Case Study 1

Designated Agency and Dual Agency

Barry and Lynn are partners and decide to buy a house together. They contact Agent Steve. He handles the initial paperwork with them after which he becomes their Designated Agent.  

A. What paperwork is involved? 

B. Is there a specific order for submitting agency information?  

C. Barry and Lynn become interested in one of Steve’s listings and ask to see it. Does representation have to be changed? By whom and in what way?

Next

AnalysisA. The Agency disclosure pamphlet. B. The pamphlet should be given at first face-to-face contact (when doing anything other than ministerial acts) C. Agent Steve will have to give Barry and Lynn a dual agency disclosure form and have them sign it. If they refuse to sign it, then another agent should be designated by the broker to work with them.

(Sections 3893 and 3897)

NextPrevious

Case Study 2Designated Agency and Dual Agency

  Agent Brady is working at the floor desk. Seller Sharon owns a home in a prestigious local subdivision and calls Brady to list it. Can Brady be a dual agent and also sell Sharon's home if the opportunity arises?

NextPrevious

AnalysisOnce Brady has the property listed as the designated sellers agent he may also show the property to buyers. Those buyers must know that Brady is the listing agent and Brady must give the dual agency disclosure form to any of his buyer clients looking at Sharon's home.

Brady has to give Sharon an Agency Disclosure Pamphlet when they begin talking in earnest about listing the property (anything other than facts), as in when Brady puts together a CMA for Sharon. The CMA represents advice and opinion, not just facts. The pamphlet should be presented prior to getting into a discussion of Brady's opinion of Sharon's property value.

(Section 3896)

NextPrevious

Case Study 3Dual Agency - Equal and Fair Treatment

  Jameel wants to buy a house but does not want to be at a disadvantage of Murray, the seller. Murray wants a relationship that is as fair to him as it is to the buyer. Jameel wants a relationship that is as fair to him as the seller. Murray and Jameel just want equal representation to make sure the transaction is fair. They approach Agent Jim and ask for his suggestions and assistance in handling the transaction for a fee.

– When they walk into Jim’s office, are there any disclosures that should be made to the parties?

– Based on the scenario, which agency position would probably be best for Jameel and Murray?

NextPrevious

Analysis

At first face-to-face contact the licensee must provide the statutory agency disclosure, unless only ministerial services are rendered. Upon written consent Agent Jim can be their dual agent.

(Section 3897)

NextPrevious

Case Study 4

Open House Disclosure Agent Paul represents seller Bing. While holding an open house at Bing’s house, Jim and Mary stop in. When they walk into the open house, are there any disclosures that should be made to the parties?

If the parties all agree that Dual Agency is the best way to proceed, can Paul show other properties to Jim and Mary, if they are not interested in Bing’s house?

NextPrevious

Analysis

Paul has an obligation to disclose agency by presenting the agency brochure at first face-to-face contact, unless providing only ministerial services. Dual Agency provides that Paul can show other properties to Jim and Mary without violating any agency relationship. When showing them other properties he would be their designated buyer's agent. (Sections 3893, 3897)

NextPrevious

Case Study 5Commercial Disclosures 

 Bill, a commercial agent for Ace Realty, has been working with a potential buyer of a small strip shopping center that Ace Realty has listed. The prospect is located in another state, so Bill and the prospect have not yet met. Bill has been providing him with details about the property, some demographic information that the prospect requested and has sent some photos of the property; all provided by phone or email. The prospect has now decided to visit the property and has told Bill that if it all looks as good in person as the facts on paper seem to show; he will be making an offer. Bill has not provided the prospect with any Agency Disclosure information as yet.

Is Bill in violation of the License Law and Rules?

NextPrevious

AnalysisSince Bill has not met the prospect yet and has only provided him with factual information (ministerial duties) then Bill seems to be complying with the Law. "Long distance" commercial transactions provide a problem for disclosure. This is because the agent and the prospect may not actually meet for weeks or months after the initial contact or may never meet.  If Bill begins to negotiate, offer advice and opinion to the client on the phone, email, or by other means then Bill should send agency disclosure pamphlet (or LREC approved equivalent disclosure) to client, go over it with him on phone and have it returned for his files.  As soon as Bill does meet his prospect he should provide him with the agency pamphlet or it's LREC approved commercial equivalent.  If Bill allows the offer to be made without a disclosure of any kind, then he is in violation of the law.  The same rules would apply if Bill were dealing with the authorized representative of the buyer.

NextPrevious

Case Study 6Procuring Cause

 Sally, an agent with Ace Realty, was working with a young couple. She had shown the couple two homes in a new subdivision on a Saturday afternoon. Sally heard that the couple had made an offer a week later through another agent on a home in a subdivision near the one she had shown them. Sally contacted the other agent and demanded part of the commission on the sale claiming she had worked with the buyers first and had shown them homes in that area.  Does Sally deserve part of the commission?  If Sally had the buyers sign the Agency Disclosure Pamphlet: would that have made a difference?

NextPrevious

Analysis

Sally has no claim on a particular couple just because she worked with them. If she had shown them the particular house they eventually bought; then she may have had a claim.

Having the couple sign the Agency Disclosure Pamphlet does not change the outcome. The pamphlet is a disclosure; not a contract.

NextPrevious

Case Study 7Dual Agency

The following case study was derived from a true incident in Alaska. Fred Smith was from a well-to-do family in Anchorage, Alaska. He had been in a seminary for almost 8 years but had decided against becoming a priest. After returning to Anchorage he decided to purchase his first house. His fiancés ex-husband , Sam (a local real estate agent), offered to assist since this was Fred’s first time dealing with a real estate purchase. Sam showed Fred several homes before leaving on a two-week vacation. Sam told Fred to continue to look at homes while he was gone. Fred saw a home he liked listed with another local real estate firm. He called the agent, Julie Haggard, to make an appointment. Julie was one of the most successful agents in Anchorage. She met with Fred and his fiancée, Sheila to view the home. When they first met Fred gave Julie Sam’s business card and said that Sam was his agent. Julie showed him the house. Fred liked the house and wanted to make an offer. He went to Sam’s company and had the broker help him write an offer of $525,000. The house was listed for $585,000. He then brought the offer to Julie so she could present it. She got very upset that Fred had not allowed her to write the offer and refused to submit it since it was “way too low” and her seller would surely reject it. 

NextPrevious

Case Study 7Dual Agency

…Continued 

Fred wanted the house but Julie had said that the only way he could submit the offer was to sign a dual agency disclosure and make the offer through her. Not knowing any better, Fred signed the agreement and asked Julie what she thought the property was worth. Julie said the property was priced right and that the seller would not budge on the price. She also said that there were already two other offers in on the property and if he wanted it, he would need to move fast. He made a full price offer and got the house.  When Sam returned he told Fred that he had overpaid by about $60,000. Fred sued.

NextPrevious

AnalysisJulie misled Fred. She did not give him a CMA even though he asked her for a value opinion. She also made him believe that he could not make the offer without going through her (thereby doubling her commission) She stole the client from Sam. She also did not disclose to Fred the significance of dual agency until an offer had already been made. And, she illegally withheld the first offer. In the real situation, the agent lost the suit and was instructed to pay

$200,000. Part went to the other real estate company as commission that should have been theirs in the first place. The other part went to Fred.

NextPrevious