By Ross Wilson

In this seventh in the series about real estate commission rates, allow me to address what is referred to as double-ending, or representing both seller and buyer in a sales transaction. It’s certainly fraught with risk, but is it too risky to participate in this practice?

It’s commonly perceived that the charging of a double commission is unreasonable. But let’s look at it another way. Technically, it may seem like a double fee, but it’s actually two separate commissions on a single property. Remember in a previous column, when I discussed dividing a full commission into two parts – half for the listing agent and half for the buyer brokerage? Well, let’s bring that concept into this discussion.



Opposition to the whole concept of dual agency exists and it is currently under review by governments in B.C. and Ontario. Amongst other concerns, it’s been suggested that when representing the interests of multiple parties in a transaction, our services are degraded. Therefore, they argue, because we provide less service, our fee should be lower.

I disagree. Nevertheless, realty agents unfortunately often discount their contractually agreed fee when double-ending, not necessarily because they want to, but because they feel obligated since a full commission is a lot of money. Or they do so to win the listing or are coerced into doing so during a listing competition. Or during an offer presentation, an unscrupulous seller or buyer demands it. But think again about risk.

Naturally, with any agency, there’s always risk, but it multiplies with multiple agency. More opposing clients and more potential conflict equates with higher risk. In a single agency, you normally assume the risk of what might ultimately prove to be a futile attempt to win the listing or generate income. And of course, there’s always the risk of liability due to technical error. Also, on rare occasions, there’s the risk of not being paid. With dual agency, you can double that risk and then some.

If a multiple-agency transaction is skilfully and conscientiously organized, more agent expertise is required – not less. To effectively execute the riskier role of dual agent and discharge your professional fiduciary responsibilities correctly, you must do more work, provide more disclosure, carefully and cautiously communicate and mediate between and expertly advise more client parties and create and manage more documents than if a co-operating brokerage is involved. Plainly expressed, doubling the number of parties equates with doubling the complexity. Consequently, under such circumstance, the full fee as agreed in the listing contract is quite justifiable.

An ethical challenge exists with respect to the discounting of fees for a “double-ender”. Let’s say the total commission payable by the seller is $20,000. You present an offer to your sellers who say they’ll accept it if you reduce your commission to $15,000. They complain that your commission is still a lot of money, especially if it’s only been on the market a couple of weeks. If you comply, the seller is happy, the buyer is happy, but you – not so much. You just lost $5,000.

Now, let’s be realistic. If you had not introduced your buyer to that listing (which you’re ethically compelled to do) and instead, sold your buyer another agent’s listing of the same value, and in the meantime, another agent sold your listing, you’d have generated the full $20,000 commission; half from your sold listing and half from the sale of another brokerage’s listing. Clearly, this is a practical disincentive to do your best for your seller client. To collect your full fee, either you not show your own listing or your buyer must make up the $5,000 in lost commission under the buyer representation agreement. Complicated? Yup. It gets even more so when the buyer demands a “kick-back” of commission for agreeing to work with you as the listing agent. Or the buyer expects to buy the property at a lower price because they think, rightly or not, that you’re earning a double commission and will reduce your fee to “make the deal happen”. But the seller wants the entire benefit of a lower commission for themselves.

Everybody wants a piece of your fee. Since when did the agent become a third-party contractor to the agreement of purchase and sale? For all practical purposes, that’s exactly what happens when you throw in your fee. Under common law, this isn’t permitted.

I mean, think about it. You’re participating as a party to the contract by contributing your fee to the price negotiation – but without the accompanying equity interest. It’s not much different from you paying part of the purchase price to the seller or giving money to the buyer for their down payment – but without the benefit of a lien or titled equity interest. In exchange for your financial donation, maybe you should demand a collateral mortgage be registered on title in the amount of your fee reduction and see what happens.

I can hear the howling as the parties fervently object to such an “unreasonable” proposal. Kicking in is a slippery slope indeed. To enjoy a solid business, I suggest you avoid it whenever possible. If the sale is meant to be, then it will be – and without your sacrificial contribution.

In the next column, I’ll continue this discussion from a slightly different perspective, that of mediation verses advocacy.

SIMILAR ARTICLES

  • PED

    Let’s cut to chase, shall we?

