Episode summary
Last episode, Dave asked the question we couldn't fully answer: if the deal gets done, why should a seller or buyer care whether one agent handled both sides? This episode is the answer.
We start by correcting the record. On-air last week we said most states had banned dual agency and that only two didn't treat agents as fiduciaries. Both were wrong — it's roughly eight states that ban it outright, and Washington itself doesn't make agents fiduciaries. Since 1996, Chapter 18.86 RCW gives Washington agents a specific list of statutory duties instead. That distinction runs through the whole episode.
Then the core of it: limited dual agency is one agent representing both buyer and seller, and the word limited is doing real work. The statute says a dual agent may not take action to benefit one party to the detriment of the other — which, in a negotiation, is a duty to do nothing. We walk through the $720K listing / $680K offer example to show exactly why a dual agent can't advise either side, why agents do it anyway (double-ending the commission), how it actually happens (an unrepresented buyer walks into an open house), and whether a 1–1.5% discount is worth the negotiation you're giving up. Our answer: almost never. The one honest use is a deal that's already made between people who know each other, handled for a modest fee.
Designated dual agency — two agents at the same brokerage, one managing broker over both — is a different animal and a much lower risk. We explain how brokerage actually works (your agreement is with the firm, not the agent), when to worry (a ten-agent shop, or a very new agent leaning on the designated broker), and why most sellers should consent to it and ask the question instead of declining.
Then Dave recites the duties from memory — OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, reasonable care — and earns a B+. The one to remember: confidentiality is the only duty that outlives the agreement. Your agent can never disclose your financial position, even in future deals.
We wrote the whole thing up as a one-page reference: What Your Washington Real Estate Agent Owes You.
Hosted by Nick Aufenkamp and Dave Miller of The Tartan Team, brokered by Real Broker, LLC. Serving Clark County and Southwest Washington.
In this episode
- [01:56] Where this fits: the question First Look left open
- [03:01] The agency pamphlet nobody reads — and why "disclosure" is generous
- [06:24] Correcting the record: eight states, not most — and WA agents aren't fiduciaries
- [10:25] What dual agency is, and why Washington added the word "limited"
- [12:32] The rule: no action to benefit one party to the detriment of the other
- [14:08] The $720K / $680K example — why a dual agent can't advise either side
- [16:54] Why agents do it anyway: double-ending the deal
- [18:54] Is a 1–1.5% discount worth the negotiation you give up?
- [19:49] How it actually happens: the unrepresented buyer at the open house
- [23:47] The one scenario we'd consider it: a deal that's already made
- [25:42] Designated dual agency — two agents, same brokerage
- [31:09] How brokerage actually works: your agreement is with the firm
- [32:19] When designated agency is a real concern: small shops and new agents
- [37:36] The verdict on both kinds
- [38:27] The real risk is the agent's ethics, not the brokerage
- [40:06] OLD CAR: the duties an agent owes (and Dave's B+)
- [45:22] Confidentiality — the one duty that never expires
- [47:21] Why we keep coming back to incentives
- [50:55] Next up: unrepresented buyers, or SB 6091
Links from this episode
- What Your Washington Real Estate Agent Owes You — the one-page explainer promised on-air: the five statutory duties, what dual agency does to them, and the two consent boxes
- Episode 11 — Compass vs. Northwest MLS: What the "First Look" Settlement Means for Washington Sellers and Buyers — the previous episode
- RCW 18.86 — Real estate brokerage relationships — the statute
- Book a Strategy Call
Transcript
Lightly edited for readability. Speaker attribution in the fast cold-open banter is approximate; attribution through the substantive discussion is reliable.
Nick (00:00): Hey, and welcome to another episode of Disclosures. I am your host, Nick Aufenkamp, along with my wonderful co-host, Dave Miller. What's going on?
Dave (00:07): Not a lot. Back to it. I got a short week — I'm headed out to San Antonio on Wednesday of this week, so recording on Monday, a couple days. For a high-performance building conference.
Nick (00:20): Nerd.
Dave (00:22): I mean, you're not wrong. But we are selling houses — or at least that's what we're supposed to — and in the spirit of continuing to become better educated about the thing that we're supposed to be advising our clients on, I'll take the insult of being called a nerd.
