Woohoo!! Merv's got it DOWN!!

[photopress:sc.jpg,thumb,alignright]At first glance it might appear that Greg Swan and I are like-minded when it comes to commission issues. but not so. Greg and I do agree that the buyer should not be led around thinking they are getting a free ride compliments of the seller, and we are both part of a growing minority in that regard. We do in many ways lead the cause of buyers controlling their side of the fence, though sometimes Greg goes a little over the net on that one.

But Merv has got it DOWN!!! Agents like Merv and I are running the test cases that will prove to be the real answer to all of this. No One Size Fits All commissions. A range of prices for various scenarios. A range of prices based on a collaborative effort of determining the client’s needs…a collaboration between the agent and the consumer.

Merv, I am totally with you on this one, and I too have case studies, though by and large, and specifically as to commission negotiations, I was not planning to unveil mine until Jaunary 2007. You GO BOY! Woohoo! The agent and the client TOGETHER determine the services and advices that the client both wants and needs. The agent cannot participate in the consumer cutting themselves short of what they need, to be successful in the client’s goals. Nor should the agent build everything around a total package of high fee services, that always leads to a win for the agent, by including more than the client needs.

For instance, just closed one where the buyer represented himself, after first trying a “full service”/full fee agent. The seller and I gave the buyer the FULL 3% buyer agent fee. Buyer just moved into his new home and is thrilled! Seller is happy and has moved on, after unsuccessfully trying a full stripped down mls only version, before hiring me. Total fees paid in that transaction – 2%. In another instance, on a different property, a buyer called and said she was going to represent herself. I asked her a few questions and she knew absolutely nothing about what I was talking about and was missing several key details needed to represent herself. Seller and I said NO, you can’t represent yourself, you just don’t have the background of knowledge needed, in this particular case, on this particular property. Total fees paid in that transaction (different fully represented first time buyer) – 6% split 3% to me and 3% to buyer’s agent. Portion of my fee used to make repairs to property. I made more on the one where the seller paid 2%, than I did on the one where the seller paid 6%. So much for percentages…they are truly irrelevant.

The agent needs to be involved in determining whether or not the buyer or seller’s wants and choices, fits the consumer’s objectives AND abilities. The consumer in turn has to be realistic about what they can do themselves, and what they can’t do themselves. It’s a collaboration with neither party “dictating” to the other.

THIS is the model of the future. Just as you can hire an attorney to fully represent you, or to partially represent you to save some money, you should also be able to hire a real estate agent to fully represent you or to partially represent you. But no attorney is going to get into the middle of partial representation unless he makes the judgment call that the client is fully capable of handling a portion of the duties. No agent should hand over responsibility to someone without making the judgment call that they know what they are doing, with regard to the services selected and not selected.

A buyer who assumes responsibility for selection of property, via the internet or other means, should not pay the same fee as one who needs agent advices. A buyer who just can’t assume full responsibility for all lender issues, should not pay the same fee as one who needs no assistance with the lending issues whatsoever. A seller who has everything ready when you walk in the door, should not pay the same as someone who needs the agent to help with getting the property ready for market. A seller who can’t read the contract, should not be able to purchase a service that says “all offers to be submitted to the seller direct”, nor should an attorney/owner pay a real estate agent to explain a contract.

No one size fits all commission! No trading in one “one size fits all” for another “one size fits all”! That’s where Greg and I part ways. I love that Merv…and Pam. Get Merv’s blog on your MUST READ list today!

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000

110 thoughts on “Woohoo!! Merv's got it DOWN!!

  1. I’d be interested to hear what you think our differences are on this subject. Not in terms of product offerings, but philosophically. Between you, me, Eileen, Cathleen and Merv, I hear a lot of differences that sound like packaging issues, but I don’t hear anything that sounds like a fundamental disagreement. Do you?

  2. Well Greg, I do derive some of your philosophical views from your “product offerings”. Same with Eileen. Cathleen? She’s perfect 🙂 Merv? He’s getting there…LOL

  3. Jason,

    I’ve been doing that this year for sure, as apparently has Merv. He’s going to print some case studies, as will I. Straying from the herd takes some trial and error and real life examples. My clients are happy, so that’s a good sign that if I have erred, I have erred on my side of the fence. I know I “erred” once. One hurt like hell, but it was really fair, just tough on me psychologically due to years of brainwashing 🙂

  4. Pingback: Heard It Through The Blogline at sellsius° real estate blog

  5. Ardell

    You said, “But no attorney is going to get into the middle of partial representation unless he makes the judgment call that the client is fully capable of handling a portion of the duties.”

