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Buyers Who Call Listing Agents Now Have More Ways to Sue Dual Agents
Who isn’t looking for more ways to sue dual agents in California? I hear from a lot of real estate clients around the country who are upset with their agents, and many of those complaints center on dual agency. They read an article I wrote about dual agency or contingencies or some other legal matter in real estate and call. In case you don’t know, in simple terms, dual agency occurs when the seller’s agent is also the buyer’s agent. This is when sellers find out too late that paying their own agent to represent a buyer might not be in their best interest. Or, buyers discover that trying to manipulate a listing agent into divulging confidential information may have backfired. By attempting to buck the system, buyers may end up with no agent advocating for them.
The new document that will most likely cause more lawsuits by encouraging parties to sue dual agents in California is the revised Agency Disclosure. Its formal name is Disclosure Regarding Real Estate Agency Relationships. I say this because I know from observation how lackadaisical many listing agents are. So many just don’t consider ramifications or cause and effect much less consequences. In fact, it is so tough to be a dual agent that I prefer to pass on it.
Dual agency is not good for sellers nor for buyers and the only people who think it is are the dual agents themselves. Further, the main reason dual agents like dual agency is because they make twice the commission. No wonder some consumers hate real estate agents. It’s rare that dual agency is better for the parties. Usually the opposite.
New language in the Agency Disclosure sets out pretty clearly the confidentiality requirements. Agents are always required to keep this sort of information confidential (without written authorization), but in dual agency, they sometimes forget. Below is the verbiage, with the new changes in bold:
“In representing both Seller and Buyer, a dual agent may not, without the express permission of the respective party, disclose to the other party confidential information, including, but not limited to, facts relating to either the Buyer’s or Seller’s financial position, motivations, bargaining position, or other personal information that may impact price, including the Seller’s willingness to accept a price less than the listing price or the Buyer’s willingness to pay a price greater than the price offered.”
Agents are often made privy to confidential information about why sellers are selling, which is none of anybody’s business but the seller. This reduces dual agents to pretty much transaction facilitators. They can’t represent either party very well. The downside is buyers might think they don’t need representation but they certainly do. Never had a buyer say, “oh, we didn’t need you guys.” Just not gonna happen.
But what will happen, mark my words, is more parties will decide to sue dual agents because the agents will, without hesitation, disclose confidential information. I know this surely as the sun sets in the West.
Making Sacramento Sellers Close Escrow Versus Finding a New Buyer
Rainbow after the rain in Kona, Hawaii, after not making Sacramento sellers close escrow.
Let us be very clear that I am not an agent who believes in making Sacramento sellers close escrow, especially when it is not in the seller’s best interest. I don’t know why this attitude should come as a surprise to so many buyer agents. But maybe, on second thought, they get their knickers in a twist because they can’t fathom it. Perhaps making Sacramento sellers close escrow seems normal to them. Too focused on that paycheck. These agents do not understand that by focusing on their client and not on the financial reward, they could buy a house in Hawaii, for example. Just sayin’.
No way, Jose, will I tell a seller to bend to a buyer’s demands. Usually, the only recourse a buyer has in his pocket is to threaten to cancel escrow. When you look at the idiocy of that strategy, well, you know who loses, right? Not the seller, I can tell you that. Escrow is not a precious commodity. No coddling required. Buyers either perform or they do not. Yeah, right, just cut off your nose to spite your face.
Yet, I still get agents complaining to me. They want me to cooperate, which means give their buyer what their buyer demands. I’d like to say excuse me? Whom do I represent? I do not represent your buyer, and I do not need to make my seller understand your point of view. No Realtor code of ethics exists that says I have to plead a buyer’s case to a seller.
Sellers can read inspection reports. They have eyeballs in their heads. If they agree to sell a home in its AS IS condition, we don’t care if buyers find dead bodies in the basement, no preferential buyer treatment. Lately, agents tend to repeat the same things over and over. Like they don’t have any creativity nor possess strong negotiation skills. They lament: who will buy this home if we do not?
Well, good question. Just about any other buyer. I look at short days on market, limited inventory, high buyer demand. Then I glance over at whiney buyer in the corner, trying her best to squeeze more out of the transaction in her favor. You know what looks more attractive? Better than making Sacramento sellers to close escrow? To find a new buyer, an appreciative and excited buyer.
We lose only a couple of weeks. Still a hot seller’s market. As a top listing specialist, I will recommend this approach every time.
Things a Sacramento Realtor Cannot Say About a Listing
There are amazing things a Sacramento Realtor cannot say about a listing.
An online newsletter I received this morning contained a synopsis of an ethics case that was interesting not because of things a Sacramento Realtor cannot say about a listing but because of the things the Realtor did not say. I am very cognizant that at all times a Sacramento Realtor who represents the seller has established a fiduciary relationship, which results in a legal duty to the seller.
Solely seeking seller representation makes my job easy, because I focus on my sellers. I have a duty to treat the buyer fairly, but my alliance is aligned with the seller. This means when a buyer’s agent asks: Is there wiggle room in your listing, I might reply they can pay more than list price.
