California Dual Agency???

Question

For you investors working with RE agents to bring you pre-screened seller leads, and then retail flipping those deals using agents, are you able to use that same agent that brought you the lead as your selling agent for a short sale flip?

I'm getting mixed responses from other sources as to whether dual agency transactions are okay or not...

If they are not okay in California, what you doing to get around it? Using a dedicated selling agent?

Scott Hubbard · Answer

There has been several written opinions from attorneys in California (and other states) stating that a single agent represent both the seller on the A to B then again on the B to C.

The main point of the argument is that there needs to be special care taken when there is a distressed seller involved due to the potential increase in legal risks.

[i]Although dual agency is well-accepted in equity based
transactions, the law is developing a "protected status" for distressed
homeowners. Since the homeowner has several options to consider and competing
considerations in a short sale transaction, it is best for the listing agent to
have undivided loyalty to the homeowner.[/i]

Basically, when an MLS listing already exists, the Seller's agent cannot represent YOU.  They cannot fire themselves and market for you YOU.  If they do, there is both risks for the agent and their broker.  You need separate agency on the A to B and B to C.

Ultimately, if you are utilizing REALTORS leads already in the MLS, they cannot represent you at all. I know for a fact new rules are being written in several states and California is leading the way.  Eventually, these rules will published, so I recommend you to be ahead of the game.