    I do and so do a lot of other attorneys. Here is an example that happens all of the time. Client Buyer comes in and wants help reviewing a Purchase and Sale Agreement. I provide review and tell them what I think needs to be changed. They have me make the changes and the deal gets signed. I then ask Client Buyer if they want help reviewing the title report and loan docs. They say no. I tell Client Buyer they are on their own for any title issues and lender related matters. Their choice, their risk.

    Why do you think it is your domain to determine what services your client “needs”? If you don’t want to be involved with a particular client because they don’t want what you think they need, that is fine. But to say that other real estate advisors (like attorneys) don’t get involved with partial representation is just not reality.


  6. Pingback: Three Oceans Real Estate» Blog Archive » If a monkey can sell a $1M home for $950K, does he deserve 3%?

  7. Ardell, thanks for the recognition. As Blogging was an experiment for us, so too was the notion that consumers wanted and are ready for change. It has turned from experiment to a “working business model.” The real key is NOT the fee schedules, it is in the value proposition that we deliver…. We like to consider ourselves the “Nordstroms” of the business, not the “Wal Marts.” We do not aspire to be a “big box super agent” business. They have their place as does Wal Mart. That’s not us. We prefer to be the “boutique” where every client get us and our personal attention.

    Our biggest challenge is to educate consumers that there is a different, better way to do this business of real estate. Maybe the Blog articles will help.

    Keep ranting. It’s good for the industry! So much to share…so little time.

    PS: Tyler, thanks for the Website/Blog plug!

  8. Greg and I do agree that the buyer should not be led around thinking they are getting a free ride compliments of the seller,


    Except that they DO get a free ride! At least when you’re the buyer agent. They wouldn’t get a dime rebate if they came to the house themselves. In fact, they’d probably pay more for the home not knowing what the fair price is, and they wouldn’t see any commission rebate. Might as well get a buyer’s agent.

    It’s very hard to price real estate services, or sales in general, hence the % commission. Every other sales job makes a % commission, but for realtors it’s somehow evil. I’d like to see Ardell or any others with these “bright” ideas bring them up with commercial realtors or corporate sales guys (or any other sales job). You’d be the laughing stock of the room. With residential, it’s only being talked about because there’s so much bitching and whining from tight sellers who want something for nothing.

    So how would I create this menu of services?
    For example, should I just drive buyers around and then stay out of the negotiations or contract? Unfortunately with real estate, you have to do over 99% of the work, or might as well not do any at all.

    And another point, if it really was possible to break down real estate services, the buyer would be able to work with one agent to see homes, and another for contract negotiations. But that’s absurd, since it’s very hard to define a line where one task for a realtor ends and another begins. Lawyer analogies DON”T WORK!

    The only time to rebate commissions is if the buyer/seller wants to do some legwork themselves, which is the only service that’s easy to separate from the rest.

  9. I’ll add an example to demonstrate how ridiculous this “menu” system would be in most cases.

    When I’m contacted by buyers for the first time (usually through my website) they aren’t ready to commit to any particular realtor. So I spend a fair amount of time with these prospects emailing back and forth, giving them various tips about which areas might be better, what to look for. They may even call me on the phone once in a while.

    Now, should I be billing them all this time? I’m providing a valuable service that saves them time. It’s 10 minutes here and 10 minutes there, so very hard to keep track of, and most people probably wouldn’t want to pay me at this point. They aren’t even sure they’ll buy or not.

    I’ve had cases where I’d do almost all the intellectual part of the job without leaving my home. I just meet the people at the end to look at the 10 homes they narrow down and then help them with the contract. At what point should I start billing them, Ardell?

    That’s why sales is commission based. You are paid for performance, the end result. I can understand a flat fee service, but I just can’t see Menu-type service working.

  10. Russ,

    I didn’t say lawyers don’t get involved in partial representation. I said they DO. I said: “Just as you can hire an attorney…to partially represent you to save some money…” In fact I have.

