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Consumer Reports
for Home Seller
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Seller Services |
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Understanding Agency
It’s important to
understand what legal responsibilities your real estate
salesperson has to you and to other parties in the
transactions. Ask your salesperson to explain what type
of agency relationship you have with him or her and with
the brokerage company.
- Seller's
representative (also
known as a listing agent or seller's agent). A
seller's agent is hired by and represents the
seller. All fiduciary duties are owed to the seller.
The agency relationship usually is created by a
listing contract.
- Subagent.
A subagent owes the same fiduciary duties to the
agent's principal as the agent does. Subagency
usually arises when a cooperating sales associate
from another brokerage, who is not representing the
buyer as a buyer’s representative or operating in a
nonagency relationship, shows property to a buyer.
In such a case, the subagent works
with
the buyer as a customer but owes fiduciary duties to
the listing broker and the seller. Although a
subagent cannot assist the buyer in any way that
would be detrimental to the seller, a buyer-customer
can expect to be treated honestly by the subagent.
It is important that subagents fully explain their
duties to buyers.
- Buyer's
representative
(also known as a
buyer’s agent).
A real estate licensee who is
hired by prospective buyers to represent them in a
real estate transaction. The buyer's rep works in
the buyer's best interest throughout the transaction
and owes fiduciary duties to the buyer. The buyer
can pay the licensee directly through a negotiated
fee, or the buyer's rep may be paid by the seller or
by a commission split with the listing broker.
- Disclosed
dual agent.
Dual agency is a relationship in which the brokerage
firm represents both the buyer and the seller in the
same real estate transaction. Dual agency
relationships do not carry with them all of the
traditional fiduciary duties to the clients.
Instead, dual agents owe limited fiduciary duties.
Because of the potential for conflicts of interest
in a dual-agency relationship, it's vital that all
parties give their informed consent. In many states,
this consent must be in writing. Disclosed dual
agency, in which both the buyer and the seller are
told that the agent is representing both of them is
legal in most states.
- Designated
agent (also called,
among other things, appointed agency). This is a
brokerage practice that allows the managing broker
to designate which licensees in the brokerage will
act as an agent of the seller and which will act as
an agent of the buyer. Designated agency avoids the
problem of creating a dual-agency relationship for
licensees at the brokerage. The designated agents
give their clients full representation, with all of
the attendant fiduciary duties. The broker still has
the responsibility of supervising both groups of
licensees.
- Nonagency
relationship
(called, among other things, a transaction broker or
facilitator). Some states permit a real estate
licensee to have a type of nonagency relationship
with a consumer. These relationships vary
considerably from state to state, both as to the
duties owed to the consumer and the name used to
describe them. Very generally, the duties owed to
the consumer in a nonagency relationship are less
than the complete, traditional fiduciary duties of
an agency relationship.
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