That’s a seriously stupid question anyway because no agent, I don’t care who she is, knows whether there is “wiggle room,” (she’s not the seller) and even if the seller told her he would accept less, unless the seller has explicitly given the agent instructions to disclose that fact, her lips better be zipped. There are things a Sacramento Realtor cannot say about a listing, and this is one of those things.
The thing this ethics case disclosed was the agent never told the seller that in his opinion the property was priced too high. Instead, he shared this opinion with other prospective buyers. He violated his fiduciary by not disclosing his conflicted viewpoint with the seller, among other things. I think some agents are scared to tell a seller what they think because they are worried the seller will cancel the listing or get angry with them if they do not see eye-to-eye. But we are required (and we are hired) to share our professional opinions and thoughts with the seller.
I don’t take a listing that I don’t believe will sell. And because there are things a Sacramento Realtor cannot say about a listing, I do not suggest to other agents nor buyers what they should offer for a home, apart from list price or above. That’s my job. Don’t ask me what kind of offers we’ve received, whether you can offer less or how high you need to go because I won’t give you the answers. Although I always suggest that my Elizabeth Weintraub Team members ask those questions of other listing agents because some will cooperate. Those are the agents who forget about the things a Sacramento Realtor cannot say about a listing.
In Fiduciary, When the Music’s Over, Turn off the Lights
If you asked a thousand people whether it’s permissible for the buyer’s agent to contact a Sacramento listing agent after closing, expecting her to further question the seller on the buyer’s behalf, I bet 999 of those people would respond: why not? It seems innocent enough. The buyer forgot to ask about something or discovered some new fact and would like more information, right? I mean, who else would the buyer ask? Buyers don’t always understand fiduciary, and neither do agents.
Buyers and sellers also don’t typically trade phone numbers or email addresses prior to closing in Sacramento. It’s not unusual for a buyer to ask his agent for help under those circumstances. The problem with it, though, is the buyer’s agent is no longer the buyer’s agent. Once the transaction closes, the fiduciary relationship that exists between the buyer and the buyer’s agent is over. When the music’s over, turn off the lights.
Now, of course this doesn’t mean an agent can’t remain friends with her client, but she can no longer work in an agent capacity. Moreover, to do so might be considered to be an unauthorized practice of law, depending on what the former buyer’s agent says and does.
This also means the fiduciary relationship that once existed between the listing agent and her seller is over. The most anybody can really expect is for the listing agent to pass along the buyer’s phone number to the seller. Yet, there are agents for whom that line is often blurred. What they hear is a former client needs help and they want to help. It’s a natural reaction.
When the music’s over, turn off the lights. Fiduciary no longer exists. Let’s say a buyer asks the listing agent to quiz the seller about pest work in the basement that was completed years ago. Escrow is already closed. That’s a can o’ worms that should have been answered during escrow. Jumping into the middle of that situation is like asking for trouble.
That’s like asking a seller to sign a disclosure after closing. It’s not a disclosure if escrow is already closed and it can’t be signed.
When the music’s over, turn off the lights.
When is a Real Estate Client Not a Client Anymore?
A one-time real estate client does not always remain a client.
Among the many homes I sell, this particular home in East Sacramento, I sold many years ago to a charming couple as a second home where they someday hope to retire. Every so often these real estate clients will call me for help because they appeared to be very happy with my services, and they respect the fact I’ve got a ton of experience on which they can rely. It’s not unusual for clients to call and ask for my expert advice. They know I’m not going anywhere and I’ll be in real estate until the day I croak. They can always find me, and I answer my phone.
The call I received a few days ago was a bit odd. It wasn’t the first time this type of situation has happened with this person. What I’m talking about is a client who, for whatever peculiar reason, decides to buy a home through whichever agent seems handy at the moment, and then turns to their trusted agent for advice. This couple bought a home in Land Park a few years ago on the courthouse steps. By the time they thought to call me, they were already in escrow with the bank and overpaying for the property. They did not know that the location of this particular home demanded much less than homes on the other side of the street, so they got suckered.
Sometimes buyers are confused and think they have to hire a listing agent to get an offer accepted, but that is way off base and a myth. Sure, there are greedy and unethical agents who will kick their seller under the bus to double-end a deal, but most Sacramento Realtors are not like that. I’m not like that. I don’t care who represents the buyer as long as my seller’s needs are met. My fiduciary responsibility is to the seller when I’m the listing agent.
This time the couple called to say they had bought yet another home, and they wanted a referral to a specific type of contractor. When I explained that the type of person they need is difficult to find, and I wasn’t sure off the top of my head if I had such a person in my contact list, they asked if I could call my office, check around with some of my associates. Didn’t they have an agent who represented them on the purchase of this home? Why, yes, they did. So, why didn’t they call me to represent them? You bet I asked that question.
The reason? The purchase was a spur of the moment decision.
What? Really? The decision was made so quickly they had no time to consider calling their reliable and dedicated Realtor?
When I suggested they call the agent who represented them and get advice from that person, they balked. They insisted I would know the answer or I could find the answer. Well, yes, I could and I would if they were my real estate client but it doesn’t seem like they are my clients. Because my real estate clients call me before they buy a home on the spur of the moment through another agent.
