Agency relationships between a buyer or seller of a home and the real estate agent are probably one of the most confusing aspects of the real estate transaction for consumers and for many real estate agents as well for that matter. Dual agency takes the confusion to a whole new level though for the parties involved as the issue gets quite complex. At the very basic level, dual agency exists when the same real estate agent represents both the buyer and seller in the same real estate transaction (a bad idea in my humble opinion). At a more complicated level, state law states that dual agency also exists if the agent representing the buyer is with the same firm as the agent representing the seller then dual agency exists as well.
The point of this article is not actually to explain all the nuances of agency relationships, it’s really about a “dual” going on presently between the National Association of REALTORS (NAR) and the The National Association of Exclusive Buyer Agents (NAEBA) over dual agency. The issue at hand is a new rule that FHA came out with, scheduled to go into effect October 1st, that would have banned dual agency relationships on all short sales involving an FHA loan. After announcing the new rule, NAR’s President, Gary Thomas, sent a letter to HUD urging them not to implement this new rule as it would “have a significant impact on real estate brokerages” and that the new rule “conflicts with state license law in every state, except Colorado..”.
On September 27th the National Association of REALTORS claimed victory after HUD announced that it would postpone the ban on dual agency with regard to short sales. This move then prompted Michael Byrd, president of the National Association of Exclusive Buyer Agents (NAEBA) to send HUD a letter stating “I’d like to applaud your efforts to protect real estate consumers. As an organization, we really felt that the new pre-foreclosure policy restricting dual agency was a step in the right direction.” Byrd went on to say “NAR is protecting is its members’ rights in collecting both sides of the commission in the transaction. In short, it’s about money – not the consumers’ money or the mortgage lenders’ money, but about the ability of the brokers to make more money. Some of their members recognize this fact and disagree with their stance. Because of this, I urge you to reinstate the dual agency restrictions in FHA pre-foreclosure transactions.”
Since, at this point, it appears HUD has only postponed the new no dual agency rule, and at least one real estate organization is pushing for its implementation, I don’t think this issue is over yet.
Leave a Reply
You must be logged in to post a comment.