Exclusive Buyer Representation, Dual and Designated Agency. Buyer be Wary!

by Henry A. Hagenah

Let’s face it. The most essential criteria in the selection of an agent/broker is that they be knowledgeable and experienced. But shouldn’t that realtor also be 100% loyal, without conflict of interest, diligently researching and negotiating on your behalf?

Why compromise your family’s financial interests when you can have extensive knowledge, 24 years experience as well as completely loyal, conflict free, representation?

Please review other sources (NAEBA, MABA websites, among others) for more in-depth analysis of traditional vs. exclusive buyer representation in Massachusetts.

Here’s my take on it.

Real Estate agency representation as explained to home buyers is often confusing. Attorney Richard Vetstein writes in his real estate blog, “Personally I think that all the recent broker forms and regulation changes by the Mass. Board of Real Estate, while well intentioned, have made this area of agency law unnecessarily complicated.” In Massachusetts, the mandatory real estate licensee-consumer disclosure form warns “that a dual agent cannot satisfy fully the duties of loyalty, full disclosure, obedience to lawful instruction” yet states that a designated agent can do so. According to Tom Wemett, a Massachusetts exclusive buyer broker and founding member of NAEBA (National Assn. of Exclusive Buyer Agents) and MABA (Mass. Assn. of Buyer Agents), “This is something that is questionable at best, misleading, and perhaps fraudulent.” As with so many things in institutional life, a savvy home buyer needs to be careful. After all, there are large, real life monetary consequences at stake and a strong confidential, fiduciary relationship is essential to insuring that your interests and treasure are not squandered.


For illustrative purposes, imagine you are at an open house or call a particular agent about their listing. The agent seems knowledgeable, conscientious, charming even. Certainly this nice person will work diligently on your behalf, right?

To be sure there are many excellent brokers and agents in the Berkshires’, but if you happen to be interested in their listing (or their agency’s listing), you should at least be aware of the structural impediment to giving their best effort. For the most part they probably will work hard, but who are they working for? Well, primarily they work for the seller. It’s in writing. It’s established in our ethical code. They may perform some tasks on your behalf but their primary allegiance is to the seller. After all, they have signed a mandatory Agency Disclosure Agreement with the Seller that states explicitly that they are working as a “Sellers Agent” agreeing in writing to “put the seller’s interest first.”

For another thing, the agent will invariably have an agreement with the Seller (Exclusive Right to Sell) and probably has a much stronger relationship with them, not only contractually, but personally. Can you count on this disclosed “Dual Agent” or even more egregious, “undisclosed” agent (illegal in Massachusetts), working presumably for both buyer and seller, to provide negative information revealed in a town health department or building file? Will this agent advise you as to what kind of offer to make, or advocate on your behalf in requesting a reduction in price based on a critical home inspection report? Please be advised that these would likely be ethical violations, a breach of loyalty to their client–the seller. Hopefully they will at least have told you this, expressing their ethical duty to remain neutral as to any dispute between the parties.

Dual agency is illegal in many states for good reason. It represents a clear conflict of interest. You wouldn’t expect an attorney to represent both sides of a contentious law suit or divorce would you? Most law firms have extensive protections in place to assure that the firm doesn’t represent two individuals who would be on opposite sides of a legal issue. Because of the obvious conflict of interest, realtor ethical rules do not permit a real estate agent to negotiate or advise as to pricing, nor be your advocate as to any dispute that arises between the parties. So what duties does your dual agent actually perform in exchange for receiving both sides of the commission? Bill Gassett, a 30 year practicing Broker summarizes the problem in a Massachusetts Association of Realtor’s (MAR) article. “The dual agent cannot counsel the client on price, negotiate inspection issues or do pretty much anything else that would justify the commission the client pays. Even more outlandish, the dual agent is more than happy to collect a full commission. He or she gets paid double for doing none of the things that they would do if they were an exclusive buyer or seller’s agent.”


Whether “designated” or “dual,” nearly all traditional listing agents now call themselves “buyer agents” because they know that’s what you want to hear. In recent years, largely in the wake of much unfavorable press reporting on the perils of dual agency, many real estate firms now practice a form of representation known as “Designated Agency” where one agent in the office represents the seller, another agent, the buyer. Designated agency is really just another form of dual agency and is generally referred to as such in many states. After all, the same agency represents both parties and although each party is presumably individually represented, the bottom line incentive of the agency remains the same–receipt of both sides of the commission.

There are a number of questions that you should be asking if you are considering working with a “designated agency” office. Just how independent can the two agents and their office manager (who acts as a “dual agent” for any issues that arise between the parties) be when working under the same roof. What is the nature of their relationship? Will your designated agent be willing and able to go to the mat on your behalf with office colleagues, his or her boss? Does the office have a policy of segregating seller and buyer files in locked cabinets and digital document programs? Are office conversations restricted between agents so personal confidences aren’t accidentally or casually revealed?

Just how trustful can anyone be that essential information will not be compromised. How would you even know if there was such a breach. There is a lot of collusion that goes on behind the scenes during an in-house transaction,” explains Tom Wemett, a Massachusetts exclusive buyer broker and founding board member of NAEBA (Nation Assn. of Exclusive Buyer Agents), further calling designated agency a deceptive practice.”

Moreover, the agent selected to represent you may not be your ideal choice. In any other context would you hire this assigned salesperson to be your advocate, trusted adviser, due diligence researcher–to negotiate knowledgeably, passionately on your behalf?

If you are interviewing a “designated agency” office these are at least concerns that you should raise with your agent as well as the owner or manager who implements office policy. Each individual office has their own established policy (or should have) for addressing these concerns. I suspect that with so much of a financial investment at stake that you would prefer to know that the entire real estate agency is working as a loyal fiduciary…….for your family alone.

In a nutshell, we recommend that you say “NO!” to Designated Agency, “NO WAY!!” to Dual Agency. Happy to meet for a no pressure, no obligation consultation!

For further information see the National Association of Exclusive Buyer Agents (https://naeba.org) or the Mass Association of Buyer Agents (https://massbuyeragents.org) websites.