    You might want to read that again.

  11. Ron,

    You said “They (the buyer) wouldn’t get a dime rebate if they came to the house themselves.” Who says? Is that carved in stone somewhere? I just did one where the buyer got the whole 3%. I’m doing one now where the buyer was told he could keep it or go hire an agent, and he went out and hired an agent with it, or maybe part of it, that’s between him and his agent.

    It’s a buyer agent fee. What do you do with the Buyer Agent Fee if there is no Buyer Agent? Put it in your pocket?

  12. I’m not sure where Ron works, but in our office, if an unrepresented Buyer wanted to buy one of our listings, we would either write it up with “No Agency” or representation or designate an agent in our office to write a Purchase & Sale Agreement on NWMLS forms and ask the Buyer if he wanted to be represented by that agent. If not, then again “No Agency” would be designated on the contract. But either way, the listing office would receive the entire commission.

  13. Marlow,

    It may be your office policy to take the buyer agent fee when you don’t represent the buyer, but Ron said it IS that way, as if all had to do it that way.

    That’s really a throwback to the days when we all represented sellers, and buyers had no rights at all. I realize that many have not changed their policies since buyers attained rights in the real estate transaction, but I think it’s time to start moving in the right direction.

    Wouldn’t it make more sense to refer the buyer to a buyer’s agent if you are going to charge him for the buyer agent anyway?

  14. I’m saying it’s up to the listing agent to give this rebate or not. If it comes to that, I’d rather give back somethin to the SELLER if I was the only agent in the transaction.

    Also, speaking of “Throwbacks” to the old days. Lets imagine that there is no buyer’s agent commission offered in a listing, and if the buyer wants to use the buyer’s agent, he’ll have to pay extra. That’ll be the END of the buyer’s agent as we know it. If there are people are dumb enough to attempt a FSBO, imagine how many will think that there’s no reason for the buyer’s agent and just do it themselves. And why not, the IDX search is free (paid for by those who are trying to be buyers agents) and there are agents like you willing to slave over two sides of the transactions for the same cost. Why the heck not just make an offer on your own? We’ll be back to the good old days where buyer agents die out and only listing agents exist, but now with 3% commission.

    Truth is, the way things are right now is perfect. Buyers think they are getting a free service, and a buyer’s agent commission effectively acts as a bribe (that’s right, bribe) to buyers agents to do the dirty work and bring interested parties to the negotiating table.

    I agree that buyer or listing commissions should not be fixed at 3% all the time…heck I give rebates once in a while, but the way things are structured nowadays are fine (I mean co-op commission split). A buyer will appreciate that much more a 1% rebate from your 3%, than you charging an EXTRA 2% on top of the 3% lower price for your services. It’s the same amount, but one creates a good perception, while another creates a bad one.

    Kind of like when people willingly waste $10k on a lavish wedding, but skimp when paying an extra $5k to a realtor. One is viewed as a volunatry benefit, another is a burden.

  15. Another important point I just thought of:

    Will lenders be willing to finance a buyer’s agent fee, and what kind of crazy regulations will come about when they try to define what is a reasonable fee and what isn’t.

    Let’s say you buy a house for $100k, where the listing agents gets 3% and its up to the buyer to pay his own agent. If this agent wants $1000, now the buyer all of a sudden has that much more money to bring to closing. Compare this with a house priced at $101k that offers the buyer agent commission. One less closing cost for the buyer, since the commission is effectively priced in. Lenders can easily make an appraisal because an unusually high buyer agent commission offered will be refelected in a higher-than-market price of the home.

    The other way, a buyer agent is free to charge whatever he wants, and since these fees are paid BEFORE the deal closes, buyers either have to pay out money before they even buy anything, or risk the lender saying that your buyer agent charged too much and we won’t roll that into your loan.

    Too many complications with the pay-for-service model for buyer’s agents.

  16. Ron says: “We’ll be back to the good old days where buyer agents die out and only listing agents exist”…”a buyer’s agent commission is a bribe for the buyer’s agent to do the dirty work and BRING interested buyers to the table”

    Now that’s a diatribe that will hopefully promote change. Lord knows people who think that way NEED change.

