What it is and what it means to you:
An agent is someone you appoint to
act on your behalf. In so doing, the agent then becomes bound
by certain fiduciary duties which include obedience, loyalty,
disclosure, confidentiality, accountability, and reasonable
care and diligence. An agency relationship can be created
by a desire to be represented and a consent to represent;
however, it is more often created as a result of a listing
agreement or a buyer representation agreement.
There are generally four types of
agency relationships. They are:
Seller Agency:
In this relationship, the agent represents the seller and
owes all the above-mentioned fiduciary duties to the seller.
In the real estate industry, this is the oldest and most often
practiced type of agency relationship. Sometimes, especially
in years past, a seller's agent extends the seller agency
relationship to other agents who are then called subagents.
Subagents are bound to the seller just the same as the principal
listing agent. Of course, the extension of the seller agency
relationship to subagents requires the seller's consent.
Buyer Agency:
The buyer agency relationship is usually created when a buyer
and an agent agree between themselves to enter such a relationship.
In this case, the agent works in the buyer's best interest
and owes fiduciary duties to the buyer. In today's world,
it is not uncommon to have a real estate transaction in which
both parties have their respective agents representing them.
Disclosed Dual Agency:
Disclosed dual agency is created when an agent represents
both parties to a real estate transaction. In such a relationship,
the above-mentioned fiduciary duties are somewhat limited
because it would be impossible to exercise them all to both
parties. Both parties in a dual agency relationship are made
aware of this limited representation and consent to it in
advance.
Undisclosed Dual Agency:
This practice is very similar to disclosed dual agency except
it is practiced without the principle's consent, therefore
it is illegal. Undisclosed dual agency is very often accidentally
created when a subagent representing a seller by his words,
acts, or deeds unwittingly creates an impression in a buyer's
mind that the subagent represents the buyer. Agency disclosure
requirements vary widely from state to state. Nevertheless,
most professional companies and their agents make complete
disclosure in writing so that the public can be fully informed
as to what the consumer can expect and the rights they have
regarding representation. If you have any further questions,
you can contact your local association of REALTORS® for more
information.
