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Multiple Families

I hate multiple offers.

First, I should define the term, for the laypeople out there. Multiple offers are situations where the offers to purchase number more than one, and thus the term “multiple.” I know it’s complex, but that’s the kind of stuff they teach us in real estate licensing school.

Now that you know what multiple offers are, you should also know that I hate them. Sure, I don’t hate them like, say, I hate Snooki. (To be fair, I don’t really hate Snooki – I don’t even know her. I just hate the idea that she is somehow out there being all rich and famous for, well, nothing while I am blogging in anonymity about something really important like multiple offers.) No, multiple offers are more like eggplant. I can deal with it, but I would rather not.

First know that this is a contemporary topic. Suddenly, in our market, it seems that every home that is standing sort-of upright and is priced within a furlong of market value is attracting multiple offers. I am seeing this throughout the I-15 corridor, but I am also hearing the same stories from some of our richer coastal cousins.  What gives?

Inventory. We have none. Take Scripps Ranch. Zillow shows 161 detached homes on the market this morning. If only! In the 92131 Zip code, our MLS includes (drum roll) 47 homes available for sale. That represents approximately 0.6% of the standing inventory. Need a home under $700,000 so your 20% down payment can bring you within high-end conforming loan limits? You’ve got 17 homes to choose from.

And, trust me. Buyers are out there. Steve’s Realtor-mobile is starting to look like one of those circus cars (and, no, I am not suggesting Steve is a clown). The buyers keep piling into the back seat but no one comes out. They are all waiting on new listings.

Where have all the listings gone? The recession ate them. Too many would-be sellers don’t have the equity to sell, so the discretionary move market has been severely hog-tied. Many others, who do have equity, are simply making the decision to stay put, banking on future price increases and a better payday.

The irony is that amidst all of this, while prices are creeping in some segments, they are doing so ever-so-slowly. It may turn out to be a seasonal thing – or not. Only time will tell. In the meantime, multiple offers are a reality.

Did I mention that I hate multiple offers?

Sure, when I am representing a seller, it is a glorious thing for my client when a whole bunch of people decide to throw their checkbooks at his head in unison. Over the weekend, I had a little listing priced slightly above recent comps that generated eight offers. Within 72 hours, we had to suspend showings so that we could catch our breath and sort things out. That’s not the part I hate.

The difficulty with multiples is that they tug at the old heartstrings. With a typical one-offer negotiation, the conversation typically goes something like this.

Buyer’s Agent: I am pleased to present this offer on behalf of my clients to purchase your listing. For $5.

Seller’s Agent: But the asking price is $800,000!

Buyer’s Agent: Yes, but we have reviewed recent sales, and this home sucks. The appliances are not Viking, the fixtures do not have the requisite gold plating, and your hair looks like it was styled by angry hedgehogs. We don’t like you. Or your client. Or this home. Accept the offer or we walk.

This confrontational approach is understandable. Despite the low inventory, this market continues to defy the laws of supply and demand. It is still a buyer’s market. Ask Case and Shiller.

But now we are seeing multiple offers, which, by the way, I hate. In multiple offer situations, the interpersonal dynamics change — like magic. The same adversaries who could only speak in complete dollar signs yesterday, the ones who would gladly have thrown the seller and his Schnauzer under a school bus for a $3,000 carpet allowance, suddenly become humanitarians of the highest order. They are deeply caring, compassionate individuals who each have a unique personal story to tell.

Enter the sappy cover letter.

There is nothing wrong with the sappy cover letter; I’ve written hundreds of them. And they all read something like this.

Dear Mr. and Mrs. Seller,

Thank you for allowing my clients to tour your home. We are sorry for the inconvenience, and we will be forever in your debt. We left you a bundt cake on the counter.

Mr. and Mrs. Buyer have been looking for a home just like yours for 39 months, and now they have found it!

My clients are well qualified. Mr. Buyer runs a local non-profit food bank, and Mrs. Buyer has devoted her life’s work to searching for a cure for kidney disease, ever since she donated her own kidney to a young inner-city homeless boy. When she is not causing stem cells to differentiate, she enjoys raising her five young disabled children who spend their summers doing missionary work in orphanages in various third-world countries – like Texas.