    Ron, the lender already does allow the buyer agent fee to be financed, always has. There have always been limits to the total amount of commission a lender will fund. Are you saying that if the seller sets the buyer agent fee, the lender is OK, but if the buyer sets the same fee…well, that’s just too complicated?

    Not surprised you choose to remain anonymous. Care to tell us who you are?

    Ron, I’m sure you have negotiated the commission with sellers your entire career, what’s the big deal about talking with buyers about commissions the same way you do with sellers?

  17. Ardell

    I didn’t misread your post. I quoted you verbatim. You said that lawyers don’t get involved in partial rep UNLESS they determine that the client can handle the rest of the transaction. I took exception to that because it is not true.


  18. Russ,

    So if you have the Title Report in your hand and it says the neighbor’s building is encroaching on the lot by 4 feet and he won’t agree to pay you to review it…what do you do?

    I was giving lawyers the benefit of the doubt that they wouldn’t let someone shoot themselves in the foot.

    But really it isn’t the same. You have to stop when the meter stops, agents aren’t bound by those parameters. We can keep going until the job is done.

  19. Good Afternoon,
    Here’s the deal. An attorney does take responsiblity for his client. It really is a muddy puddle, but once the aattorney starts they guide. My accountant is the same way; he suggests. My attorney doesn’t let me go out the door without suggesting that I may need more help or he tells me we are done.
    A Real Estate agent is no different as you’ve pointed out before. We have an obligation to our client from beginning to end and maybe for years to come. In my opinion that’s what the public and a whole bunch of real estate agents are confused about.
    It’s the Real Estate agents responsibility to make sure the client get’s the best deal possible. We’re not sales people we are a clients agent; it’s the law that we work in the clients best interest. A used car sales person may be able to duck that responsibility because the law does not call them a fiduciary http://en.wikipedia.org/wiki/Fiduciary .

  20. David,

    According to Russ, the law does not call us a fiduciary either…not sure why not or if there is really a difference here in WA. Seems pretty odd that the one state that says everyone “represents” the buyer as a default position, wouldn’t hold the licensee accountable. Not sure what is required of “fiduciary” that isn’t required in WA. I’m still acting like I did in four other states 🙂

    Russ, is the difference between us here in WA and “fiduciary” what makes me think agents should peek over the lender’s shoulder and other such things? Are licensees merely “salespeople” here?

  21. Ardell,

    To your earlier post about the title issue, I would tell my client that there is a title issue that needs their attention. If they want me to handle it for them (and pay me), fine. Otherwise, they are on their own.

    I have no obligation to NOT let a client ‘shoot themselves in the foot’ (I know, double negative), other than to let them know that they may shoot themselves in the foot if they don’t use me. Many clients do just fine without attorneys while some get shot. It is impossible to know in advance and because of that, I cannot tell a client that they WILL be harmed if they choose to go it alone. As long as I advise of the risks, I have done my job. Whether the meter is running is irrelevant and while I don’t like to work for free, sometimes it happens in order to properly advise the client of the risks of not using (and paying) me.

    David says “It’s the Real Estate agents responsibility to make sure the client get’s the best deal possible.” Sorry David, but that is not your responsibility. At least not in Washington state nor in most states that have agency laws. How does one define “the best deal possible”? What does that deal look like? By defining the job of the agent in this fashion sets them up for failure as there is no “best” deal. The only deal is the one that the buyer deems acceptable to them knowing all of the material information about the property presented in an unbiased format.

    Ardell, I have explained Washington’s agency law and the duties of a buyer’s agent ad nauseum to you. Not going to do it again.

    You ask why agents are not “fiduciaries” as that term is defined under common law. Simple. Because a true fiduciary cannot represent both sides of real estate transaction. It is impossible because of the inherent and unavoidable conflict of interest between the interests of the seller and the interests of the buyer.

    Now, what would happen to most large real estate firms if they were suddenly told that they could not collect both sides of a commission from a sale? Answer? They would lose a ton of dough. This was never an issue in the days of subagency because both listing and selling brokers (and their agents rep’d the seller). “Fiduciary” works in that context because no conflict of interest (as long as you ignore the whole reason why subagency was done away with…but that’s for a different day).

    So here it is. Elimination of fiduciary duties in most states was based on economic factors in order to allow the industry to function as it always had. To allow brokers to sell their own listings. In place of these common law duties, statutory agency duties were created that mirrored many (but not all) of the common law duties.