Nick (00:43): Hey, I didn't say it was a bad thing. Nerds rule the world.
Dave (00:52): That's just so — nobody thinks that.
Nick (00:55): Are you kidding? Verifiably true. Sam Altman, Mark Zuckerberg. I have a feeling that even Bezos himself is pretty nerdy. The guy started his career selling books.
Dave (01:05): He's pretty buff now, though.
Nick (01:08): Well, so is Zuckerberg, right?
Dave (01:11): Is he? I don't keep up.
Nick (01:13): Got shredded, man.
Dave (01:15): I do know, in an anecdotal point to everyone being upset at Jeff Bezos — I had to pay eighteen dollars for shipping from a third-party website over the weekend, trying to order something that could only be gotten from this small website. Shipping's expensive. Everyone's upset at Jeff and old Amazon, but everybody loves their free shipping.
Nick (01:40): Once you've got to go to some legacy website and pay for shipping, all of a sudden you appreciate the brilliance of Amazon Prime.
Nick (01:56): Good. Well, last week we talked about First Look, the new listing status with the Northwest MLS that a lot of different Washington sellers are going to start hearing about. That episode already got quite a bit of traction, which was encouraging to see. One of the issues that we raised in that episode was a concern that this First Look status may lead to an increase in dual agency. And it was tough to get through that entire episode without really doing a deep dive in what dual agency is. You asked a really good question of, hey, so long as the deal gets done, why should a seller or buyer even care about dual agency? And so that's really what this episode is going to be unpacking. What is dual agency? What different forms can it take? Adjacent to that is also: what are the duties that a real estate agent owes to their client? So picking up on all of those things — anything that you'd add to sort of frame the episode?
Dave (03:01): I think that's good. Touching on, and hopefully explaining well, the types of agency relationship that exist and the things that go along with them. Because in Washington it is a mandatory — I don't know if calling it a disclosure is exactly correct. It's a pamphlet that needs to be delivered to a buyer or a seller at different points in the transaction that explains what the difference is.
Nick (03:31): Real quick, let me just double-click, because I think that's interesting. There is a pamphlet that must be given to any client before engaging them officially as a client. How come you hesitate before calling it a disclosure?
Dave (03:53): The reason is that I'm not sure on the formal definition. A lot of clients, we will attach it as a DocuSign and put a signature on it — for something to be a disclosure there usually has to be a signature on it, I would say. And the pamphlet itself — it's really weird, because there's not really a state-issued form for it, or a NAR-issued form. There's a text that has the verbiage that comes from the state, but then you don't necessarily have to use that one, and we see different brokerages using different versions of it. So it all feels a little convoluted and fuzzy.
Nick (04:35): I know I was putting you on the spot. And this will tie in, I think, to the larger part of the conversation. I would hesitate to call it a disclosure — not because as a document that's exactly what it is — but this whole idea of informed consent. Oftentimes, and we can even be guilty of this at times too, like you said, that PDF document gets attached in a whole bundle of documents that need to be signed. And oftentimes, just for the sake of pragmatism, as agents we're not going through that document line by line, making sure that the seller or buyer understands every clause that's within the law of agency pamphlet. And so then it's really on the client to read through and ask any sort of questions. And that's really the case with the listing agreements, buyer agency agreements, where all of this dual agency language shows up. I think as a whole, the industry doesn't do a great job. We're fantastic at sending documents and calling them disclosures. But I don't know that we're actually that good at disclosing — to the degree that a client actually really deeply understands what it is that they're signing or agreeing to. And in large part, that's the whole point of this podcast: disclosures. That was the reason I highlight that.
Nick (06:17): I also — my mind just went to, with this being Disclosures, I should correct the record from last week's podcast episode. There were a couple of points where, after we had aired it, you had graciously asked, and also as I was running the transcript through Claude, Claude was like, "Hm, you're wrong." And those two things were: the number of states that have banned dual agency. I said it was most. You asked, do you know how many? And I fumbled on that one. In fact, it is not most states. I think it's only about eight states that have actually banned dual agency outright. In most cases it's pretty unclear.
Dave (07:10): Which is an important distinction, because every state is going to have slightly different restrictions put on what the agency relationship can look like when you have either a single agent representing both sides of a transaction, or two agents from the same brokerage representing both sides of the same transaction.