My clients have outgrown their current studio apartment. Their lease is month-to-month. Therefore, their timing can be flexible to meet your needs. By the way, they really enjoyed meeting your puppy! Their own Schnauzer was run over by a school bus last month while trying to save a toddler who had wondered into the street, and they look forward to putting your dog run to good use as they foster rescue animals in Scooter’s memory.

Please accept our offer for $5.

And here’s the problem for the listing agent. You will have five or eight or ten of these letters, each more emotional and compelling than the next. Your client will select the “best” offer (“best” usually defined as “most money”), and you will be left to make the phone calls in which you proceed to squash the hopes and dreams of multiple families. It’s not fun.

That’s what “multiple offers” really means – “multiple families.” That’s the hard part.

Caveat emptor: One word of caution about deploying the sappy cover letter. Even the most compassionate seller and listing agent will consider other things: Namely, the reputation of the buyer’s agent. Because, you see, it is the buyer’s agent who they are going to have to work with and rely on (to meet time frames, to perform under the contract) throughout the process. It won’t matter how much of a tear-jerker your story is if your offer is filled out with a crayon or the listing agent has to rewrite the contract for you. That’s a big-old red flag, an indicator of how the next thirty days might go. And if your agent is not well-liked, lacks respect among his peers, or is not perceived as entirely competent, this will become a big factor at decision time. Just sayin’.

 

 

 

 

 

The Property Inspection – You had to be there (revisited)

It was three years ago this month that I wrote about the importance of being present at your property inspection.

The idea is that things tend to get lost in translation. More specifically, when an inspector’s findings are translated to paper, even the must mundane observations tend to take on a DEFCON 1 level of urgency. This is because paper by its very nature is quite portable, so that it can be delivered to the judge with speed by even the frailest bailiff.

First, if you are a little rusty on property inspection protocol, here is how it typically goes. The buyer’s inspector, accompanied by the buyer’s agent, will arrive at the home at 10:00 a.m. to perform an investigation of the property that will take “oh, an hour and a half or so.”  He will finish at about noon – in November. This is because it is the inspector’s job to be thorough and to make sure the buyer get’s his money’s worth.

Usually, the buyer and the seller’s agent will arrive “oh, an hour and a half or so” after the inspection began so that they can hear the summary of findings. They will all stand around the kitchen and swap stories about their children and domestic pets until November, at which point the inspector will announce that he should be wrapping things up in “oh, an hour and a half or so.” Five hours later, he will be ready to deliver the tablets unto the anxious audience.

This is where the fun starts. First I should clarify that not all property inspectors are created equal. And I am not talking about all inspectors here, but just the ones I have encountered most recently. And it’s not their fault; we live in California, where our motto is “E Pluribus Lawsuit.” Better to err on the side of caution.

But, back to the “lost in translation” part. Sure, everything may sound just ducky when you hear the inspector say it, but twenty-four hours later when the report arrives, memories may have faded. And what you are left with is a written summary of findings that suggests moving your family into this particular home would be negligent on par with running with scissors barefoot over hot coals through the zoo’s Bengal tiger exhibit at feeding time.

To quote myself from my previous post (and to save me the trouble of having to write brand new words this morning), here is how it might go.

Inspector at the home: “You can see here that there is some ponding of water on the back patio. They probably ran their sprinklers just before we arrived.

Inspector in the report: “Evidence of improper drainage. Potential for water accumulating near the foundation and, over time, causing home to hydroplane into adjacent structures or fall down entirely. Recommend contacting Army Corps of Engineers for complete analysis of surrounding water shed (minimum 42 mile circumference) assuming 100-year-flood and an Elvis sighting.

Inspector at the home: “This outlet has reversed polarity.”

Buyer at the home: “What is reversed polarity?”

Inspector at the home: “It is (speaking loudly and slowly) when the polarity is reversed. I’ll note it in the report.”

Inspector in the report: “Electrical outlets at various locations show evidence of improper and/or faulty wiring and/or gross negligence on the part of the contractor who had no personal stake in the safety of future owners or their families. Recommend a complete toxic mold investigation and remediation by a licensed HVAC/OPEC/FDIC/Structural Engineering specialist as well as immediate relocation of any remaining, living occupants to high ground in a neighboring county.