  22. But we have designated agency. So buyers CAN be represented in a fiduciary capacity here better than CA, for example. Dual Agency only kicks in if the listing agent is involved, not a different agent in the company. We have the best chance of retaining fiduciary level services, more than most states…and yet did not. Brokers as in the company can clearly sell their own listings without Dual Agency here. Two different agents in the company assigned to represent the buyer and seller individually.

    Did fiduciary go away before Designated Agency came in? Maybe it’s time to go back to fiduciary and let listing agents who sell to buyers give the buyer the fee to go hire an agent. Or let the broker assign a buyer’s agent, las the law provides.

    Let’s stick to our State on this one, as “fiduciary” or not is not as clear everywhere, other than FL and OK.

  23. Russ,

    So is Marlow correct? Licensee has no obligation whatsoever to oversee the buyer’s “exotic” loan package? To pull the prepayment penalty, if possible? To question the subprime rate and convert to non-suprime? I’ve done that last one twice in the short time I’ve been here.

  24. Just to further complicate things, I once had a very notorious company attorney tell me when I worked for that very notorious company, that I could not under any circumstances continue to represent the buyer after the sale completed and that if I got in any way involved in a problem resulting from the sale, that I would not be covered with E&O. Do you agree with this, Russ. What kind of responsiblity for buyer agency let’s that happen.

  25. Eileen,

    That explains one I was working on a couple of years back. Was wondering why after 400 emails from me and 2 meetings…there was not a peep from the buyer’s agent. I resolved the issue. I had to deal with her client and my client. I did copy her on every single email, etc…but not a peep out of her. Good agent…huge company. But they were burying their head in the sand and were mute.

    Thanks Eileen. That explains why that transpired the way that it did. Luckily it all worked out.

  26. Merv:
    I curious (and by the way, a great web site. Is it off a blog template?) about your smartchoice system. Since you have covered all the bases in the same company, you must have experience knowing which one is easiest to present and get accepted by buyers and sellers. Care to share? and considering how much I had to defend $300/hr, I’d love to know how your hourly rates are bases, how much and for what. Care to share that, too?

  27. It also explains why I left that company after just being there 3 months. Said lawyer also would not allow writing of an addendum, but did suggest I offer his services to my clients! I needed to leave them anyway.

  28. Ardell ~
    I too am in the development stage of a new ABM (Alternative Business Model, not Anti-Ballistic Missile, although there are days when I wish I had one!), having concluded that the status quo is fatally flawed.
    Realtors need to figure out what they must develop better ways to deliver their services.
    Technology is going to marginalize Realtors to the point of extinction in the next 5 years if we don’t figure out how to embrace new ways of doing business.
    i.e. ~ the Redfins and Zillows are not going to go away, and if they do, someone with a better mousetrap will take their place.
    I am working on developing a system of flexible, negotiable fees based upon tasks/skill sets/time/services, etc. and will first focus on the buyer side ~ because I think it probably requires different considerations for buy vs. sell sides (listings take longer to sell, more handholding in this market, etc.).
    I will also factor in incentives for well-behaved buyers, including signing buyer rep, pre-approved loan thru direct local lender, offers not contingent, etc.
    I am thinking a simple 3-Tier system so as to not confuse people.
    And, also a non-refundable retainer that will be credited toward a flat fee @ closing.
    Nothing like parting with a little money to eliminate the lookie-loo’s.
    Fees will be flat and graduated, and discounted, but not absurdly cheap.
    Goal = get paid more often and get paid every time vs. hoping for the big score with a percentage commission.
    I would love to reliably close a handful of transactions each month with respectful, cooperative, well-behaved clients.
    Keep up the good work!

  29. Phil,

    I interview people before deciding the commission on a case by case basis. First I decide if I want to work with them at all and vice versa. By then I have a feel for level of difficulty, the same way you would by seeing a listing before quoting a fee. I do some cash backs at $450,000 and under, but that’s based on the string of events by the end. I do that on closing day. Most at or over $700,000 I go with a straight 1% off both ends if they are buying and selling, so they get 1% off the high purchase end and 1% off the lower sale end.