Nick (07:21): And on a related point — I said, off the top of my head, I was very confident in saying I know that there are only two states that don't mandate real estate agents be fiduciaries to their clients. And those were Maine and Florida. And then, lo and behold, even here in Washington, officially a real estate agent is not a fiduciary. It's a technical sort of argument. But if you were to make a legal complaint against a real estate agent for failing you as the client, you would not make that complaint on the grounds of them violating fiduciary law. It would actually be their failure — they have statutory obligations to you as real estate agents. But officially speaking, real estate agents in Washington are not fiduciaries. So a little bit of egg on the old face there.
Dave (08:44): The laws are going to vary state to state, and so to a certain point it becomes a very nuanced thing based off of where you are. And so as we're going to talk about dual agency in this episode — if you're in, I think Colorado is one of the states that has it banned outright, Massachusetts if I'm remembering —
Nick (09:10): Texas has some really strict rules around it.
Dave (09:14): So if you're listening to this and you're in one of those places, maybe, one, be grateful. But two, also — back to sort of the thing that I try to always come back on at the end of every episode — do your own research. We do our best to give you the facts as it pertains to whatever topic we're talking about, but people make mistakes, unknowingly and on accident, and sometimes on purpose. And so it's a good lesson to highlight that you should be digging into stuff yourself. The internet, for as many problems as it has, is an amazing tool to get your own facts and learn about the process you'll be embarking on if you choose to buy or sell a house.
Nick (10:05): For sure. So now, as voices on the internet, let's chat about dual agency. In Washington specifically, to be very clear. Try not to cast too wide of a net, because then you end up just having holes in it.
Dave (10:25): Well, maybe let's start with a definition. How would you define dual agency? Or I should say, how does our state define it?
Nick (10:33): So a dual agent is where you have one agent who is representing both the seller and the buyer in a real estate transaction. Probably the most basic way to put it.
Dave (10:47): From a terminology standpoint, if people are following along and looking stuff up — in Washington, they recently, maybe 2024, added the word limited into the definition. So if you're reading through, you're probably not going to see something that just says "dual agent" as it relates to Washington. You're going to see "limited dual agent." What was the reasoning the state added that term in?
Nick (11:15): It's a really important word. And it's funny, because when you just read it, it's not really clear what limited means or what it's doing in that clause. But limited is really expressing that the agency that's being provided is fundamentally limited. Your dual agent is limited in — not exactly the responsibilities that they have to you, but when you think of a good agent, which is somebody that is representing your interests by trying to negotiate the very best terms possible for you —
Dave (12:02): They're advocating for you in every sense. That's what comes to mind.
Nick (12:06): Well, because a limited dual agent is representing both the interests of the seller and the buyer, and they need to represent those interests equally — they owe confidentiality to both — well, they're very limited in what they can do from a standpoint of negotiations, or advocating for one party over the other. So the way the Washington law says it is: they cannot take action to the benefit of one party to the detriment of the other party in the transaction.
Dave (12:39): So as you think about the mechanics of a real estate transaction, it's like — well, the main thing we're trying to move on is the price and the terms. The terms, for the most part, could just be some extension of price — a credit, better terms. So we're talking about real money. That is, as you just said, the main issue: because you can't advocate for one side of the party over the other, the state wanted to add the definition in to make it clear that there's not much you can do in terms of agency if you are a quote-unquote limited agent, a dual agent. And I would go as far as to say, at that point, you're not really an agent anymore. In certain places they have different terminology for it. They might call it a facilitator —
Nick (13:43): A transaction agent.
Dave (13:45): Transaction agent, exactly. Because the idea that you're able to represent a buyer — as well, represent them as an agent — it doesn't really fit the traditional definition of agency anymore if you can't actually advocate on behalf of your client.
