Of course, the underlying issue is simple, and relates to money and control. The argument goes that if a broker represents the seller of real property and brings that property to the market, the broker wants to maximize the potential income and exercise the most control possible over the outcome of the process. If somehow the broker can provide assistance to both the buyer and seller in the transaction, the income is generally greater, and the necessity of working with another broker is eliminated. Of course, the question is, just how can this be done?

The discussion stems from a 1983 FTC study that determined that most consumers thought the broker showing them homes was working for them, when in fact, the broker was, in most cases, working for the seller’s (listing) agent using a practice called “sub-agency”.  With sub-agency, the listing broker was in control of both money and process, offering to compensate a sub-agent if that sub-agent brought a buyer to the closing table. The buyer was a customer.  If the listing agent brought the buyer to the closing table, so much the better.  In that case, the buyer was still a customer. There was little notice or disclosure to the consumer regarding representation or property condition.

As the real estate industry moved into the concepts of representation and disclosure in the early 1990′s, the question of how to maximize income and retain control remained, and thus was born the concept of Dual-Agency, the idea that a single human person can represent the best interests of both the buyer and seller of a unit of real property.  This philosophical legerdemain is somehow accomplished by fully disclosing to both parties that the broker is a “Dual-Agent”, and with disclosure, the question of trust and confidence is somehow set to rest. Evidence is mounting that the  consuming public is no longer willing to accept the concept of Dual-Agency, and since the consumers are writing the checks, the real estate industry might wish to find a better business model.

The answers,or choices, are simple if difficult for the industry to digest:

1. The broker is an agent for the buyer or seller, never both.  This of course affects the income of the broker, and control of the outcome has to be shared, many times with brokers operating at different levels of competence.  But the competency question is really one for the consumer, and consumers are free to decide to choose a more or less competent broker based on their understanding of the process of buying or selling real estate.
2. The broker is a facilitator for the transaction, not representing either party.  With today’s vast amount of readily available information, this concept has certain benefits for all parties, but may affect the amount chargeable to the consumers for the service provided. The question of trust is left unanswered with this approach, sometimes called “transaction brokerage”, and the fact is, most consumers want some advocacy or counsel regarding the purchase of their home or investment.
3. The seller’s (listing) agent represents the best interests of their selling client, and any prospective buyers choosing to buy without representation or the use of a facilitator are customers. Again, with the vast amounts of information available to the public, some well informed consumers may be able to function well as buyers, without any help at all.  Like it or not, many sellers act in their own behalf (FSBO’s) and many times buyers choose to buy without involving a professional broker.

Dual-Agency should be relegated to the dust bin of history, and the real estate industry should move forward in adopting or developing new business models that better serve the consuming public. If not, the debate may become moot, as the public may decide they simply do not need the services of a professional broker to buy and sell real property.