Understanding Agency Relationships
There are a handful of laws today governing agency relationships designed to help you relax and feel comfortable with your home-buying or -selling transaction. Keep in mind these laws differ from state to state, and agency policies differ among real estate companies. Read on to learn about the basic types of agency relationships.
Buyer or Seller Agency:
When you choose to be represented by a real estate brokerage in the purchase or sale of a home, the buyer or seller's agent and the brokerage must act on behalf of and promote your best interests, be loyal and obey your lawful instructions, disclose material facts to you, maintain confidential information (which includes anything that could have an adverse effect on your transaction), act with reasonable skill and care when answering your questions, present all offers in a timely fashion, be accountable for handling funds and paperwork, and execute all other duties as outlined in your buyer's agency contract or listing agreement.
A dual agency is formed when the same agent and brokerage who represents the seller also represents the buyer. Agents and brokers who become dual agents must maintain a neutral position between the buyer and seller. This means that they may not support the position of one client over the other, or disclose any personal or confidential information to the other party without written consent. Dual agents must also disclose any material defects of the property and prepare and present all offers and counter offers to each party.
In Company Split Agency:
On occasion, the buyer and seller will each be represented by two different agents from the same brokerage. In this case, the agents may each represent the best interests of their respective clients. Or, depending on the company policy, the agents may both act as dual agents and remain neutral toward both parties. When either situation occurs, the broker will be considered a dual agent.
A common misconception about agency relationships is that they are automatically established at the first meeting between a brokerage and a homebuyer or seller. However, these relationships are typically established when agents disclose whose interests they are serving, which is usually done through an agency disclosure form. The state law mandates that agents must disclose their representation before they show you any properties.
When considering a home purchase or sale, it's key to understand the differences among the various agency relationships. If you have any questions, contact me at 614-565-8161 or email me at firstname.lastname@example.org. I can provide you with a detailed explanation of these relationships and show how they'll affect your transaction.