Designated Agency versus Non-Designated Agency
Posted on 6/27/2019 by David M. Dion
Designated Agency versus Non-Designated Agency. Understand the difference.
In 2015 The Vermont Real Estate Commission amended its rules to allow for real estate professionals to practice something called “Designated Agency”. Some states use the term interchangeably with “Dual Agency”. In any event, this was a sea-change in the way real estate agents in Vermont would be able to interact with the consuming public. As a consumer it is vitally important to understand the difference. Sadly, almost three years later and it is crystal clear consumers largely do not know the difference.
First let’s cover the term “Dual Agency”. Dual Agency essentially states a real estate agent cannot represent the seller and the buyer in the same transaction. The simple reason is obvious in that there is an inherent conflict of interest. How can a real estate agent represent the seller’s best interest at the same time as representing the buyer’s best interest? The answer is it is quite simply not possible.
Amazingly, some states do allow Dual Agency. Massachusetts is one example with the qualification that there exists full disclosure and written informed consent. In any event, it defies logic how this can possibly be in the best interest of the consumer. Perhaps it was the lawyers who lobbied heavily for the regulation to ensure they will be able to afford to pay for their kids’ college education?
The Vermont Real Estate Commission does not recognize Dual Agency. However, its Administrative Rules speak extensively about the difference between Designated Agency and Non-Designated Agency. Furthermore, the Commission requires all Vermont real estate agents to provide a Mandatory Consumer Disclosure (for Designated Agency) (for Non-Designated Agency) to every consumer expressing interest in real estate at the first reasonable opportunity.
The Disclosure explains the difference between being a client or not being a client of a real estate agent, and how this may impact any information you should be willing to share. The Disclosure also explains the difference between a Designated Agency and a Non-Designated Agency. This is a very important distinction to understand before you make the decision to become a Client of the Agent and/or Agency.
A Non-Designated Agency real estate firm owes a duty of loyalty to a client, which is shared by all agents of the firm. It’s pretty straight forward and very easy to understand.
On the other hand, a Designated Agency firm appoints a particular agent to a client. In theory no conversations can take place at the water cooler (for example) that might compromise the duty of loyalty that agent owes to the consumer. That means no sharing of any information whatsoever of a confidential nature within the real estate firm.
So, with Designated Agency real estate agents who all work under the same roof, and for the same employer, and with the same policies and procedures, do not disclose any confidences to each other. And they do this while working with hundreds, sometimes thousands of consumers.
The opportunities to compromise that loyalty are enormous and are seen on a more or less regular basis. And the only ones who truly benefit are the agents and their employer. This is because they can keep the entire transaction “in-house” where making the sale is more important than representing the client’s interests. And they also collect more profits from each sale.
For you as the consumer the decision is quite simple. DON’T DO IT!
Mad River Valley Real Estate does not practice Designated Agency. Our reasoning is simple. Hire one of us and you hire the entire firm. That means we bring a collective body of resources to you as the consumer and that is truly the only way a real estate agent, or real estate agency for that matter can truly represent your best interests.
Be careful out there!