The Realtor Association and the residential real estate industry are apparently smarter than God

Submitted anonymously to CAARE 

 

You (not including Realtors) Cannot Serve Two Masters 

 

The Realtor Association and the residential real estate industry are apparently smarter than God – 

no matter which religion you practice. If you are a Realtor, you can serve two masters or even 

three or four. When you do, you make more money. In fact, brokerages stand to double their 

commissions. The rest of the biblical saying goes like this, “You cannot serve both God and 

money.” One Minnesota real estate firm has done more to destroy that biblical and legal 

principle and in doing so has put millions of consumers at risk. 

 

For thousands of years the old precept that you cannot serve two masters (a basic principle in 

Christianity, Judaism, Buddhism and most others) has been an integral part of our ancestry. That

principle still exists today and has been prescribed in legal systems around the world. If you hire 

a law firm, they will first conduct a conflict check to make sure that they do not (or have not in 

the past) represent(ed) any adverse clients to you. If such a conflict is found, the law firm will 

withdraw. Lawyers know that serving two masters (also called dual agency and designated 

agency) creates an insurmountable conflict of interest that is immensely harmful to their duty of 

loyalty to their clients. In addition, attorneys who practice dual agency could be disbarred or 

disciplined. It is usually impossible to provide a full disclosure to clients and to obtain their 

informed consent. There is simply too much that can and does go wrong and lawyers know this. 

 

If law firms could engage in dual agency, firms would likely double in size and become much 

more profitable; they could represent both buyers and sellers in the same contract negotiations. 

They could represent husband and wife in divorce negotiations. They could even represent 

defendant and plaintiffs in the same lawsuit. Despite the potential for profit, the legal profession 

has refused to put the self serving interests of profit above their unfettered duty of loyalty to 

properly represent their clients. 

 

It used to be illegal for Realtors to serve two masters. However, if a brokerage firm serves two 

masters they can collect twice as much in commissions. That money likely enticed one 

Minnesota firm to take a shot at it. Perhaps Edina Realty did a cost benefit analysis and 

determined that the financial benefits of serving two masters outweighed the cost of any lawsuit 

that might be brought. In 1993, that firm found itself on the wrong end of a class action lawsuit 

for engaging in dual agency that sent shock waves around the country. Every news story, except the Minnesota Star & Tribune, condemned the practice. Rather than stop the practice, the local Realtor Association successfully lobbied for the legalization of serving two masters (called “dual agency”). These laws have now spread all over the country and have allowed brokerage firms to grow to tremendous size while simultaneously leaving a trail of injustices and harmed clients. Realtors are now the only profession that can serve two masters. Realtors also have the least amount of training to engage in this practice. Most do not understand it. 

 

“The disclosures and consents necessary to make a dual agency lawful are so comprehensive and specific that a typical real estate broker cannot undertake them as a matter of routine.” That was written by the William North, President of the National Association of Realtors in 1986. At that point in time, the Realtor Association and Mr. North appeared to have their priorities regarding money and representation properly aligned. They embraced the basic principles of loyalty that existed for all other professions and fiduciaries: A fiduciary should place the interests of their client above all others, especially their own. 

 

Recently, the same firm that blazed new trails in the destruction of the two thousand year old 

biblical and legal principal struck again. Their latest move demonstrates why the old legal and 

religious principle should be reinstated. Edina Realty intentionally limited the marketing 

exposure of their clients’ homes by removing their sellers’ listing data from two of the top visited 

homebuyer websites, Realtor.com and Trulia.com. 

 

Homebuyers who are starting their search are most likely to start their search using an online 

resource such as Realtor.com (the number 1 real estate buyer website) or one of the other top 4 

(including Trulia.com). Realtor.com actually gets their data updated daily directly from the 

Realtor owned Multiple Listing Service. Home buyers will no longer see most of Edina Realty’s 

listings on those sites. That means homebuyers will not see Edina listings and Edina Realty 

sellers have lost huge marketing exposure of their homes. For out of state homebuyers who have never heard of Edina Realty, the likelihood that they will even see an Edina Realty listing in their search is even more remote. 