Nick (14:08): Right. And to make it just really explicit, let's take a situation where a seller has hired a listing agent, and they've told the listing agent, "Hey, we want to list at 720, but the minimum that we're willing to accept on this house is 700." And then a buyer comes along and is working directly with that same listing agent, and they say, "Hey, we want to offer 680, but the most that we're willing to pay is 700." Well, for that agent who's in the middle, it would be really easy for them to just say to the seller, "Hey, they'll come up to 700," and then to say to the buyer, "Hey, they'll come down to 700, let's just meet in the middle and be happy." But that would actually be a violation of agent duties — of loyalty and of confidentiality. And so then that agent is in a really difficult position if the buyer makes an offer for $680,000. Because how in the world is that agent supposed to then advise the seller when they can't share anything that they know about the buyer or their financial position? It really puts the agent in a sticky position.
Dave (15:37): And you'll see agents who'll be like, "No, I can do it, and I have a completely clear conscience about it." It forces the agent to start to make really generous — in terms of how far they're willing to go — judgment calls on behalf of both of their clients. To reverse the example: if you have a really distressed seller that really needs to sell a house, and then a buyer comes up and they're unrepresented and they say, "We're willing to offer this" — if they need to sell the house and it's listed at $600,000, and they know that they haven't gotten any offers, and these other buyers are coming to this agent who's going to act as their dual — how can you really advise that person when maybe you know your listing isn't going well, and you're like, "Well, this is probably going to go for 575"? How do you give any price or terms and really advocate for that buyer at that point? And I think we're in agreement to say you can't, really.
Nick (16:54): And so it does raise the question — okay, clearly, if you're listening, you can see that neither of us have ever done a dual agency deal. But they happen all the time. Which then raises the question of: okay, why would any agent take on dual agency?
Dave (17:14): More money. That is the obvious one, for sure.
Nick (17:18): But what do you mean by that?
Dave (17:22): Well, in a lot of cases — and it varies agent to agent, state to state — but if you have a house listed, and an unrepresented buyer walks through an open house, and you're able to get them under contract —
Nick (17:39): And by under contract you mean get them signed on as a buyer, under a buyer agency agreement.
Dave (17:50): Yep. So if you're able to get both the buyer and seller under listing and buyer agency agreements, then in a lot of cases — some agents will discount the buyer's agent commission, but oftentimes they don't. And so you're capturing, around here, a lot of the time, five percent of the sale price. It's a serious amount of money. Online, in forums and whatnot, you'll see this is called double-ending the deal — where the one agent is capturing both the listing and the buy side. It can potentially double their income for a specific transaction. And it really raises the question of: for what extra work? Especially when you have the term limited dual agent — that implies that they're actually doing less than if there were truly two agents involved.
Nick (18:54): And so you're right to address that — well, sometimes the agent will discount their commission on one side or the other. And that can generate a real savings, potentially, for clients. But it also means that you're not getting top-notch negotiation on either side. So if that's a one, one-and-a-half percent discount, which would be kind of typical, the question really is: well, am I making up that one and a half percent versus what could potentially be negotiated for me off of the list price initially, or in repairs, and those kinds of things? I'd say typically most people are better off financially to just either go at it as an unrepresented buyer, or to hire their own representation.
Dave (19:49): Really, at that point — and the way this typically happens is exactly the situation we've described — you already have a seller client that you're representing, and then an unrepresented buyer walks into an open house and says, "Hey, I love the house. I'd like to put an offer in, but I don't have an agent." And then the opportunistic agent says, "Hey, great, we can get you taken care of, let's get it done," and they write up the offer. And in a really worst-case scenario, they might not explain any of this. The buyer gets no opportunity to get talked out of the house. And this is something we oftentimes push really hard on in our own practice for buyers — we're going through and looking at the properties with our clients and saying, all right, is this really a good fit for you? Does this house make the most sense? Is it too much house? Is it too little? Is it too expensive? Is it in the right area? All these questions. Not that ultimately we're always supposed to tell clients what they do or don't want, but more so to test them, so they don't get run away on an emotional train where they walked a house, they loved it, and now it's this hurry-up-and-go, got to get it under contract before somebody else does.
Dave (21:19): And so if you're hosting an open house as a seller's agent, you could really press in on those emotions of hurry up and get it done. And then you completely take away that buyer client's option to even have the counseling of, hey, is there a better house for you? And a lot of agents might maintain that, yeah, they're going to do all that. But the reality is, who knows how long they've had this house for sale. They want that house to sell and close, because that's really their first priority — their original client. And typically the only way they get paid, too, is for that thing to actually close.