    I’ve tried several variations. I’m going to do an online case study review without revealing who’s who, and changing specifics enough to retain confidentiality. Merv is doing that too. I’m planning to do mine In January, since that will be one year’s worth of examples. Then if I do a “menu” or schedule of fees, it will be based on the reality of how things played out.

    I just did one that was over the top. Not sure how I feel about that one. I may do a whole post on it soon, so others can help me sort out how I REALLY feel about it 🙂

  30. Ardell ~
    I could probably do an analysis of some of my more unusual compensation arrangements too.
    I have previously done a lot of custom build jobs utilizing flat fees when no other agent was involved.
    Have previously done some of those with dual agency, but not any more.
    In fact, I avoid dual agency period except when legally forced into it @ the broker level with another agent in my own office.
    If someone comes direct to me on one of my listings, I will only represent the seller.
    Wish we could get to the point where we could get our buyer compensation from buyers and have lenders recognize the concept.
    Another topic: We residents of Bloggerville probably need to be careful about discussing specific fees/rates in our posts in order to avoid running afoul of the anti-trust/price-fixing regulations.
    I studiously avoid mentioning anything of a “standard” commission for that precise reason.
    We probably shouldn’t even be mentioning any specific percentages.
    I notice that others on various RE blogs aren’t being that careful.
    It would be a shame for one in our midst to get prosecuted for that when we are trying to develop better ways to do business.
    Would enjoy hearing about your “over the top” transaction if you care to share it.

  31. Ardell

    Designated agency was created by our Agency statute, which at the same time eliminated common law fiduciary duties. The concept of designated agency is a “made up” concept that allow brokerage companies to skirt the historical conflicts that fiduciary duties would have created for the ‘in house’ transaction.


  32. Phil,

    I agree. I do stay away from the numbers. I told you what I took “off”. I didn’t tell you what I took it off “of” 😉

    I think Eileen’s post with a published fees schedule saying hey everyone let’s ALL do this, is an anti-trust violation…but only if we agreed with her 🙂 I tried to stay away from that one.

  33. Russ,

    Last I looked, 33 of the 52 states went Designated Agency. That was two years ago, so there are possibly more by now.

    Are you saying that more than half of the Country is following some sleazy law made up to skirt the real issues? I don’t think so. In fact I think it works fairly well, for the most part.

    But it makes NO sense that everyone gets handed a Pamphlet “by law” that says they are “represented”, and then say there is no duty to “represent” them in a fiducuciary capacity. Someone’s gotta fix that.

  34. What do you think of these Buyers Agents who claim that only THEY can represent buyers as Exclusive Buyers Agents because they don’t list homes for sale?

    Here’s a quote from First Exclusive:

    “When you are ready to shop for your home, ask the agent you contact one question – DO YOU OR YOUR FIRM HAVE HOMES FOR SALE? If the answer is yes, they are NOT an “EXCLUSIVE BUYER’S AGENT” and are bound by Washington State law, to represent and negotiate the best possible terms and price for the seller.”

    Or this quote from Exclusive Buyers Agents:

    “According to the National Association of Realtors® publication ‘Agency – Choices, Challenges, and Opportunities’, Exclusive Buyer Agency is: “The practice of representing only buyers and never sellers in a transaction. The company never lists a seller’s property and thus never has a seller as a client. Agents never accept subagency that is offered by a seller’s agent” (pg. 25).

    Recently, a lot of traditional Agents have started advertising that they will represent buyer’s. While this is legal in most states even the National Association of Realtors® warns it’s members: “Buyer agency is viable method of practicing real estate, but an agent should be cautious in her approach if she is not thoroughly knowledgeable about the entire process. Agents who are used to working with buyers as seller’s subagents need to be aware of the new duties and potential liabilities of buyer’s agents before changing the form of representation they offer.” (pg. 18).”

    These advertisements make it sound like any agent who also lists homes can’t be a “Buyers Agent” and represent a Buyer in a real estate transaction.

    In your opinion, is this accurate, inaccurate or merely misleading?

  35. Marlow,

    They didn’t say you couldn’t be a Buyer’s Agent if you also list homes. They said you couldn’t be an EXCLUSIVE Buyer’s Agent, if you also list homes. To be a member of NAEBA, National Association of EXCLUSIVE Buyer’s Agents, your Company can’t list homes. Pretty sure Tom Early, their current President, doesn’t recognize Designated Agency States. Something about “subrogating the Common Law of Agency”.

