Gaining a comprehensive understanding of the legal responsibilities of your real estate salesperson is of paramount importance when embarking on a transaction. To ensure absolute clarity regarding agency matters, it is vital to inquire about the agency relationship with your salesperson and their brokerage company. Presented below are various types of agency relationships that will aid in familiarizing yourself with these concepts:
- Seller’s Representative:
A seller’s representative, also referred to as a listing agent or seller’s agent, is employed by and represents the seller. Their fiduciary obligations are exclusively directed towards the seller, and this agency relationship is established through a listing contract.
A subagent bears the same fiduciary responsibilities as the agent towards the principal (the seller). Subagency typically arises when a sales associate from a different brokerage, who does not represent the buyer as a buyer’s representative or in a non-agency relationship, shows the property to the buyer. While acting as a customer, the subagent upholds fiduciary duties towards the listing broker and the seller. It is important to note that while the subagent cannot act in any manner that harms the seller, they are obliged to treat the buyer with honesty and provide clear explanations of their responsibilities.
- Buyer’s Representative:
A buyer’s representative, commonly known as a buyer’s agent, is hired by potential buyers to advocate for their interests throughout a real estate transaction. The buyer’s agent operates with unwavering commitment to the buyer’s best interests and assumes fiduciary duties towards them. Compensation for the buyer’s agent can come directly from the buyer or as a portion of the commission shared between the selling and buying agents, covered by the seller.
- Disclosed Dual Agent:
Dual agency arises when the brokerage firm represents both the buyer and the seller in the same real estate transaction. In such cases, dual agents have limited fiduciary obligations to both parties due to potential conflicts of interest. Informed consent from all involved parties, often documented in writing, plays a crucial role in establishing dual agency relationships. It is important to note that many states legally allow disclosed dual agency, where the agent explicitly informs both the buyer and seller about the dual representation.
- Designated Agent:
Designated agency, also known as appointed agency, allows the managing broker to assign specific licensees within the brokerage as agents for the seller and others as agents for the buyer. This approach prevents the creation of dual-agency relationships within the brokerage. Designated agents provide comprehensive representation and fulfill fiduciary duties to their respective clients, while the broker remains responsible for overseeing both groups of licensees.
- Non-Agency Relationship:
Certain states authorize real estate licensees to establish non-agency relationships with consumers, often referred to as transaction brokers or facilitators. The specific obligations owed to consumers and the corresponding terminology may vary from state to state. Generally, the duties in a non-agency relationship are less extensive compared to those found in traditional agency relationships.
By acquainting yourself with these distinct types of agency relationships, you will develop a deeper understanding of the roles and responsibilities of your real estate salesperson. Armed with this knowledge, you can confidently navigate your transaction and make informed decisions throughout the process.