Nick (22:05): I don't know if you've ever heard of it in the opposite way — the opposite way of this would be you have a buyer client who goes to look at a FSBO. And I almost have never heard of that happening. But that could have all of its own issues — more so the detriment on the seller side, if you were approaching a FSBO and trying to net them. Although I'd say most people who embark on a FSBO sale are usually pretty agent-averse to begin with, hence why they listed their house by themselves.
Dave (22:49): No, it's just a bad deal. It doesn't look good for the industry as a whole when you have people running around and doing this. Especially so often when you see agents justifying the very expensive commissions they charge on the basis of "I'm going to negotiate like a pit bull, I'm going to get more money off of the purchase of this house than is going to be my commission" — or in reverse, "I'm going to net my seller more money than my commission." That's the argument. It's like, well, you're saying that to justify your commission, but then you're also willing to hop into doing both ends of the transaction, where you're essentially getting double the money and throwing your value to the wind, basically. So it's not a good look.
Nick (23:47): The only — as I think through, like, when would I ever consider dual agency —
Dave (23:52): Limited dual agency. And I keep touching on that because we're going to get to a caveat in a minute here, but go on.
Nick (24:00): Good catch. So when would I ever consider true limited dual agency, where it's me as the one agent standing in between a buyer and a seller? And the only circumstance that I can think of is if a client came to me and said, "Hey, I've essentially come to terms verbally with this family member or friend who's looking at buying my property, and we just need somebody to help draw up the deal and facilitate it." And because Washington doesn't have a facilitation or transaction category, I could see how, with the full disclosures from both parties, me being a dual agent — so that it does intentionally neutralize me, so that I can just help them walk through the documents that they need, help them coordinate all the steps of the transaction so that they can close successfully — I could absolutely see doing that. But it would be for a pretty modest fee, because I'm not having to market a property, I'm not having to source a deal. I'm just essentially on call for helping with paperwork.
Dave (25:16): At that point, a lot of people who are in that scenario, if you don't know, might just use a real estate attorney to do the same thing, and it might be comparable in price.
Nick (25:26): And that's essentially what it'd be functioning as. So that's kind of the one caveat. I really would be curious to hear thoughts from anybody who is listening — if you've had experiences with dual agency, or if you've ever had an agent try to talk you into it, what the arguments were, if there's something that we're missing. But since you kind of teased it, let's move on to: all right, what is this other category that you hinted at for dual agency in Washington?
Dave (25:59): So we've been talking about limited dual agency, the important distinction being that your broker's ability to represent you is limited. We've been unable to find the exact terminology here, but it's commonly referred to as designated limited agency. So what that is: Nick and I both work for Real Broker in the state of Washington — they're the brokerage that holds our real estate licenses. And let's say I'm representing a buyer and Nick's representing a seller. Because we both work for Real, that transaction would be treated as binding our managing broker and our designated broker, our branch manager —
Nick (27:14): Those are specifics depending on how large your brokerage firm is and the structure of your brokerage. But essentially, Washington has the category for us to still be able to give full agent representation to our clients respectively — my seller and Dave's buyer — even though we are employed by the same brokerage. But it still falls under the category of dual agency, because there's an understanding that if something were to happen — there was some dispute, some argument — we would need to get our managing broker at Real involved in the transaction. And regardless of whether it was me who had an issue or Dave who had an issue, we would both require that designated broker, who sits above us and runs either our local branch or our whole brokerage, depending on the size. That team of people — it has to be disclosed that they're operating in a limited capacity. They're not able to back us up as much as they would if Dave and I worked at different firms.
Dave (28:44): If I was at Keller Williams and you were at Real, we'd have different designated brokers to advocate for the seller and the buyer. And so you're saying, all right, this sounds a little convoluted — why does this matter? The reason it matters is if you're in a market that has a single brokerage firm that has the market share. In some smaller towns you could have one or two brokerages that essentially own the whole market. Here in Clark County, it's a big enough metro area that — it's not like it's not going to happen, but it will happen less, because there's, I don't know, a couple dozen brokerages, five really big ones, and then dozens more smaller individuals. And so it hasn't happened in all your transactions —
Nick (29:43): I think you had said off-air, three or four times, on the other side.