Lately, I have seen even the most minor cosmetic issues written up in a way that might cause concern.

Inspector at the home: There is a small red stain in the hall carpet. Someone probably spilled something – like cranberry juice. Or, if it was my house, a Bloody Mary. Ha, ha, ha!

Inspector in the report: Soiled flooring present in the hallway, one meter southwest of the linen closet. Source unknown. Recommend further investigation. Suggested reference materials: In Cold Blood, 1967, Truman Capote; Hoffa, 1992, directed by Danny DeVito. (The latter is available for instant download on Netflix.) Identifying locations of ancient burial grounds is beyond the scope of this inspection.

Every time I attend an inspection these days I am reminded that we have lost touch with the reason for the property inspection – to confirm that there are no serious structural or health and safety concerns that any reasonable person would expect to be addressed prior to commencing habitation. Instead, so many now see it as an opportunity to remodel and upgrade as a condition of sale. They are looking for new construction when what they initially offered to purchase was a used product.

I am not planning on selling my home any time soon, but I may some day. With that in mind, I think it is only fair to disclose the following so that my future would-be buyers can make an informed decision.

  • All of my appliances currently function, but I’m pretty sure they will all cease functioning at some point in the future. That’s what appliances do.
  • The faucet in my laundry room leaks a little at the base, but this only happens when I turn it on. My advice is that you not turn it on.
  • The master bedroom window screen frame is bent from that time I accidentally locked Steve out on the balcony and went to a termite inspection. It is still functional. And Steve got over it.
  • In the kitchen, there is a small chip in granite counter top that bugs the heck out of me. I am not sure how it got there, but my money is on the time I bonked it with an empty wine bottle on my way to the recycling bin. (Note: At my house, using “empty” and “wine bottle” in the same sentence is beyond redundant.)
  • When it rains, our patio gets wet.
  • My refrigerator is 12 years old, and my washer and dryer are one year new. If you buy my house, I may give you all three so I don’t have to move them. But if you have any issues with the way they operate or look, I will not fix or replace them. Because it’s my stuff, and I think it’s kind of nice that I’m willing to give you my stuff. (Speaking of stuff, the Betta fish that my daughter brought home from college two years ago, the one intent on making a mockery of published fresh water fish actuarial tables, will convey. This is not negotiable.)
  • My garage has more cobwebs than the set of The Amityville Horror. We keep meaning to clean it out, but we may not get around to it.
  • I have never been in my crawl space, and I have no intention of going there. Unless you find something clearly not indigenous – like a pack of rabid wolverines or Jimmy Hoffa – know that everything you see is as was delivered by the builder. Blame them.
  • While we are on the subject, “delivered by the builder” applies to pretty much everything in my house. Let me go on record as saying I did not marry Steve for his do-it-yourself skill set. Power tools were long ago banned at our home. We own a hammer and a couple of screwdrivers that we sometimes commission to change a light bulb or open a wine bottle, but that’s about it. So, if you see any code violations, you can sleep nights knowing it didn’t happen on my watch.
  • The master bedroom door makes this annoying jiggling sound. For the jiggling sound to present itself, several things must occur: The door must be closed, the window must be opened, there must be wind, and you must be trying to take a nap. I suspect this is due to natural settlement, but I am no expert. What I do know is that this condition is easily remedied by wedging several sheets of Kleenex between the door and the jamb when closing. (Other brands, like Puffs, may work as well, but I haven’t tested the theory. In any event, I would avoid generics to be safe.)
  • Periodically, our fire alarm goes off. This only happens at two in the morning, with the median duration of deafening blaring documented as approximately 93 minutes. Spreadsheets are available on request. I should clarify that we have never had a fire — at least, not to our knowledge. (As I mentioned, I have never actually been in my crawl space.) The important point here is that the men and women of Fire Station 37 are always responsive and courteous. You will really enjoy their company.

You’ve been warned.

 

Why we love Scripps Ranch (video)

I've toyed with the idea of incorporating video into our site for years, but staring into the eyes of the video monster can be a frightening thing. I always came back to the same question: Do it yourself or do it right?

