Giving Agents a Green Light to Go to Bat for Their Clients

“No man can serve two masters.”

–New Testament

[Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.]

Unlike, say, many financial advisors, Realtors owe their clients a fiduciary duty.

batIn laymen’s terms, that means they must act in their client’s best interests (“duty of loyalty”), and be (at least) professionally competent (“duty of care”).

Two Agents, One Broker

But, what happens when the Realtors representing the Buyer and Seller work for the same Broker?

That’s seldom an issue for small brokers with a handful of agents, but for Edina Realty — with a market-leading 2,200 agents in the Twin Cities and 25% market share — it comes up a lot.

Statistically, you’d expect dual agency to occur at Edina Realty . . . exactly 25% of the time. 

In fact, the actual rate is well above that, because Edina agents have so many intra-company networking tools available to them.

Current Minnesota Law

Under current Minnesota law, when the Buyer’s agent and Listing agent work for the same broker, they are essentially required to treat the other agent’s client as their own.

Because technically, at least, they are:  the same broker is representing both clients.

Practically, that means the dual agents must play a more neutral role, and not do anything that could be construed as harming the other party.

Not incidentally, both agents must disclose their dual agent status, and get their client’s written assent.

Conflict of Interest; “1 + 1 = 1 ” (??)

But, isn’t zealously advocating for your client — including getting them the best possible deal — the very essence of professional representation?  See, “Realtor Job Description.

green lightI’m sure clients think so.

And I’m sure every other corporate lawyer — active, or in my case, former — would agree.

Which is why a proposal is afloat in Minnesota to recognize the tension inherent in such dual agencies, and free each agent to play their usual role.

The name for the new (old) role:  “designated agency.”

My sentiments:  a) what’s the argument against designated agency?; and b) what took so long??

See also, “Perils of Dual Agency:  Exhibit A”; “Awkward Dual Agent Moment #24“; and “Dual Agent vs. Double Agent.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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