M
y college roommate, an attorney with an international law firm, recently visited to look at Paradise Valley homes priced between $3 million and $4 million. I showed him three listings from our brokerage firm, but he wasn't interested. He then asked me to show him five more listings from my deskmate's portfolio, and one of those caught his eye. However, he expressed concerns about not seeing any other Paradise Valley homes listed by competing firms.

    He jokingly mentioned that his law firm wouldn't represent both the buyer and seller in a high-profile deal like the World Trade Center. He trusted me to represent him properly but didn't know my deskmate well enough to make an offer on one of their listings. Instead, he plans to return in two weeks to view homes listed by other brokerage firms.

    Did I do anything wrong by only showing him our firm's listings? The answer depends on your perspective. As a realtor, you owe a fiduciary obligation to show the best available homes once you know what type of property your client is looking for. This means disclosing all relevant information, regardless of whether it's from your own listings or those of your colleagues.

    While dual agency is allowed in many states, it raises inherent conflicts between buyers and sellers. A seller wants the highest price, while a buyer wants to pay the lowest amount. This conflict can lead to compromised representation, making dual agency a euphemism for conflict of interest.

    The practice of dual agency persists due to financial motivations. One Phoenix brokerage firm earns $20 million in annual commissions, with 40% coming from "in-house" sales – representing both buyers and sellers. If dual agency were banned, these earnings would likely disappear. Additionally, individuals who suspect a dual agent has breached their fiduciary duty often can't afford the costs of litigation, allowing insurance defense firms to delay and eventually settle to avoid public disapproval.