Right won out. A big shout-out to the Hickman Group for helping us produce this wonderful short that perfectly captures all of the reasons we love Scripps Ranch. We'll be doing more of these. In the meantime, I am left to ponder how we might find a time and cost effective way to do something equally compelling for each of our listings. That's the tougher nut to crack.

 

Zillow and Unicorns

Unicorn
Creative Commons License photo credit: libertygrace0

Information and misinformation has been a problem for our clients and would-be clients for years. The search box runneth over with sites offering real estate “listing” data, and it’s hard (in the words of the more famous Yogi) for the average bear to make sense of it all.

It’s long been a problem, but in the midst of the brouhaha over ARG Realty’s announcement that they were opting out of third party syndication, I suppose I have been paying a little more attention to the whole idea of data integrity lately. In the last week, we have fielded more calls about homes that were not really for sale than I can remember. Buyers are confused. Can you blame them?

A couple of Thursdays ago, I spent some time shoveling through the “active listings” on Zillow. And let me say that this isn’t just about Zillow; I could have easily picked one of hundreds of other third-party aggregation sites for the purposes of my little forensic investigation. But Zillow is becoming what you might call a household word – a household word whose fourth quarter earnings report was a smidge better than my own – so this seemed a logical place to start.

My friend Jonathan Dalton likens searching for homes on the Zillows and Trulias of the Internet to a visit to Mr. Roger’s “Neighborhood of Make Believe.” And since I have a long-standing tradition of ripping off Mr. Dalton’s better stuff, let’s see what was happening in the Neighborhood of Make Believe on February 2, 2012.

Consumer Search Primer

First, a little home search primer is probably in order. Real estate agents (and by real estate agents, I mean me) tend to forget that while we understand the life and travel tendencies of a listing, many homebuyers and sellers may not.

When a home is listed, your agent will enter the information in their local MLS. Through the MLS, all other agents in the area will have access to the vitals including text, photos, show instructions and offer of compensation.

There is also this thing called “IDX,” or Internet Data Exchange. MLS agent and broker members agree through IDX to allow their listings to be displayed along with the listings of all other cooperating agents/brokers on member websites. IDX closely mirrors the actually MLS – I say closely because a broker may always opt out, although they rarely do. So when you search for homes on any local agent or brokerage site with a search feature, including ours, you are looking at an IDX feed which is straight from the MLS to you. By the way (and many agents don’t even get this part) this includes Redfin’s site, because Redfin is a broker. In San Diego, it includes SDLookup, because that too is a broker-operated site. It also includes Realtor.com, because our data is delivered to them through an agreement with our MLS.

Then you have the third party syndication sites. These are multiplying like bunnies, so there are too many to list, but two of the more familiar and frequented sites are Trulia and Zillow. Here, the listings come to roost in many ways. They can be manually input by a listing agent, broker or homeowner. They can be delivered via a “feed” from the agent/broker website or through a listing syndication service.

The important thing to keep in mind is that garbage in equals garbage out. In the case of IDX, the same theory applies, but our MLS’s have policies and procedures in place for policing. They have the authority to insist that data is correct, current and not misused. Not so where the third-party syndication sites are concerned.

By the Numbers

So on with the show. Please keep in mind that I have a day job, as evidenced by the fact that it took me a couple of weeks to get around to writing about this. And because this day job keeps me pretty busy, I didn’t have the luxury of plowing through data for an entire region. I limited my search to one Zip code: 92131.

On a morning when the Sandicor Multiple Listing Service (MLS) showed 48 detached homes for sale in the 92131 Zip code, Zillow showed (drum roll) 224! In their defense, that’s only off by 367%. Close enough, you say, except that we are the ones fielding the calls from confused buyers returning from the Neighborhood of Make Believe. (By the way, my own IDX site was off the actual number by 3 on this day, which I can attribute to a mere time-delay in data refreshing.)

Now, it turns out that 46 of those were miscategorized; they were condos that had been included in the “detached” category. We’ll get to those in a minute, but for now, let’s exclude them, leaving us with 178 Zillow listings. Of those, 15 were new homes posted by a builder or For Sale By Owner postings, leaving us with 163 Z-homes.

