(Newswire.net — October 15, 2013) Bethesda, Maryland — The U.S. Department of Housing and Urban Development originally set October 1st, 2013 as the date for implementing a dual agency policy that prohibits real estate brokers from simultaneously representing both sellers and buyers in short sales of properties with FHA loans. The policy is designed to eliminate the inherent conflict of interest when one firm tries to represent both the buyer and the seller in a real estate transaction. It represents a major validation for Exclusive Buyer’s Agents. Unlike traditional agents, Exclusive Buyer’s Agents work only one side of transactions — the homebuyer’s side.
Commenting on the new dual agency policy, Steve Israel, President and CEO of Buyer’s Edge, an Exclusive Buyer Brokerage firm in Washington says, “HUD recognized that you cannot guarantee an open, competitive market when you have the same broker representing both the buyer and seller in a single transaction. This is exactly what Buyer’s Edge and other Exclusive Buyer Brokers around the nation have been saying for 25 years.”
The October start-date for implementation of the new policy, however, was recently postponed. The National Association of Realtors® (NAR) had strongly urged HUD to reconsider implementation saying it would require agents splitting commissions with other brokers. Given that NAR is the largest trade association in the U.S. with over a million members, HUD’s reversal did not come as a great surprise. The postponement allows the NAR to continue the dialogue with agency officials on a formal solution to the dual agency issue.
“It’s not surprising that traditional agents were not happy with HUD’s dual agency policy,” said Israel. “It would have prohibited them from realizing their most profitable arrangement (getting paid to represent both parties in a single sale) on any short sale for a property with an FHA mortgage.”
Israel, the CEO of a Washington DC real estate firm, is hopeful that eventually the practice of dual agency will be eliminated altogether. “Now that dual agency is actually affecting the FHA (Government backed) loans, the Federal government has stepped in to stop the practice with regard to any FHA short sales or foreclosures. Some day they may realize that dual agency is just horrible for all consumers and will move to eliminate the practice for all, not just to protect the government from this long standing industry practice which promotes potentially crooked dealing.”