Dave (29:50): And so when you're — there's a part of the paperwork that says, all right, well, are you going to consent to limited agency? And I was just thinking about this live — I don't know if they let you consent to designated dual agency separate from limited agency on the form. Maybe that's something to talk to the local association about. But just to say, if I'm a seller and I'm about to sign a listing agreement, if it were me, I would consent to designated dual agency — because I don't want to limit the potential buyers who maybe didn't want to consent to limited dual agency, a single party working both sides of the transaction. But I also wouldn't want to not consent to designated agency, because if Nick has a bunch of buyers who are looking to purchase a house, I wouldn't want to cut them out of people I'm willing to do business with just because they're working with somebody at the same brokerage.
Nick (31:09): Absolutely. I think that's helpful. And maybe I'll even go a little bit higher level, for listeners — it's kind of mysterious to a lot of people how real estate brokerage actually works. Because most everybody just thinks, "Yeah, Dave is my real estate agent, he's who's representing me, he's who I work with." But when you sign a listing agreement with Dave, you're actually signing a listing agreement with Real Broker, with Dave as the assigned broker from the brokerage. And let's just say Dave were to leave Real while that listing agreement was active — Dave wouldn't actually get to take your listing with him. The brokerage, Real, owns that agreement. And so that context helps in terms of understanding: well, what does this designated broker have to do with anything? Because in all likelihood, you as a consumer are never going to meet that person. You don't know their name, don't know that they exist — until something comes up, and you do.
Nick (32:19): So then this got me thinking of, well, what are the caveats? Because I think that you're right — there's a few really large brokerages in the Clark County area. Keller Williams, I believe, is the largest. Real and eXp are also very big. There's a lot at Premier Property Group, Windermere Northwest, and then there's quite a few with Sotheby's. And these are at least, even if they're not the highest by agent count, where I see some of the top-producing agents — where you're going to see the most of their name on a sign, the people that have the most buyer clients. So yes, it would be concerning if you were to say, "Well, Dave's at Real, I don't want to have any other agents who are at Real" — because then you're limiting yourself to a huge segment of the market. However, there are also a ton of two- or three-person brokerages. And in fact, if Dave and I were to ever turn Tartan, instead of being affiliated with Real, into its own brokerage — well, then you might have more concerns about this designated dual agency, because there's only a couple of agents that are part of the brokerage.
Nick (33:43): The other area where I might have concerns about designated dual agency is if it is a really new agent that you're working with. And this is not a knock against newer agents — but with a newer agent, that's going to have a lot more questions; they're agents who lean much more heavily upon their designated broker to speak into the specifics of a transaction. And that puts that designated broker in a much more difficult advisory position when the person on the other side of the transaction is also an agent at the same brokerage representing another client.
Dave (34:25): And if you're listening to all this and you're like, "Man, this sounds so convoluted" — it is. It's super convoluted.
Nick (34:33): Ain't it fun?
Dave (34:36): So much fun. No, but we are trying to help bring some light to this, because so much of this isn't ever explained. In our specific example, of having our licenses collectively held at Real Brokerage — Real is all over Washington. There's a real chance that you could be completely removed from other branches, other parts of these brokerages, when you're talking the really large brokerages that have hundreds if not thousands of agents. I think Real is like twelve hundred agents in Washington now, something like that. There's for sure concern when you get to the smaller-scale brokerages — a little small local Clark County brokerage that has only ten agents, let's say. And it really does come down to being concerned about price and terms and motivation, and that info being shared within the brokerage.
Dave (36:02): Way back before a lot of the law changes and disclosures and pamphlets around this, brokerages were supposed to have these internal operating guidelines in certain states that said, all right, well, if you're going to represent the buyer on this transaction and I'm representing the seller, we're not supposed to talk about any of the price and terms on this deal. And that all could have worked hypothetically, if everyone was doing exactly what they were supposed to do. But people just let stuff slip. The amount of times we run into an agent at a coffee shop and they're like, "Yeah, I just got a new listing, and we've got to list it at 650, but it'll probably sell for 630." People just end up talking. So I guess that's a warning against a sloppy agent, but it's also a warning against dual agency if you're talking about a small crew — because it's just really hard. Even for agents who aren't sloppy, you really have to be on your A game to not let any price, terms, or motivation accidentally slip up, or give away something that could really, in a significant way, hurt the best price and terms for your client.