If you are still awake, here is where it gets fun. 54 of the 163 homes shown were not for sale – have never been for sale. They are homes that a certain foreclosure website has determined, from the tax records, have a Notice of Default filed by the owner’s lender. In other words, they might be on the market someday – or not. These pretend listings are shown with no address, only a street name, and requests for more information are funneled to their website where a buyer might pay to subscribe to a foreclosure notification service or be put in touch with a “neighborhood specialist” who will likely say something like, “That home isn’t available, but we have others!”

If we exclude the 54 unicorns, we are left with 109 Z-listings on February 2nd. Now we’re getting somewhere! Except:

  • 24 had long ago sold, one dating back a full 13 months.
  • 10 were in escrow. (Fun side note: One very large brokerage is showing all of their pending listings as “active” in Zillow, which sounds suspiciously like intentional deception in order to make that phone ring. Our own feed refreshes with the MLS; our listings go pending, and they come off of Zillow. If I can figure this out, I have to believe a national brand-name brokerage can.
  • 1 was shown for sale at a bargain price of $7,000, but the remarks revealed it was actually a miscatergorized rental.
  • 1 home was entered for sale twice by the same agent.
  • 8 were expired, cancelled or withdrawn listings.
  • 17 were “contingent,” with an accepted offer waiting on bank approval.
  • 2 were mystery homes, and I finally gave up trying to figure out where these came from or if they are/ever were for sale.

The good news for Zillow is that most (not all) of the active inventory this day was there – somewhere. Just try finding it.

And the condos that were miscategorized as detached homes? Over half were not really for sale.

How does this happen?

Is bad data just another example of agents behaving badly? Sometimes yes; other times, I’m not so sure. Either way, it should be the responsibility of the platform to have effective procedures in place to ensure compliance.

My favorite example of the “agents behaving badly” scenario is the home that sold in September but shows up as an active listing.  Big deal. There were 24 examples of this. Except, in this case, the agent that represented the buyer in September is the one who subsequently reposted the listing; he is now showing up as the listing agent for a home that is not on the market. Utilizing the magic “Report problem with listing” link, we indeed reported this listing to Zillow — three weeks ago. And, just like magic, it is still on their site in all its glory this morning.

And then there are the inaccuracies that I just can’t figure out. There’s a home that sold last summer, and the history indicates that the listing agent posted it as for sale the day after it sold. Yet, there is no listing agent or listing office shown. So, who really reposted the bogus listing? In fact, there are numerous examples of active listings with no listing agent or listing office attribution. I can think of only two folks who would benefit from such a posting: The agents adverting around and beneath, and a site owner who wants both a populous site and happy advertisers. If a listing is “accidentally” left on the site, I just can’t reconcile how the listing agent/office information falls off the grid. There could be a very good explanation; I just can’t see it.

Who cares?

I do, and other agents and consumers should. It’s a sort of listing Wild West that makes a mockery of both the data, and of the system that supports cooperative sharing of the data and offers of compensation between members. Remember, it is the latter that was the whole genesis of our MLS system.

The problem is that Zillow and their counterparts are not MLS’s. They are sites born of a free market, a site where the founders saw an opportunity to repurpose and monetize the efforts of the real estate industry. That’s fine. It’s that kind of thinking that breeds innovation. It’s that kind of entrepreneurial opportunity that makes America great. It’s just too bad that, given that the plankton of their business models is listing data, they can’t spend at least a fraction of the time they spend manning the phone banks to sell advertising around the data that they do on the data itself.

So keep in mind that if you show up on these sites searching for homes, you are really just, as I once put it, “Playing Zillow.” Your search results will include many homes that are for sale, but you will also be looking at many more properties that are only available in the Land of Make Believe. Have fun and, if you don’t already own a Ouija Board, delight over the Zestimates. Be dazzled by the array of side bar “neighborhood specialists” who may or may not be specialists at all but share the commonality that they had to pay to play Zillow.

Or, in San Diego County, you can just search here or here. And if you are in full search and purchase mode, maybe, just maybe, you could establish a relationship with a local agent who can help you sort through the online mess, an agent who knows the difference between real and make believe.