    The first paragraph where they say that everyone works for the seller in WA is SO totally false, in fact it’s is the reverse of true. ALL agents represent buyers here, except the one and only listing agent. The seller gets one measly guy and the buyer gets every other person who is licensed in the State. So that person should be called to task to remove that paragraph. The ONLY place I know that operates that way is NYC.

    My guess on the NAR quotes is that it is WAY out of date. I’m sure it says it somewhere, but maybe from a 1989 publication, or one not updated since 1992.

    Again WA is different from CA, so the “Company” part in the quote IS true for CA but not WA. I don’t know each and every state, but last I counted 33 of 52 were Designated Agency States where the statements would not be true. CA isn’t one of them. OK had NO agency, last I looked, they outlawed the whole mess 🙂 Just got rid of it altogether, and no one was allowed to call themselves an agent in the State of Oklahoma.

  36. Ardell

    You said, “Are you saying that more than half of the Country is following some sleazy law made up to skirt the real issues? I don’t think so. In fact I think it works fairly well, for the most part.”

    I did not say the law was “sleazy”, you did. Who actually represents the client by law, broker or salesperson (I use those terms because that is what you are called unde Washington law by the type of license)? Answer: Broker. The salesperson is a subagent of the broker who takes on the representation through the broker.

    Designated agency is a “made up” legal relationship. It never existed at common law, in any state. It was created to allow brokers who employed the listing agent and the selling agent in the same sale to act as a dual agent and “designate” one to rep the seller and the other to rep the buyer.

    You keep harping on this word “fiduciary”. How many buyers and sellers in the real word have any clue what fiduciary duties really are? I can tell you that when I taught agency law classes to “real estate professionals” before our agency law went into effect, very few of those “professionals” could tell me what fiduciary duties were.

    This whole issue is in the collective head of the industry, not the public. If the public doesn’t understand what a fiduciary is, how can you say that they expect their agent to be one? Makes no sense.

    Let me give you another example of how our law helps the industry work. Let’s say you are a listing agent for Home A. Let’s say you also represent a buyer looking for a home. Buyer wants to look at Home A but also wants to look at other homes. Under common law, if you show Home A to Buyer, you are engaging in dual agency which is almost impossible to legally perform at common law because of the inherent conflicts of interest. If you show Buyer another home that competes with Home A, you would have breached your fiduciary duty of loyalty to Seller by taking action that would be adverse to Seller’s interest in signing up Buyer.

    Our agency law addresses this very practical dilemma and makes it legal for an agent to fill both roles. Does the public expect something different? Does Seller expect that their agent will only work with them and will put every other client (including possible Buyers of Seller’s home) on the shelf while the listing is in effect?


  37. Russ,

    It totally freaks me out when what you say doesn’t match the Agency Pamphlet given to Consumers in this State.

    Russ: “Who actually represents the client by law…Answer: Broker”

    I think you are INCORRECT there, Russ. OR the consumer pamphlet is wrong. Which is it?

    The LAW OF AGENCY pamplet, required by law to be given to consumers in the State of Washington, says:

    “A LICENSEE (any status) who works with a buyer…REPRESENTS THAT BUYER…unless the licensee is THE Listing agent…”

    It further states: “…in a transaction involving two different LICENSEES affiliated with the same broker…EACH LICENSEE SOLELY (SOLELY) SOLELY (EMPHASIS ADDED) SOLELY REPRESENTS HIS OR HER CLIENT”…unless the parties agree in writing that both agents are Dual Agents.

    33 States may have “made up” these Designated Agency laws, as you say. But they are still the law of the land regardless of who made them up.

    Where in there do you get that the LICENSEE (salesperson or Associate Broker) DOES NOT represent the client, but the Designated Broker or Brokerage does?

    Sometimes I think you are from California, where what you say is correct. But in Washington? How can you be correct if the Agency Pamphlet contradicts what you are saying? Is the public being lied to? Please say it ain’t so. This is not hidden back on page 4 either. It is the MAIN message, front and center, of the pamphlet. The licensee represents you…with or without a Buyer Agency contract. That’s what is says. Why is it wrong?