Nick (37:36): So just to zoom back out, to make the distinction really clear: limited dual agency, where you have one agent representing both the buyer and the seller — we would say almost under no circumstances is the relative risk of dual agency ever worth it. Designated dual agency, where there's two individual agents representing buyer and seller, but one managing or designated broker who oversees both of those agents — very, very low risk, all things considered, of there being any nefarious play or any conflict of interest. It still has to be disclosed. But that's not something that we would say, as a buyer or seller, you really need to have too great of concerns about.
Nick (38:27): And it's funny, because even as you talk about, well, what are really the specific risks — I remember back in the day when all realtors would work out of a real estate office. There was a concern that, well, my Keller Williams agent might be talking to the Keller Williams buyer agent and might be giving away details about my position. And it's like, yeah, that might have been happening. But I'm telling you, with a lot of agents, that's still happening no matter what brokerage they're part of — through phone calls and texts and back channels where agents are giving away too much. And so those sorts of risks, the very thing that you were talking about, have so much less to do with "man, we've got two agents at the same brokerage," and everything to do with the ethics of the agent that you hire. Which is why that interview process is so important.
Dave (39:20): Or the skill and care, or the experience. Not to be contrarian — but "ethics" might imply that there's nefarious intention there, which — nefarious might be too strong a word. Self-promoting intention. An intention to make the deal get done quicker and maybe get both ends of it. All sorts of stuff that violates the code of ethics, to the end of making a deal close quicker.
Nick (40:06): And maybe one of the things to just sort of wrap here, because I mentioned it at the start: okay, even though agents are not officially fiduciaries in Washington state, they function very much like it. It's really just the legal process that's different between a true fiduciary and somebody that has statutory obligations. So what are those obligations that an agent has to their client, regardless of dual agency or not?
Dave (40:32): Well, you're going to make me do them off the top of my head. The acronym is OLD CAR, right? So it's Obedience — that's the first one. So if you tell me to do something, I'm supposed to do it, if I'm your agent. Well, I guess I should say — I was trained primarily in Minnesota, which is a state that recognizes agents as fiduciaries. So I don't know if Washington says OLD CAR, but effectively that's what it is.
Nick (41:08): I'm actually really impressed. I didn't know that you had the acronym. You're blowing my mind right now.
Dave (41:15): And then it's Loyalty — which, I don't know how they define that differently than: your interests are higher than mine, right? I'm supposed to be loyal to you before I'm loyal to, let's say, the other person I'm trying to be an agent for if I'm a limited dual agent. Hence part of the issue we have with this.
Nick (41:32): Or loyal to the client versus loyal to your paycheck.
Dave (41:36): Correct. OLD — what is the D? I can't remember. Let's skip it and come back. C in the CAR is for Care, which is — we're talking about the skill of the agent.
Nick (42:05): D is Disclosure.
Dave (42:07): Disclosure, yeah. The podcast — how about that? We're doing that right now. So D is disclosure. We're not going to hide things. Like, with the construction experience I have, I'm crawling around in the crawl space and I see that the center footing is completely cracked and it's starting to shear apart, and the client loves the house otherwise — but if I tell them that I saw this broken foundation, that could blow the deal up. Well, disclosure. I'm supposed to disclose that to you and put your interest in front of mine. Okay, so OLD CAR. We're down to the C, which is Care — goes back to what we were saying earlier about lots of price, terms, and conditions getting disclosed, and not in a good way, to the wrong parties all the time. That's the care of the agent; they're supposed to handle your affairs with care and with skill. A — Accounting, which is similar to care. You're supposed to understand basic math, which you would be surprised is harder than you think. We sometimes get into stuff we see on purchase and sale agreements — like, "we wanted half of the sale price off as the seller's credit." And then, gosh, I'm drawing a blank on R.
Nick (43:53): Dude, let me pull it up. So I'm trying to figure out where confidentiality fits in here — because we've got obedience, loyalty, disclosure. C was Confidentiality. And R is Reasonable care.
Dave (44:15): Reasonable care. I was close.
Nick (44:18): Still a B-plus.
Dave (44:20): I'll take what I can get.
