"designated agency" real estate?

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charlestown1978
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Joined: Sun Mar 20, 2011 10:47 pm

"designated agency" real estate?

Post by charlestown1978 »

Does anyone have any thoughts, comments, concerns, or experience with "designated agency" when purchasing real estate? Specifically, from the buyer's perspective?

(I searched this forum and the web and can find very little about it from someone without a clear agenda. From what I have read, I have formed my own opinion but I'd like to hear from the folks here.)

Thanks
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deanbrew
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Re: "designated agency" real estate?

Post by deanbrew »

I am unclear what you are asking. Are you asking about using a "buyer's agent" to find (and possibly help negotiate) properties to buy? Or are you asking if there are benefits to contacting the listing agent for each property rather than your "regular" agent?
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
VgSince1982
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Re: "designated agency" real estate?

Post by VgSince1982 »

I'll take a stab, but might be off.

In NC, designated agency is a form of "dual agency". A dual agent is an agent who is representing both the buyer and the seller. Both the buyer and seller are aware of this and have agreed to it. Many agents I know won't practice dual agency since it can easily lead to complaints that the transaction was unfair to one party or another. Instead, they may ask another agent to handle one side of the transaction so that the negotiations are fair and confidential.

Designated agency is when the same agency (like Coldwell Banker) has the buyer and seller. You expect that if you have different agents in the same firm that the negotiations will be fair and confidential. Designated agency ensures that this is the case by putting it down in 'black and white'. But regardless, be wary of what you choose to tell your agent, especially if it is of an 'extreme' nature...we'll pay ANYTHING to live in Vanguard Downs or if we don't sell by Feb.1 we'll lose a bonus...etc.

I hope this is answers your question.
imagardener
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Re: "designated agency" real estate?

Post by imagardener »

Are you looking at real estate from a developer who has chosen one particular RE broker to list/sell their properties? That would be a case of designated agency, where the developer/seller wants to control their sale expenses and probably has a reduced commission schedule for themselves. The buyer would not have any advantage however and could be at a disadvantage because the RE broker would have no incentive to bring up any negatives about the properties or compare them objectively to others on the market.

However my experience with RE agents is that even when they are not "dual" agents they never bring up any negatives because they would be talking themselves out of a commission.
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charlestown1978
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Re: "designated agency" real estate?

Post by charlestown1978 »

Thanks for the replies. To clarify, for example, say I am working with Agent A and Agent A lists a property I want to purchase instead of doing dual agency, Agent A "designates" one of her colleagues from the same office. That is, two agents from the same Coldwell Banker office or two agents from the same Century 21 office.

While not formally dual agency, it seems like dual agency to me. Further, the state I am in requires that the agent disclose what designated agency is and requires the buyer sign a disclosure form (see below).

The majority of agents I have spoken to insist that designated agency is not a problem because the moment and agent is designated, "a wall" is put up between the two agents and they don't share information. I question this, do they not talk on the phone anymore, do they have separate fax machines, was nothing shared in advance of this, etc. Additionally, the new 'designated' agent knows how long we have been looking because they have seen us around and, maybe, even knows what our ideal property is. Further, the state requires disclosure for some reason...not to create more paper work. And, we all know how well "walls" work in business (e.g., front running, client money (MF Global), etc.

What I am really interested in knowing is if people from this forum think the whole designated agency is just dual agency in sheep's clothing or if designated agency is nothing to worry about.

Language from the disclosure form:
DESIGNATED SELLERS AND BUYERS AGENT
A real estate agent can be designated by another real estate agent (the appointing or designating agent) to represent either the buyer or seller, provided the buyer or seller expressly agrees to such designation. The real estate agent once so designated is then the agent for either the buyer or seller who becomes their client. The designated agent owes the buyer or seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentially and accountability, provided, however that the agent must disclose known material defects in the real estate. The agent must put their clients interests first and negotiate for the best price and terms for their client. In situations where the appointing agent designates another agent to represent the seller and an agent to represent the buyer then the appointing agent becomes a dual agent. Consequently a dual agent cannot satisfy fully the duties of loyalty, full disclosure, and obedience to lawful instructions which is required of an exclusive seller or buyer agent. The dual agent does not represent either the buyer or the seller solely only your designated agent represents your interests. The written consent for designated agency must contain the information provided for in the regulations of the Massachusetts Board of Registration of Real Estate Brokers and Salespersons.
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deanbrew
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Re: "designated agency" real estate?

Post by deanbrew »

When I sell or buy real estate, I don't tell "my" agent any more than I have to, in terms of the "real" minimum I might accept as a seller or the "real" maximum I might pay for any property or for a specific property. Unless you have a true buyer's agent, all agents work for the seller, and have a both an incentive and responsibility to sell a property for as much as possible.

I would suspect, as I infer you do, that any "wall" between agents in a brokerage office is not very high nor very thick. I would behave assuming anything I tell the designated agent would get to the listing/selling agent. I'm not sure how this is a huge problem, however, as you - the buyer - have final say in what you want to look at, how you negotiate and how much you will pay. I guess I'm still not real clear on the specifics of your concern.
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
baseten
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Re: "designated agency" real estate?

Post by baseten »

Sometimes dealing with the same agency can work to your benefit.

We purchased a bank-owned property, and I believe part of the reason we got it (other than our strong offer not far below asking price) was that the agent was able to keep buyers and sellers commission in-house. They had less incentive to show the house to other buyers agents and start a bidding war.
imagardener
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Re: "designated agency" real estate?

Post by imagardener »

Does it matter what it's called? I agree with you that it seems like the same thing as dual but since the agent representing you is different from the listing agent it cannot be dual. Perhaps the broker for this agency had a bad experience one time when a dual agent sale went bad and now uses designated instead. You are at least going in with your eyes open.

FWIW I have bought properties 2 separate times dealing only with the listing agent from the very beginning. Yes had to sign a paper acknowledging they were a dual agent. When you do your homework on a property and don't depend on a salespersons information (never do I rely on that) I find not having another party involved makes the deal go much faster. Of course you don't tell the listing agent things you don't want the seller to know (how much you want this property, what your maximum bid is) but I wouldn't tell those things to any agent.
retiredatfifty
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Re: "designated agency" real estate?

Post by retiredatfifty »

deanbrew wrote:... Unless you have a true buyer's agent, all agents work for the seller, and have a both an incentive and responsibility to sell a property for as much as possible.
In my experience as both a buyer & a seller, Real Estate Agents work for themselves. Their incentive/motivation is to sell the house. There's not a whole lot of difference in their commission if the house sells for 10k more or 10k less than what it ought to and a lot of them could really care less ... but there is a big difference in their commission (zero!) if the house doesn't sell at all or a contract falls through.
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