Agency
- In-house Designated Agency
- Implementing Designated Agency
Order of Forms
- Massachusetts Mandatory Licensee Consumer Relationship Disclosure
- Exclusive Right to Sell Listing With Designated or Dual
- Exclusive Buyer Representation Agreement with Designated or Dual
- Notice of Designated Agency upon occurrence
- Notice of Dual Agency upon occurrence
Designated Agency Considerations
- Responsible broker provisions
- Appointed agent of both parties
- Team considerations
- 2 Separate agents…no Dual Agents
Recognizing Conflicts of Interest if your Brokerage Represents “2” Clients in the same Transaction
- cannot fulfill all fiduciary duties to both
- lawful after disclosure and informed consent
- cannot have undivided loyalty to opposing parties
- confidentiality vs. full disclosure
- both clients may agree to modify the brokerage company’s fiduciary duties to eliminate the duties of undivided loyalty and full disclosure
13 Things I can do in a Dual Agency Relationship
- Disclose material defects
- Treat both parties honestly
- Provide helpful hints about the property and neighborhood/HUD
- Respond accurately to questions
- Convey buyer’s questions to the seller and vice versa
- Disclose ability of buyer/seller to buy/sell
- Explain terms and procedures
- Assist with property inspections
- Explain closing costs/procedures
- Help the buyer obtain financing
- Provide comparable property information
- Assist with standard PA form
- Work diligently to complete the sale
4 things I can’t do in a Dual Agency Relationship
- Disclose price the seller will accept, buyer will pay
- Disclose terms not in agreements
- Disclose motivation of parties
- Disclose anything that hinders the bargaining position of the parties Without the clients’ written consent!!
Buyers Can be a Customer
If a buyer does not want to be involved in Dual Agency they can remain a customer…
Legal liability vs. Business Loss
- Risk reduction techniques – fear of business may get in the way
- Behavior vs. Disclosure:
- What if your clients will not allow Dual Agency Status
- Before it Occurs
- After it Occurs
Penalties of Breach of Fiduciary Duties
- Forfeiture of Commission
- Recession of Contract
- Actual Damages
- Punitive Damages
- Loss of License
Showing the Property
- Summarize the property information
- Material facts
- Defects vs. Deficiencies (?)
- Help the buyer make the right decision
- The buyer’s agent is the counselor to AID in that process
- Factors: List price, market value, affordability, condition and external factors
- Comparative Market Analysis
- There are limitations
Writing the Offer
- Write the offer according to the
- Buyer’s instructions
- Take into consideration the other players in the transaction
- The Buyer’s agent can recommend issues in order to protect the buyer…reasonable care…even it works to the disadvantage of the seller (Home Inspection)
Unauthorized Practice of Law
Real estate agents sell real estate, not practice law. Agents have been writing “legalized” addendum to purchase contracts…which could be classified as the unauthorized practice of law.
Presenting the Offer
- MLS Rules 2.3 and 2.4
- The Agents ARE NOT ADVOCATES FOR EITHER PARTY
- The Buyer’s agent should be prepared to represent the buyer’s price while not offending the seller
- The Seller’s agent should be prepared to represent the seller’s price while not offending the buyer
Inspections and Other Menaces
- Each party – buyer and seller- are on their own for negotiating the inspection report.
- This is the hardest part of Dual Agency since you can’t work to the detriment of EITHER party.
- Environmental testing, etc
- Walk thru at closing-make sure that you are not surprised – be prepared!
In dual Agency Relationship
The Brokerage Company and their agents have fiduciary duties to BOTH clients
The Brokerage Company and their agents CANNOT ADVOCATE for Either Client
What can you disclose about the other party? Motivation? Strengths? Weaknesses?
- Buyer’s / Seller’s Market?
- Buyer’s Financial Qualifications
- Buyer’s and Seller’s Position