(Fun footnote fact, in case you dazzled by the agent review stars: This morning I checked the three "Premier Agents" who are shown sidled up to one of my listings. Now, I admit that they could each be the greatest thing since the death of Disco. But, according to the MLS, one has a total of ten career sales to his credit but twenty client reviews (OK, his "leads" are probably going to his agent team), another has zero transactions in his career, and the third is an agent who works in a different county and is not even a member of our MLS. I guess that doesn't mean their money isn't good. At least in the old days, gaming the system was free.)

 

 

Revisiting Dual Agency – Like Gefilte fish, sometimes it makes sense

(This is a little trip through Kris' brain that I originally penned back in July, 2009. With all of the recent hubub surrounding the listing syndication debate, many have chosen to make the idea of dual agency central to their arguments (ironically, on both sides). So it seemed fitting to rerun my own position on the idea of an agent playing a dual role in the transaction. In short, it's risky business at best, but I continue to hold that whether the practice is the devil incarnate or not is strictly situational. It depends on a lot of things — including the buyers and sellers and their particular needs, the circumstances, and the agent involved. Gefilte fish is generally sort of gnarly too, but there a couple of times a year is makes sense and ends up tasting pretty darn good.

Oh – and the part about the buyer's agent being disintermediated by the web? Thankfully, I wrong about that one. But listing agent shoppers are still out there in force, make no mistake.)

I don't care what you say, Mommy loves me more!
Creative Commons License photo credit: Ruth L

(Editor's Note: Steve is somewhere out of broadband range with Daughter #2 conquering yet another pristine high Sierra trail, this being his 48th "last-trip-ever-cause-I'm-getting-too-old-I-promise" backpacking adventure. I do my best work — and get into the most trouble — when he is unaware.)

It seems we are at it again. Dual agency is the topic du jour on the blogs this week (which makes no sense, but you get what I mean), and I spent most of that time plugging my ears and averting my eyes. That is because I seem to be in the minority on this issue. But having decided recently to get back on the horse, I am ready to declare "game on."

Dual agency, strictly speaking, is where the same brokerage represents both the buyer and a seller in a transaction. If two different agents from the same company, say Millineum 42 or Rock Solid Realty, are representing both parties, this is dual agency, but that is not the kind of dual agency most are concerned with. It is the single-agent dual agent which tends to get everyone in a lather.

Dual Agency Refresher

Say I have a listing contract with a seller. I have an agency relationship with the seller; I am his fiduciary. Now, what if a would-be buyer comes to me and asks me to write an offer for him? In this case, if I agree, I also am establishing an agency relationship with the buyer; now, I am his fiduciary as well. On the face, this sounds like the work of the devil, and rightly so. The argument is rather obvious. How can I pound my fists on the table in an attempt to negotiate the highest price for the seller and then, presto, change hats and chairs and argue for the lowest price for my buyer client? I can't. But…

I'll repeat a little speech we are called on to deliver at almost every listing presentation, and it is generally in response to the question, "If you represent the buyer too, will you reduce your fee?" Remember, the listing contract specifies both the total fee due to the listing agent and the portion of that fee that will be paid to a cooperating broker. Right or wrong, the seller is paying the listing agent the fee, and the seller and listing agent are agreeing that a portion of the fee (usually, but not always, half) will be sent the way of the buyer's broker if there is one. In short, the seller is hiring me to bring a palatable offer to the table. Part of doing that is by offering compensation to another agent who can assist, but it is the listing agent's contract.

The Speech

But, back to the speech. It goes something like this. Dual agency by its very nature begs at least the perception of conflict of interest, so it is not something we seek out. In addition to marketing your home and generating offers, my job is to negotiate the best price for your home that the market will bear while keeping us all out of the pokey. In certain circumstances, dual agency may be to your benefit and to the buyer's. In others, it may not. Under no circumstances will we act as dual agents if even one of the parties is just slightly less than thrilled with the notion. Thrilled clients trump the paycheck every day of the week. That's how we roll.

Where is the argument?

