The Supreme Court of the State of California has just handed down a decisión in which two agents in one brokerage; one representing the seller, the other representing the buyer, have a duty to fully investigate and disclose all confidential information and facts to BOTH parties. The reasoning, Buyer’s representative and Seller’s representative each work for the same broker so loyalties cannot be divided.
Over the years many large brokerages had felt comfortable with one agent representing one party and a second agent representing the other party, believing confidential information could be kept separate and each party could be correctly served.
Not so! California’s Supreme Court, ruled in Honike v. Coldwell Banker. It further stated that when the two agents work for the same firm they become “associated licensees” and must properly investigate and disclose ALL important information related to the transaction.
In many parts of Mexico, real estate agents commonly represent both buyer and seller in a dual agency situation. Both Buyer and Seller need to be aware that. since the Buyer wants to buy at the lowest price possible and the Seller wants to sell at the highest price possible, a conflict of interest arises when both are represented by one agent. The party interested in buying a property may wish to seek out a specific agent to work exclusively for him/her.
Those areas which enjoy a sophisticated Multiple Listing System, such as Puerto Vallarta and Los Cabos-La Paz, have an easier time of compliance with the single agency system since properties are listed in the MLS and brokers and real estate agents are accustomed to promoting and selling properties listed by other agencies. This method, of course, helps protect the Buyer and the Seller and provide them with the security their interests are protected by their agent.
As a result of the Honike v. Coldwell Banker ruling, large companies with multiple offices under one brokerage are in a quandary about how to keep lucrative double sided transactions in house and still fulfill fiduciary duties.
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About the author:
LINDA JONES NEIL is the founder of The Settlement Company, which specializes in real estate transfers and escrows. Licensed as a California real estate broker, she has pursued her profession in Mexico for over forty years. She has been widely published on the subject of real property in Mexico. Memberships; FIABCI, AMPI and NAR. Linda has been awarded the CIPS, ABR, SRES, CNE, RSPS, e-PRO, TRC designations. She is a former member of the National Advisory Council of AMPI and has served as Presidential Liaison for Mexico to the National Association of Realtors®. She is also co-founder of Global Mexico Real Estate Institute (IIGM), an educational institution which provides international real estate classes and designations.
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