Every state may very slightly on their explanation of the Agency relationship. The Buyers Agent for your area will give you more detailed information, but here are the basics:
At your first personal meeting to discuss a specific property or properties, real estate agents (brokers and salespeople) should give you an Agency Disclosure Form. The purpose of this form is to disclose the agent’s relationship with you or any other party to the transaction (buyer or seller). The form also includes explanations of the different types of agency relationships. Before you begin working with an agent it is important to understand the different types of representation and broker/agent relationships for both buyers and sellers.
The Seller’s Agent:
Most property is sold and listed on your local MLS. Nationally about 80% of homes are purchased thru an agent that has listed a home on the MLS. The seller engages the services of a real estate agent to sell his/her property and to “Get the Home Listed”. This agent, called the listing agent, is the agent for the seller. This means that the real estate agent represents and works for the benefit of the seller. The agent must put the seller’s interests first and negotiate for the best price and terms for the seller. The Seller’s Agent, however, is supposed to disclose any known material defects about the property to the buyer.
Many purchasers of Real Estate end up calling the number on the sign and never think about representation. A buyer can and has the right to involve the services of a real estate agent to purchase the property. The real estate agent is then the agent for the buyer or “The Buyer’s Agent”. The Buyer’s Agent must put the buyer’s interests first and negotiate for the best price and terms for the buyer. This means that the real estate agent represents the buyer, and can and should disclose to the buyer any information that he can and negotiate for the best possible price.
Another key fact: The buyer’s agent is paid from the same seller-authorized commission split that is made in the listing agreement. The buyer’s agent doesn’t collect any money from the buyer. So, obviously a buyer benefits from having an exclusive buyer’s agent, but it’s even more remarkable when that agent is willing to rebate part of that commission to an informed buyer.
Facilitator or Customer relationship:
When a real estate agent works as a facilitator he or she represents you only as a customer. As a customer you have no written agreement and the agent assists the seller and buyer in reaching an agreement but does not represent either the seller or buyer in the transaction. The facilitator owes the seller or buyer a duty to present each property honestly and accurately by disclosing known material defects about the property and owe a duty to account for funds. Unless otherwise agreed, the facilitator has no duty to keep information received from a seller or buyer confidential. Be careful to understand that when you call “the number on the sign” you are usually talking to someone who’s interest lies with the seller and this relationship may not always be disclosed as it should.
If you choose not to be represented by an agent and you wish to deal directly with an agent representing another party (the buyer or seller) most state’s laws requires the Real Estate Agent to perform the following basic duties when dealing with any buyer or seller of Real Estate:
- Present all offers in a timely manner
- Account for money of other property received on your behalf
- Provide an explanation of the services to be provided by the agent
- Be fair and honest and provide accurate information
- Disclose known adverse material defects about the property
Unless you enter into a written agreement designating an agent to represent you, the agent does not represent your interests or act as your agent (or act in your behalf). Unless you have a written agreement, you should not expect the agent to promote your best interests or to keep your bargaining information confidential.
In some states a real estate agent may act as a dual agent representing both the seller and buyer in a transaction but only with the express and informed written consent of both the seller and buyer. Written consent to dual agency should be obtained by the real estate agent prior to the execution of an offer to purchase a specific property. A dual agent is supposed to be neutral with regard to any conflicting interests of the seller and buyer.
Consequently a dual agent cannot satisfy fully the duties that would be offered by either a seller or buyer agent. A dual agent does, however, still owe a duty of confidentiality of material information and accounting for funds.
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