 

Edina Realty is likely to be paid twice as much if homebuyers find their new home on Edina’s 

website vs. one of the other online resources. Buyers who find their home on Edina’s website 

will be directed to an Edina agent who also represents the seller. Those buyers will be forfeiting 

their right to negotiating advice. The dual agency (two master) rules prohibit the dual agent from 

helping the buyer negotiate price or terms (to help reconcile the conflict of interest). The same 

goes for sellers. If a buyer uses an Edina agent, the seller will forfeit their right to representation. 

Do Edina sellers understand that this new practice increases the chances that they will lose their advocate as well as decrease the market exposure of their homes? 

 

In our opinion, Edina Realty is placing a bet that they will make more in double commissions 

than they will lose from reducing the marketing exposure of their sellers’ listings. In other 

words, they will earn more in double commissions than is lost from the reduced number of sales 

and possibly lower sales prices. What is good for Edina Realty is not good for their sellers. 

Sellers do not stand to similarly benefit from this. Rather, the reduced marketing exposure could 

cause sellers’ homes to remain on the market longer, cause them to sell for less, and at the same time cause sellers to lose the advice and counsel of their agent if an offer does come in. 

Unfortunately, most sellers will not figure this out. 

 

If Realtors believe that everyone would be better off with a revision to the biblical standard about 

serving two masters, perhaps they could take it up with their theological professionals and see 

how their lobbying efforts succeed there. 

http://caare.org/sites/default/files/no_one_can_serve_two_masters_0.pdf#overlay-context=DualAgency

 

Dual Agency – The Good, Bad, and The Ugly

Let’s be frank, in Dual Agency if the seller’s realtor helps you in negotiating the sales price, and the Real Estate Council of BC is informed, the realtor will be reprimanded severely and most likely their real estate commission will be disgorged.

The courts see this as the realtor working only to obtain a commission. It’s against the law for the seller’s realtor to tell you the seller’s motivation, including what price to use in your offer or counter offer. The realtor must ask for your consent first, to act for both sides in Dual Agency, and must only act impartially. They are not allowed to talk to the seller about where you are going with your price.

Hmmm, I wonder if this ever happens? All of the time in South Georgia

Most Buyers do not understand how they can be disadvantaged, and many foolishly think they will get a better deal working with the listing realtor.

Lets be more frank, you may even be offered a commission kickback, which the realtor must disclose to the seller, so this is agreed together by them, in advance of any decision to accept your offer. This may appear to you like you are saving money, while in fact you then agree to pay the price determined by the seller, more money for the property.

The seller usually laughs all the way to the bank and you never ever know….

The small amount of commission money that you are told you receive back is often much less than if you had professional help, and the research you need to negotiate the lowest price. For your own benefit work with a trusted professional of good reputation who is individually and legally responsible for protecting your success . You need someone working on your side ONLY.

Worse, in Dual Agency you tell a realtor to write the offer and presented it to the seller, but you will not be part of the conversations between them. Right? You think you are negotiatiating from a safe, strong position but the seller and the agent have already discussed where their final price will go and you will be led to that price with counter offers, while believing this is just normal negotiating.

Here’s the kicker,,, determining actual value, if you don’t have all the known facts, the sales history of this home, plus all records that show the complete price and sold history of every other similar property in surrounding locations you are buying blind. You may not have direct or complete access to sold history, yet you need all this information before you write an offer. The person you are dealing with has already signed a contract promising undivided loyalty to the seller.

A thoughtful question; Is it likely a Buyer purchasing a home approximately every 5or 6 years, has more knowledge and information regarding value than a person whose job is selling homes every month of the year? Yet many Buyers in Dual Agency believe that they are negotiating a smoking deal. Buyers will sign documents acknowledging that they have investigated everything and confirmed all known facts, whether they have done so or not. Buyer Beware.

In this new world of technology, Home Buyers feel extremely empowered, since they have such greater access to information. Buyers feel stronger in their decision making than ever before. It is true there is much more access, but the information is not complete without full and proper research.

A reasonable person would consider that these issues put a Buyers at a tremendous disadvantage and that financially the buyer is not getting the best price or best terms for the property.
Your Next Step… make an appontment with Dan for more explanations and protection.

http://www.danmillar.com/agency