Nick (44:22): You did great on reasonable care already. So — confidentiality. That one's fairly self-explanatory, but the "care" you described is essentially confidentiality. And that oftentimes is where reasonable care fails the most: in the confidentiality of the client's price, terms, and motivation for selling the house. Hence why we recommend strongly against limited dual agency.
Nick (44:59): And essentially, that is what the statutory law in Washington requires of real estate agents. And so if there ever was a complaint against an agent, it would be made on the grounds of one of those things. Now, there's still a lot of legal interpretation of whether loyalty or confidentiality was broken. And confidentiality is an important one, because that actually transcends the agreement with the client. So if you have signed an agreement with an agent, either listing or buyer side, they owe you confidentiality indefinitely. That doesn't end when the transaction ends. They still can't disclose anything about your financial position in future transactions — which is pretty interesting to think about. Everything else, like loyalty and disclosure, all ends when the agreement between you and them ends.
Nick (45:57): It's kind of amazing. I think, as a consumer, it's helpful to just keep those things in mind. And we'll do a little explainer PDF that we'll link to in the show notes, in case you want to have a quick reference for this. Because it is kind of crazy just how many agents have passed the test, gotten their license, and have been able to just kind of get by —
Dave (46:23): Can't even remember what OLD CAR means.
Nick (46:27): We'd better be careful setting a bar too high for us to clear.
Dave (46:36): I mean, remembering the acronym is one thing. Really staying focused on keeping your client's terms and conditions and their motivations for selling or buying confidential is something that we see, very often, is not taken very seriously. Because it's more like, "Hey, you know, I'll give you a little information, you give me some, we're going to try to get this deal done." Your stereotypical slick salesperson. Scratch my back, I'll scratch yours.
Nick (47:21): And this is just why we talk so much about incentives. Because at the end of the day — and we've mentioned it a few times here — the agent has their own incentives. They're not doing this work for free. They want to get paid as well. And so for you to understand what your agent's incentives are — wanting to get paid doesn't make them a bad person. But just understanding how those incentives may hurt or help you in a transaction, I think, is really important.
Dave (47:51): And just the fact that so much of this — back to my opening thought on the podcast — if you've ever sold a house before, or purchased a house before, how well was any of this explained to you? Or was it just a pamphlet that was kind of slid across the table? Back in Minnesota, you have to sign their version of this. And here, oftentimes, like I said at the top of the podcast, they'll put a signature on the pamphlet, but no one will really explain it. And understandably so — I mean, we've been talking, what, we're probably close to an hour on this. Maybe we rambled a little bit, but we also hit a lot of the reasoning behind what this is. The pamphlet is two pages, just about, and it's not like there's no substance to it. But if you're not familiar with what a designated broker is, and what an agency agreement is and all this stuff, it's like, I don't even really know what this means.
Dave (49:06): And because so often you're not going to need to consent to the dual agency — or even if you sign the consent in either of your agreements, your buyer agency agreement or your listing agreement — so oftentimes a designated limited agent, or on the sell side if an unrepresented buyer comes — it's something that does happen, but not so often that it goes sideways where somebody who's not in the industry would have heard about it. There are horror stories, but they're mostly buried way down in Reddit forums and all sorts of other places on the internet where people are like, "I had no idea until it was too late, and my sale got botched," or "I feel like I overpaid." So do your own research, and try to listen to stuff that's informative. And if you're not listening in Washington, understand what your state's own laws are. If you're in maybe one of the eight states that have this banned — like I said, you should be grateful. If you get in a listing contract and you retain the services of an agent, that agent doesn't have a monetary incentive to try to net an unrepresented buyer and double-end a transaction. Which we think is a good thing.
Nick (50:46): A hundred percent. Well, good. I think that's a good spot to leave it for this week. Thank you for listening to the show. Please do subscribe, leave us a review, share it with somebody who is thinking about buying or selling a home so that they can be more informed. And I think next week we'll pick up on the thread of either unrepresented buyers, since we touched on that, or the whole State Bill 6091 with private marketing and how everything's got to be public. That all runs in this same sort of lane with dual agency and First Look and all that exciting stuff. But much more to talk about in the coming weeks. Thank y'all. We'll see you soon.
Dave (51:28): Bye.
