Real Estate Representation on the Verge of Change?

A case relating to real estate representation has reached the California Supreme Court. The outcome may force the real estate industry into the biggest change since the inception of buyer agency.

Before the early 1990s homebuyers who worked with a Realtor® or brokerage to find and purchase a home were not represented. The only party represented was the seller, no matter how many brokerages were involved. Since that time buyer agency has emerged and has served to represent homebuyers exclusively.

What I consider a leftover from the old days are things like designated and dual agency.In short, these two forms of agency allow a real estate agent and brokerages to represent both the buyer and seller in the same transaction. These forms of agency representation are often scrutinized for obvious reasons.

Presently, eight states in the US that have outlawed dual agency. This number could quickly rise. There is pending litigation sitting in the hands of the California Supreme Court that could change things in that state and possibly nationwide.

The case involves a buyer who purchased a home using an agent from the same brokerage that also represented the seller. The seller and buyer had different agents that both worked for the brokerage. The form of representation at work here is known as designated agency.

The issue occurred when the buyer found out that the home he purchased was not 15,000 square feet as stated in the literature but approximately 9,000 square feet. The buyer’s argument was that the square footage discrepancy should have been disclosed to him, but the brokerage stated that they had no obligation to do so.

If you want more about the case and the issue at hand visit this web link My take… Real estate agents and brokerages have been debating representation, commissions, procuring cause and the like since the dawn of time. Most homebuyers and sellers just want to complete a real estate transaction without all the clutter that spews forth for the real estate community.

Sellers who want to place their home for sale often contact a Realtor® to complete the task. Many times they interview many agents before making a decision. Listing the home for sale is thus a process of decision making.

Home buyers often contact whoever is involved with a home. They are often interested in seeing the property and finding out more about it. If their research leads to purchase so be it. Many times the buyer puts less energy into choosing the agent. Websites like Zillow, Trulia, and, have exacerbated this situation. In many cases, the buyer does not even know who will be contacting them with information on a home, whether that person is the listing agent or someone’s assistant.

I am not a proponent of designated or dual agency, but yet practice at certain times. It is difficult to evenly split representation between two parties. That said, taking away the practice may also limit the agents a buyer can seek to represent them.

The problem has many layers. The best advice I can offer buyers is to consider what sellers do before listing a home. Research agents before calling on homes. Find a good agent and you are well on your way to competently acquiring the home of your dreams.

Knowledge is Power!