Best of the Hotline

By James L. Goldsmith, Esquire



Q. My office practices dual agency, and my broker requires that when we take listings and enter buyer agency contracts, we do so as designated agents. When my buyer ultimately chooses to purchase a property listed with another broker, do I indicate on page one of the agreement that I am a buyer agent with, or without, designated agency?


A. This has been a hot question since designated agency came to life in November of 1999 when agency amendments to the Real Estate Licensing and Registration Act took effect. An agent becomes “designated” when the broker and client agree that “their” agent will exclusively be their agent. The benefits of designated agency are most obvious in the in-house transaction where the listing agent and buyer agent retain their distinct agency relationships to the respective clients, and the broker takes on the mantel of dual agent. Meanwhile, the designated agents act as though it were a traditional cooperative transaction, with each agent maintaining the role of advocate for their respective client. It is a sensible relationship and assures that buyers and sellers get everything they expect from their agent.


The benefits of designated agency are much more subtle, and inapplicable at times in a cooperative transaction between two brokerages. It is not surprising that a buyer agent would check the box “Buyer Agent without Designated Agency.” I don’t have a problem with that.


But what if the agent checks “Buyer Agent with Designated Agency”? Perfectly acceptable, as well! Why do I think both agents have done the right thing when the two checkboxes seem mutually exclusive? And why would a buyer agent ever indicate that she was a designated agent in a cooperative transaction where designated agency is arguably not applicable? Checking designated agency in the cooperative transaction is oftentimes meaningless, but so what? It can’t possibly hurt because whether that agent considers herself a designated agent or not, she clearly is the buyer agent in the transaction and the designation (or mis-designation you consider it as such) as designated agent is of no consequence. None. Absolutely zero.


Further, there is some rationale for checking the designated agent box in the cooperative transaction. What if the cooperative transaction fails and the buyer and her agent renew their effort to find a home? And what if their efforts lead to an in-house transaction? Can the other agents in your office just stop being dual agent? At this point, the buyer agent clearly wants to be a designated agent in order to avoid dual agency as between the listing and selling agents. The thought, shared by some, is that agents are either “designated” as the exclusive agent for the client at the beginning of the relationship, – and none of the other agents in the office represent this client – or every agent in the office represents the client from the beginning, and dual agency, once bean, cannot be undone. I personally think this is stretching things a bit.


My point of view remains that it really doesn’t matter if the buyer agent identifies herself as a designated agent when submitting an offer to a cooperating company. I know some listing agents are quick to find fault with the offer, even when the nature of your relationship with your client is not at issue in the sale. But if it really causes the listing agent to freak out, then move the check mark to the box that says that you are a buyer agent without designated agency. Again, it really doesn’t matter.



Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2014

All Rights Reserved



Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.