Designated Agency in Connecticut – Still Dual Agency

In a previous post, Why You Should Know About Dual Agency in Connecticut, I defined dual agency for you and why you should know about it if you are going to sell a house or buy a house in Connecticut.  You should also understand “Designated Agency,” which is still dual agency, only more confusing.

Dual agency exists when a brokerage firm represents both the seller and buyer in the same transaction – the purchase and sale of one property, for example.  Dual agency is akin to one law firm representing both sides in a court case but having two different attorneys handle opposing sides.  Doesn’t make a whole lot of sense, does it? 

Designated agency is when the same brokerage firm represents a buyer and seller in the same transaction and designates one agent to represent the seller and a different agent to represent the buyer.  In theory, the agents are still able to provide fiduciary services to each of their clients because they are two different people.  However, my concern is what is done in practice.

Agents work for a broker who owns/manages the brokerage.  Agents don’t receive nearly enough training before they are  licensed and sent out to handle your most important asset – your home.  So, agents learn largely by working with other agents and by talking about their clients with their broker.  When you sign a contract with an agent to reprsent you either in the purchase or sale of real property, your contract is also with the brokerage.  So, it just makes sense that an agent will regularly talk to his/her broker about a client and discuss private issues. 

Even though two different agents are each handling a client of the brokerage, how can it be said that the broker will never know the motivations and financial ability of each client? This is unrealistic when agents are regularly updating their broker on these very issues.  Designated agency promises that fiduciary responsibilities will be met but it cannot deliver.

Furthermore, if you were a buyer client of an agency that practiced designated dual agency and you saw a house that your agent just happened to be listing.  You decided to put an offer in.  Your agent, the one you carefully selected, will now have to choose whether to represent you or her seller.  One of you will get turned over to another agent to finsih out the deal.

Before you sign a contract with an agency that practices dual or designated agency, have the agent fully explain to you how he/she will handle your purchase or sale in the event that the other party is also represented by your agent or brokerage.  Agents are required by law to have your informed consent in writing before they can represent you.

Note:  I am an exclusive buyer’s agent and therfore never practice dual agency or designated agency.  However, it is a reality that both may be practiced in Connecticut even though they are not in the consumers best interest.  Many agents do a fine job of representing their clients within dual agency and designated agency.  My concern is for the ones who do not.  Designated and dual agency allow too much wiggle room for agents.