    Let’s get this key point straight, before I address your other questions.

  38. Ardell

    Of course the salesperson represents the client. I was too specific in my wording. However, they do so ONLY through their relationship as a subagent of their broker. I should have said who is the “primary” agent of the client. It is the broker. Everything leads from the broker. The salesperson has NO independent right to represent anyone. That is covered in RCW 18.85 which is embodied by reference in RCW 18.86 (which is the agency law).


  39. Nope. Let’s try this again.

    How can you say “The salesperson has NO independent right to represent anyone”

    when the Pamphlet given to consumers says:


    The BROKER does NOT have the same relationship with the consumer as the LICENSEE in this State.

    Joe Agent licensee “solely” represents Buyer in a SINGLE agency capacity.. Jane agent licensee “solely” represents Seller in a SINGLE agency capacity. Broker is a Dual Agent.

    Salesperson’s representation does not equal the same as broker’s. Broker CAN NOT solely represent the buyer and or the seller, if it is an in house transaction. Only the LICENSEE can SOLELY represent the consumer.

    Everything “leads” from the Broker in the sense that the Broker does Designate the licensee. But after that, the licensee DOES have the independent right and OBLIGATION to SOLELY represent the consumer.

    OR…other option…Pamphlet given to consumer is incorrect. Can’t have it both ways. Pamphlet clearly states to buyer consumers that their agent solely represents them in a SINGLE agent capacity when selling an in house listing.

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  41. Ardell

    Quite frankly, your last posts confuses me so much I’m not sure what the point of the discussion was.

    Brokers and licensed salespersons DO represent consumers. They just DON’T have fiduciary duties. I’m really unsure what is so complicated with that concept.


  42. OK. I think we agree now that Designated Agency means the licensee represents the buyer. So the only question left is, does it matter whether or not the licensee reperesents him in a “fiduciary capacity”.

    Yes. The consumer clearly wants someone to look out for their interests, over and above the agent’s need to sell them something. They don’t need to understand the word “fiduciary” to understand that they want someone focusing on representing THEM and not “closing a deal” for themselves.

    Let me ask you this Russ. Weren’t the high fees being charged based on fiduciary level representation? If you water it down, shouldn’t consumers pay less for a watered down version? When fiduciary level of care got stripped out, were the fees reduced accordingly? Are we at “Transaction Broker” care level?

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  44. Designated agency does not mean the licensee reps the buyer. It means that the broker is a dual agent and they assign one salesperson to work for the seller and one to work for the buyer.

    As to your question, my head is really beginning to hurt. You CANNOT have common law fiduciary duties apply and have this thing called “Designated Agency”. It DOES NOT work. You are stuck on this fiduciary thing. For sake of brevity here, you need to go back and re-read all of the duties of a licensee and a seller’s/buyer’s agent under the WA law. Then, tell me what additional duties or obligations the public is craving from real estate professionals. You have the pamphlet so shouldn’t be hard. The key question here is what is the public asking for, NOT what will sustain a certain level of fees.


  45. The licensee DOES rep the buyer according to the pamphlet given to the consumer.Therein lies the rub. What they want is what they are told them they would get. The licensee representing the buyer. Life is not a list of “duties” that you give people becaue they ASK for it.

    They want to know the agent’s opinion, as in, “if I buy this house today and call you back to sell it…what hindrances to sale are you seeing that I am missing?” What is my monthly payment going to be if I buy it? Given the program the lender is suggesting, will my payment stay the same for as long as I own it? Given my annual income, does this payment seem to fit? Does this rate look right given my credit score? Is there a prepayment penalty if I sell within a year or two? When you come back to sell it, what can I do in this house that will increase the value, so I can do those first?

    Generally speaking, people want you to be the real estate expert. They want good advices. They want you to have a negotiation strategy. They want you to treat them like a family member and give them your best advices. Better yet, they want you to tell them what you would do if you were buying it. Would you buy it? Would you wait for a better option to come on market? If you did buy it, how much are you willing to pay for it?

    They don’t want an agent to stop “working” when they find the house they want to buy. They want the agent to START working when they find the house they want to buy. A non fiduciary is done when the buyer decides to buy. A fiduciary STARTS when the buyer decides to buy.

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