Another Reason Why People Don’t Trust Real Estate Agents

John in Home Buying, Home Selling Tips

Multiple Representation (also referred to as Dual Agency) can occur when one agent represents both the buyer and the seller in a real estate transaction. Wondering how one person can effectively protect the rights of two people with such opposite interests? You’re not alone. It’s an obvious conflict of interest that the real estate industry has been able to keep legal.

Ethical issues aside, the other problem with multiple representation has to do with the “double-dip”, or as one real estate agent calls it the “2-1-0”: Getting paid Twice, for One transaction, and serving Zero parties. When the listing agent represents both the buyer and the seller in a transaction they typically “double-end” the deal receiving double the commission.

A home buyer I met recently told me about an experience she had with a Toronto real estate agent double-ending a deal.

After a couple of months of searching, Jennifer finally found the house she wanted to buy. The house had been on the market for around a week and the sellers were taking offers any time. Excited that she didn’t have to compete for the house, she had her buyer agent call the listing agent to inform him that they would be putting in an offer and to clarify a few details relating to the inclusions and exclusions with the house. Her buyer agent called listing agent several times over the span of three days but never received a call back. On the fourth day, they found out that the house had just sold to a buyer who was represented by the listing agent. Jennifer was particularly upset by this experience because had she been given the chance, she was prepared to pay more than what the home eventually sold for.

I was particularly concerned because Jennifer was left with the impression that the listing agent deliberately avoided her agent's calls so that he could double-end the sale. It’s impossible to say what motivated the listing agent who failed return their calls or whether or not he acted unethically.

Consumers perceptions of the real estate industry are not based on the probability of an agent acting unethically but rather by the possibility of an agent acting unethically. It doesn’t matter that most agents would never consider avoiding another agents offer to double-end a deal. The fact that these types of unethical actions are not only possible but very difficult to prove is what consumers see.

What can consumers do to protect themselves from these types of unscrupulous actions? Unfortunately there is very little in terms of consumer protection in the real estate industry. You could file a complaint with the Real Estate Council of Ontario if you suspect that an agent acted unethically. In Jennifer’s case, she felt that it wasn’t worth the hassle and headache to go through the process.

Perhaps abolishing Dual Agency would be a good first step to help restore consumer trust in the real estate industry.

Update March 26th:

A reader named Jim posted a great tip in our comments section.  If you find yourself in a similar situation as the buyer in this story, have your agent prepare and register an offer with the listing brokers office.  This will ensure that you have an opportunity to purchase the property, assuming it is still available.     

John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John

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