So, why would dual agency possible be acceptable, even beneficial, to both parties? There can be many reasons. Let's start with defining the "agent." I happen to work in tandem with my husband and business partner. Functionally, we do not operate as the two-headed agent. He has closed transactions where I have never met the client or seen the home and the other way around. In the event we both have an initial relationship with the client, it always evolves to the point where there is one primary point of contact, and the other is relegated to back-up mode. Who takes the lead is a natural evolution, sometimes dependent on schedules but more often on personalities.

So, we have the ability to act as dual agents because we are "dual" agents. This may sound like semantics, and it won't work if you are working with agents who are ethically challenged, but ethics are central to our model and our being. The day I knowingly breach ethics, you have my permission to shoot me through the temple and call it a day. (I'm embellishing; report me to the Department of Real Estate and have my license revoked. It's just as painful but a little less a felony.) Case in point – we actually had a listing this year where I was the lead on the listing, while Steve had a buyer client he had been working with for a year who wanted to make an offer. He did, with Steve, and two other buyers did, with their own agents. The home closed escrow two months ago, and Steve's client is still out looking. It was one of my proudest moments.

If you as an agent are in a position to divide and conquer, it can work. If you have an established relationship with a buyer who trusts only you to represent them, it can work. If you are a single agent who has to deal loyalties from a deck just to "make the deal," then the dual agency naysayers have a valid point.

Web 2.0 is Disintermediating the Buyers' Agent

I'm not saying this is a good thing, cutting the buyers' agent out of the equation. It's not; in fact, it stinks. It's just that the reality of the world in which we now live is that consumers are empowered with information and access. They are taking matters into their own hands. And many buyers sense that by buying direct, there may be a benefit. I'm not saying it is always so, or even mostly so (Note to attorneys: Commissions are negotiable!), but variable commissions are not all that uncommon. An example of a variable commission is where the listing agent agrees to a total commission of "X" unless he represents both parties, in which case the commission will be "X minus something."  So, free agent buyers (no pun intended) are becoming more commonplace. And, in the case of the variable commission and two parties living in the land of reasonableness, a gap can be closed to their mutual benefit. Turn your back on this segment of the buyer population, and you are shrinking your selling client's buyer pool to their detriment.

Circumstantial Evidence

Finally, circumstances may beg for a dual agency situation. Recently, we were approached by a would-be buyer for one of our listing who wanted the home – badly. They were informed, they had been looking, they had done the research and the math, and they knew exactly what they wanted to pay. Only, they had a home to sell. Now, had they waltzed in with another agent, our client may have been less than inclined to entertain their contingent offer. But, the seller trusted us. They knew how we marketed, they trusted our opinion of value, and they knew that if we said the buyer's home would be under contract in a given period of time, it would. Anyone else, and they likely would have kicked them to the curb. Using the divide and conquer approach, we now have two clients who couldn't be happier with the outcome, which is ultimately the goal.

In Short (like I'm capable of that)

Dual agency has many forms. It can be evil incarnate or it take the form of accomplishing what we were hired to do – sell the home.  It is situational; there are situations in which is can work exceedingly well, yet other times it can be a recipe for disaster. Making a blanket indictment of the practice is, in my opinion, knee-jerk. One of the biggest vocal opponents of dual agency, Ardell DellaLoggia, once said it best:

"If" the beginning of every residential real estate transaction were the buyers and the sellers and their agents meeting and chatting, maybe having dinner together and a drink or two for an hour. Then everyone walks through the house together while the seller tells the buyer the story of their life in the house and the buyer and agents ask questions. Then the offer is written, and proceeds through the inspections to find things the seller just truly doesn't know about. At the end of the transaction when all items and terms are fully negotiated, the buyer comes into the room with a check in his hand. The seller comes into the room with the keys to all doors and garage door openers and manuals on appliances. The agents review the final numbers and nod to the closing agent.

Sometimes, just sometimes, that is what a dual agency situation can accomplish.

Office Location

  • San Diego Castles Realty
  • 12265 Scripps Poway Parkway, Suite 115
  • Poway, CA 92064
  • P: 858.530.2374
  • F: 858.876.1701
  • E: info (at) sandiegocastles.com
  • CA BRE# 01853496

Broker Information

  • Kris Berg, Broker
  • CA BRE #01241572