UNDERSTANDING AGENCY
JULIE PARRISH REALTY
_______
When buying or selling real estate, you may find it helpful to
have a real estate agent assist you. Real estate agents can provide
many useful services and work with you in many different ways. In
some real estate transactions, the agent works for the seller. In
others, the seller and buyer may each have agents. And sometimes,
the same agents work for both the seller and the buyer. It is
important for you to know whether the agent is working for you
as your agent or simply working with you while acting as an agent
for the other party.
The agency relationship is based on one person
representing the interest of another person. Real estate agents
are licensed by the state to represent a person in the purchase,
sale, or lease of a property. The state law relating to agents, the
REALTORS® Code of Ethics and general principles of agency law, define
the responsibility of the real estate agent.
The type of relationship formed between the agent and the client is
called a fiduciary relationship. A fiduciary relationship is one based
on trust because the agent owes the following duties to the client:
loyalty, diligence, confidentiality, obedience, disclosure, accounting,
and reasonable care.
The courts strictly enforce the agency duties so that the client can
rely on the agent putting their interests before those of anyone else.
The courts also require that the real estate agent be fair and honest
to all parties in the transaction.
THE TYPES OF AGENCY:
Traditional Agency - All Agents Represent Seller
Throughout the country, most real estate agents have been representing
only the seller in real estate transactions. That meant that those
agents were representing the Seller, even if they were working with
the Buyer. This was accomplished by a system called sub-agency. The
real estate company that lists property is called the listing broker.
The real estate company working with the buyer is called the subagent
or cooperating broker. The company working with the Buyer actually
works through the listing broker. Although the buyer had access to
a real estate agent, that agent did not legally represent the buyer.
The agent becomes a Seller's agent working with a Buyer.
The duties of the agent are owed directly to the seller in all
transactions where there is no buyer agent. The system worked well
as long as the buyer was made aware that the agent represents the
seller and that the buyer could not rely on the agent for assistance
in determining an offering price that was other than asking price.
Buyer's Agent- Buyer and Seller Are Equally Represented By Different
Companies
In real estate transactions, an agency relationship is formed between
the broker and the client. The client generally works with one agent
who is associated with a broker. The client typically has been the
seller.
Recently, however, buyers have become aware that they may want an
agent that represents only their interest ( as a Buyer's Agent ).
When the real estate firm and its agents represent you, they must
* promote your best interest * be loyal to you * follow your lawful
instructions * provide you with all material facts that could influence
your decisions * use reasonable skill, care and diligence * account
for all moneys they handle for you. Agents have considerable knowledge,
which previously had not been available to buyers and can be of great
assistance in deciding what property to buy.
Although the traditional agent will work hard to find the perfect
property for the buyer, the traditional agent has some limitations
because of the duties owed to the seller. A buyer's agent does not
work under those restrictions. For example, a buyer's agent can make
the buyer aware of attractive purchasing strategies, which the seller
may find acceptable even though they did not offer those terms
initially.
Once you have agreed for a firm and its agents to be your Buyer's
Agent they can not give out any confidential information without
your permission. Until you have made this agreement avoid telling the
agent anything you would not want a seller to know.
Dual Agency - Equal Representation within the Same Firm
A real estate agent or firm may represent more than one party in the same
transaction only with the knowledge and consent of all parties for whom the
agent acts. "Dual Agency" is most likely to occur when a buyer represented
by a buyer's agent wants to purchase a property listed by that agent's
firm. A dual agent must carefully explain to each party that the agent and
the agent's firm are also acting for the other party. In a dual agency
situation, the agent must obtain a written agreement
from the party that fully describes the obligations of the agent and
agent's firm to each party. In this situation, when you agree to dual agency,
the agent you have been working with becomes a sub-agent of the Seller's.
Designated Agency - Represented by Designated Associates
Two associates are designated to represent buyer and seller separately
within the same brokerage firm.
When a firm represents both the buyer and seller in the same real
estate sales transaction, with full disclosure and consent of all
parties, the firm can designate one agent within the firm to represent
only the interests of the seller and another agent within the firm
to represent only the interests of the buyer in the transaction.
The declaration of designated agency shall be in writing and
signed by all parties. Handling a transaction in this manner puts up
a wall between the agents so that information to either's advantage
or disadvantage is not shared.
Seller's Agent - Representation to Sell Your Property
If you are Selling real estate you may want to "list" your
property with a real estate firm. To authorize the firm and its agents
to represent you in your dealings with Buyers you will sign a "listing
agreement". A Seller's Agent promotes your best interest while seeking
buyers for your property. You may also be asked to allow agents from other
firms to help find a buyer for your property. Agents in many areas have
"MLS" a system by which they share the information on your house and have
agreed to work with agents, of member firms, who may have an interested buyer.
To help you sell your property, the listing firm and its agents will offer
to perform a number of services for a commission or fee. Services include
items like * helping you price your property * advertising and marketing
your property * giving you all required property disclosure forms for you
to complete * negotiating for you the best possible price and terms *
reviewing all written offers with you * otherwise promoting your interest.
For representing you and helping you sell your property, you will pay the
listing firm the amount agreed upon under the terms and conditions stated
in the written and signed " listing agreement". The listing
agreement also states whether you will allow the firm to share its commission
with agents representing the buyer. Sharing the commission is a common practice
among agents and is on of the features of allowing your property to be included
in the MLS system.
Signing an Agency Agreement
When choosing an agent you will be asked to sign an agreement stating that
"Agency" has been explained prior to viewing properties or submitting an
offer to purchase. If an offer is presented without a written agency
agreement then the agent can no longer represent the buyer.
Sometimes you may be hesitant to sign an agency agreement when the process
is new to you and the agent was a stranger up until a moment ago. This can
be resolved by signing a short term agreement where your interest are
protected but you can also get to know each other before signing for a longer
period.
Still have a question, e-mail me at
jp@julieparrishrealty.com.
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