When I went to real estate school I learned about the "hogger." That is the sweet deal that our instructors told us would happen if we represented both the buyer and the seller. Stories were told about unrepresented buyers calling listing agents and those agents selling the listing to the buyer. It is also called dual agency.
Agency is an issue I think about often and every six months or so I write a consumer-oriented post about it on my blog. I keep the Minnesota agency disclosure in each of my listings so that I have it on hand at all times if I need to show the listing to a buyer.
The idea of agency is a consumer education challenge. Consumers do not understand real estate agents, real estate companies or agency. The whole Realtor and commission process is a mystery to most buyers. They just want to see the house, and they don’t care about who gets paid what or how.
Buyers who are interested in purchasing foreclosures seem to be the least educated of all. Some may get the idea of buying a foreclosure from late-night TV and infomercials. They go from listing to listing and call the agent on the sign; many believe that they will save money on a home purchase by not engaging a buyer’s agent, and some are unaware that they can have their own agent.
They may even think that the listing agent knows more about the property. With the foreclosures none of us know much about them. The banks use a kind of nondisclosure and no one asks the people who lived in the home questions about it.
When I went to the classes that I needed to get my real estate license I remember the story the instructors told about the lucky agent who got the "hogger," or both sides of the deal. They painted a picture of the hogger being something to strive for because the agent gets the entire commission and does not have to split it with a buyer’s agent.
There is an upside to being a dual agent in that it pays well, but there is also a downside. The dual agent cannot act in favor of or on behalf of one party or another.
When buyers ask me to write an offer for them on one of my listings they either get a no, or a lecture or both. I have had transactions where I have represented both parties, but I will only do it if I know both parties well enough so that I understand their needs and I trust them. …CONTINUED
The unrepresented buyers are usually people I just met and that I don’t know at all. They seem to be more likely to have a distrust of Realtors and decide not to engage a buyer’s agent because of it. Working with people who are suspicious and in some cases even paranoid about getting ripped off is difficult to do and everything that happens during the transaction is met with suspicion.
Sellers become suspicious when their agents write a lowball offer for some buyers. They don’t understand why their agent — the same one who helped set the price — would write an offer for less than the asking price for some buyers.
From a legal point of view, my exposure is huge when I play dual agent. Is the court going to be sympathetic to an agent who has the hogger or to a buyer or seller who were harmed in some way?
Dual agency also occurs when two agents under the same broker represent the buyer and the seller in a transaction. That gets even more complicated. I have represented buyers and sellers in that situation and in every case the agents involved represent and advocate for their client.
Consumers need more education on the issue. As Realtors we make the most amount of money for the least amount of work when we play dual agent, so why would we want to educate consumers? Should agents be encouraged to get the hogger? There are plenty of real estate agents to go around; if there were a shortage, dual agency would make more sense.
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
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