The real estate industry continues to adjust itself to meet the demands of consumer service. As a professional real estate agent, I offer several options to sellers and buyers to provide the best level of service. In the past, when you worked with an agent to find a home, the agent typically was “employed” by the seller. This meant that the agent had a legal responsibility to always act in the best interest of the seller. Now the buyer has the ability to “employ” an agent in a legal capacity to act in their best interest. Most times, this arrangement is at no expense to the buyer as Buyer's Agents are typically compensated by the Listing Broker as a consequence of the contractual arrangement between the seller and the agent.
What is meant by the phrase “Agency Relationships?”
It is the relationship resulting from mutual consent between you and your real estate agent. That the agent will act upon your behalf during the course of the real estate transaction. To begin this relationship, you will be asked to enter into a legal agreement.
If a brokerage firm (“Broker”) has a contractual obligation to represent the buyer or the seller, then the Broker shall promote the interests of the client by:
1. Performing the terms of their contractual agreement;
2. Obtaining a transaction at a price and terms acceptable to the client;
3. Present in a timely manner all written offers or counteroffers to and from the client;
4. Disclosing to the client all material facts related to the property of which they have actual knowledge;
5. Accounting for in a timely manner all money and property received in which the client has or may have an interest.
Seller Agency – A seller’s agent is a real estate agent, who represents only the seller’s interests. Because the seller’s agent lists and markets the home to sell, they are also referred to as the listing agent. The seller’s agent has responsibilities, which include obtaining the highest possible purchase price and the best possible terms for the seller.
Buyer Agency – A buyer’s agent is a real estate agent, who represents only the buyer’s interests. The buyer’s agent is employed by the buyer. Their sales commission may be obtained from the seller as a split with the listing agent, OR paid by the buyer. Some buyer’s agents may charge the buyer an hourly fee or a retainer for services, in addition to, or, instead of the sales commission. Make sure you understand the payment terms, before you enter into a buyer agency relationship.
Designated Agency – occurs when the seller and buyer are represented by their own individual Sales Associates who happen to be affiliated with the same Broker. Each of these Sales Associates, known as Designated Agents, represent fully the interests of a different client in the transaction. Designated Representatives are not Dual Agents if each represents only the buyer or only the seller in a specific real estate transaction.
Sub-Agency – A sub-agent is a real estate agent, who may be contacted by a buyer to find a home for purchase. However, the sub-agent represents the seller and is responsible for getting the best possible price and terms for the seller. The sub-agent may provide such services as, home search, explanation of financing options, calculating monthly payments and estimating closing costs. They may NOT disclose confidential information that is not in the best interest of the seller, but may share with the seller information provided by the buyer. For example, if a buyer is willing to pay more than is offered or that the buyer will pay more closing costs.
Dual Agency – Dual agency may be called several other names but the basics remain the same. Other names may include, in-company situation, transaction broker or facilitator. A premier agent will usually have many properties listed for sale, meaning they have entered into an agreement with the seller. When a buyer chooses to utilize this same agent’s professional service, they, too, enter into an agreement. If the buyer decides to purchase a property that their agent has listed, it creates a dual agency capacity for that agent. In all cases, the agent must have the informed consent of both the seller and the buyer in order to perform this service. The agent is obligated to make certain that all material facts relating to the property’s condition are disclosed; however, they must exercise care with negotiating information. Because in any instance, this form of agency limits the agent’s ability to represent both parties fully, it is required by law (in states where Dual Agency is legal) that all parties enter into this agreement in writing. Laws governing agency relationships differ from state to state. Therefore, it is extremely important that you, as a consumer, make a wise decision when selecting your real estate agent. Make sure you use a true professional, who willingly describes the various forms of agency relationships.
Who exactly will I be representing when working with you?
Because there is a limited fiduciary responsibility provided to both the buyer and the seller in either a Dual Agency or Sub-Agency transaction, I refuse to do either. My allegiances are ALWAYS to one client or the other. If I am hired by you to sell your home, I will use my expertise in marketing your property to the target market with the highest probability of finding your buyer….the Buyer’s Agent! Also, because I work independently, there is never a need for a Sub-Agent that works under me. If I had information on a buyer that was interested in your home, I would pre-qualify them for the purchase and refer them to a colleague who could represent them fully in the transaction or suggest they seek legal counsel. Real Estate is about fairness, loyalty, and confidentiality. When one agent represents both sides of a transaction, someone’s rights and privileges may very well be compromised in the process. I am never willing to jeopardize anyone’s rights in a transaction….EVER!