    It’s not about the whitewashed story you concoct to convince yourself and your clients that acting as a dual agent can work well when handled properly, after all, I’m fairly certain that every single one of the defendants in that link who found themselves unable to convince a judge that they cared more about their client than their money, thought it went well until someone decided to not let it go.

    https://www.canlii.org/en/#search/sort=decisionDate&text=%22dual%20agency%22

    Face it, it’s about the money as Rosa Powell so clearly said – she “collected both ends of the fee, without guilt.” Yet, so did those people who were found guilty.

    After all, Every single one of you I’m sure, sells yourself as protecting the client’s best interest – dual agency does not allow that, no matter how you slice it or dice it. Maybe you even advertise that you sell for more money, faster and a whole host of lines you should know is nonsense because once you go the dual agency route, by default of agency law, none of that is true any longer. And,

    I’m fairly certain there is not a Realtor out there who tries to sell a client on dual agency yet will use the same attorney as the person they’re divorcing or suing.

    I’m also certain that when they’re trying to land a buyer, who’s mentioned going directly to the listing rep, that they’re talking the buyer out of going to the listing Realtor because it’s ‘better to get their own representation.’

    The dishonesty in this industry is too evident as supported by these articles and do absolutely nothing to increase the general public’s trust in our industry. They just show that some of us are shamefully unapologetic when it comes to our own self-interests.

    It’s more disheartening when you see a long-time industry person others look up drone on about the possible ban – how it’s not fair because he would have to turn around and set his buyers free to someone not as capable. Apart from the likelihood of that being very remote, with all those years of experience, it escapes him that, rather than attach himself to the seller in a fiduciary capacity he could say, you know Mr. & Mrs seller, I have a client for this property, my duty right now is to them, so I will not represent you but I will be thrilled if you would allow me to bring an offer from my buyer for X fee.

    Meanwhile, the very ‘not as capable’ as he puts it, look up to him and are influenced by his excuse which places himself first and the cycle continues.

    We need a serious clean-up in this industry, might as well start with this. I’ve lobbied for it for at least 8 years now and have yet to see a cogent argument for the practice to stay.

    It can’t be banned fast enough!

    • Well, I must say Mr. Anonymous PED, that you certainly hold a rather cynical view. I suppose your opinion is based upon much negative experience in what I must presume is a not terribly successful real estate career. I’ll not respond to each and every point you raise since I suspect any argument I make will likely fall upon deaf ears.

      However, allow me to say that we do agree on one point – the industry is in need of a serious clean-up. But the banning of dual agency will certainly not have much of an effect. Improving our industry will involve a fundamental evolution of how we practice, and that evolution is well underway. Like any business, it cannot occur over-night. So, we must be persevering and patient, with an eye to the future.

      A bit of advice, though, if you don’t mind; our thoughts are real energy. And we attract what we think about. Thoughts lead to feelings which in turn, lead to action – or not. For more, I invite you to read my book, The Happy Agent, wherein I delve further into the whole concept of creating happiness first, and wealth second.

  • Rosa Powell

    excellent take on this controversial issue. I have successfully completed dual agency transactions and collected both ends of the fee, without guilt!

    • Thanks Rosa. Over my 4+ decade career, I’ve successfully sold my own listing on countless occasions, usually from an open house, with all parties quite satisfied with the results. And I have always collected both ends of the commission. If handled honestly, ethically, intelligently and in strict accordance with regulations, there’s no reason to create a negative outcome. I believe that what the politicians are up to now with their meddling is purely political.

      • Rosa Powell

        I agreed.

  • Peter

    I’m an agent in BC and have never “double ended” anything in my career….and neither has any other licensee. The current standard form listing contract states a total amount of commission owed to the listing brokerage by the seller, and how much commission the listing brokerage will LOSE if they have to rely upon a cooperating brokerage to find a willing buyer. As an industry, we owe it to ourselves not to perpetuate the use of incorrect terminology that comes along with negative stigma and negative connotations of how we get paid. Our role is to correctly inform the public on real estate related issues…let”s set the record straight on this one.

    • An interesting practice, Peter. If I understand you correctly, a BC sales rep can still sell their own brokerage’s listing, which is as it should be. However, since the buyer is never a client (the default position in Ontario) in such cases, but remains a customer, it’s technically not what we in Ontario refer to as a “double-ender”, which involves two clients. The listing agent has a duty of honesty to the customer, but not the duty normally owed to a client of confidentiality. Am I correct?