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When buying or selling real estate, you may find it helpful to have a
real estate agent assist you. Real estate agents can provide many useful
services and work with you in different ways. In some real estate
transactions, the agents work for the seller. In others, the seller and
buyer may each have agents. And sometimes the same agents work for both
the buyer and the seller. It is important for you to know whether an
agent is working for you as your agent or simply working with you while
acting as an agent of the other party.
This article addresses the
various types of working relationships that may be available to you. It
should help you decide which relationship you want to have with a real
estate agent. It will also give you useful information about the various
services real estate agents can provide buyers and sellers, and it will
help explain how real estate agents are paid.
SELLERS
Seller's Agent
If you are selling
real estate, you may want to "list" your property for sale with a
real estate firm. If so, you will sign a "listing agreement"
authorizing the firm and its agents to represent you in your
dealings with buyers as your seller's agent. You may also be asked
to allow agents from other firms to help find a buyer for your
property.
Be sure to read and
understand the listing agreement before you sign it.
Duties to Seller:
The listing firm and
its agents must
 | promote your best interests |
| be loyal to you |
| follow your lawful instructions
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| provide you with all material facts that could
influence your decisions |
| use reasonable skill, care and diligence, and
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| account for all monies they handle for you.
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Once you have signed the listing agreement,
the firm and its agents may not give any confidential information
about you to prospective buyers or their agents without your
permission so long as they represent you. But
until you
sign the listing agreement, you should avoid telling the listing
agent anything you would not want a buyer to know.
Services and
Compensation:
To help you sell
your property, the listing firm and its agents will offer to
perform a number of services for you. These may include
| helping you price your property
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| advertising and marketing your property
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| giving you all required property disclosure
forms for you to complete |
| negotiating for you the best possible price and
terms |
| reviewing all written offers with you and
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| otherwise promoting your interests.
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For representing you
and helping you sell your property, you will pay the listing firm
a sales commission or fee. The listing agreement must state the
amount or method for determining the commission or fee and whether
you will allow the firm to share its commission with agents
representing the buyer.
Dual Agent
You may even
permit the listing firm and its agents to represent you and
a buyer at the same time. This "dual agency relationship" is most
likely to happen if an agent with your listing firm is working as
a buyer's agent with someone who wants to purchase your
property. If this occurs and you have not already agreed to a dual
agency relationship in your listing agreement, your listing agent
will ask you to sign a separate agreement or document permitting
the agent to act as agent for both you and the buyer.
It may be difficult for a dual agent
to advance the interests of both the buyer and seller.
Nevertheless, a dual agent must treat buyers and sellers
fairly and equally. Although the dual agent owes them the
same duties, buyers and sellers can prohibit dual agents from
divulging certain confidential information about them to the other
party.
Some firms also offer a form of dual agency
called "designated agency" where one agent in the firm represents
the seller and another agent represents the buyer. This option
(when available) may allow each "designated agent" to more fully
represent each party.
If you choose the "dual agency" option,
remember that since a dual agent's loyalty is divided between
parties with competing interests, it is especially important that
you have a clear understanding of
| what your relationship is with the dual
agent and |
| what the agent will be doing for you in
the transaction. |
BUYERS
When buying real
estate, you may have several choices as to how you want a real
estate firm and its agents to work with you. For example, you may
want them to represent only you (as a buyer's agent). You
may be willing for them to represent both you and the seller at
the same time (as a dual agent). Or you may agree to let
them represent only the seller (seller's agent or
subagent). Some agents will offer you a choice of these
services. Others may not.
Buyer's Agent
Duties to Buyer:
If the real
estate firm and its agents represent you, they must
| promote your best interests |
| be loyal to you |
| follow your lawful instructions
|
| provide you with all material facts that
could influence your decisions |
| use reasonable skill, care and diligence,
and |
| account for all monies they handle for
you. |
Once
you have agreed (either orally or in writing) for the firm and its
agents to be your buyer's agent, they may not give any
confidential information about you to sellers or their agents
without your permission so long as they represent you. But until
you make this agreement with your buyer's agent, you should avoid
telling the agent anything you would not want a seller to know.
Unwritten
Agreements:
To make sure that
you and the real estate firm have a clear understanding of what
your relationship will be and what the firm will do for you, you
may want to have a written agreement. However, some firms may be
willing to represent and assist you for a time as a buyer's agent
without a written agreement. But if you decide to make an offer to
purchase a particular property, the agent must obtain a written
agency agreement. If you do not sign it, the agent can no longer
represent and assist you and is no longer required to keep
information about you confidential. Furthermore, if you later
purchase the property through an agent with another firm, the
agent who first showed you the property may seek compensation from
the other firm.
Be sure to read and
understand any agency agreement before you sign it.
Services and
Compensation:
Whether you
have a written or unwritten agreement, a buyer's agent will
perform a number of services for you. These may include helping
you
| find a suitable property |
| arrange financing |
| learn more about the property and
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| other-wise promote your best interests.
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If you have a written agency
agreement, the agent can also help you prepare and submit a
written offer to the seller.
A
buyer's agent can be compensated in different ways. For
example, you can pay the agent out of your own pocket. Or the
agent may seek compensation from the seller or listing agent
first, but require you to pay if the listing agent refuses.
Whatever the case, be sure your compensation arrangement with your
buyer's agent is spelled out in a buyer agency agreement before
you make an offer to purchase property and that you carefully read
and understand the compensation provision.
Dual Agent
You may permit
an agent or firm to represent you
and the seller at the same time. This "dual agency
relationship" is most likely to happen if you become interested in
a property listed with your buyer's agent or the agent's firm. If
this occurs and you have not already agreed to a dual agency
relationship in your (written or oral) buyer agency agreement,
your buyer's agent will ask you to sign a separate
agreement or document permitting him or her to act as agent for
both you and the seller. It may be difficult for a dual agent to
advance the interests of both the buyer and seller. Nevertheless,
a dual agent must treat buyers and sellers fairly and
equally. Although the dual agent owes them the same duties, buyers
and sellers can prohibit dual agents from divulging certain
confidential information about them to the other party.
Some firms also offer a form of dual agency
called "designated agency" where one agent in the firm represents
the seller and another agent represents the buyer. This option
(when available) may allow each "designated agent" to more fully
represent each party.
If you choose the "dual agency" option,
remember that since a
dual agent's loyalty is divided between parties with
competing interests, it is especially important that you have a
clear understanding of
| what your relationship is with the
dual agent and |
| what the agent will be doing for you in
the transaction. |
This
can best be accomplished by putting the agreement in writing at
the earliest possible time.
SELLER's AGENT Working With a BUYER
If the real estate
agent or firm that you contact does not offer buyer agency
or you do not want them to act as your buyer agent, you can
still work with the firm and its agents. However, they will be
acting as the
seller's agent (or "subagent"). The agent can still help you
find and purchase property and provide many of the same services
as a buyer's agent. The agent must be fair with you and
provide you with any "material facts" (such as a leaky roof) about
properties.
But remember, the agent represents the
seller—not you— and therefore must try to obtain for the seller
the best possible price and terms for the seller's property.
Furthermore, a
seller's agent is required to give the seller any information
about you (even personal, financial or confidential information)
that would help the seller in the sale of his or her property.
Agents must tell you in writing if they are sellers'
agents before you say anything that can help the seller. But
until you are sure that an agent is not a seller's agent, you
should avoid saying anything you do not want a seller to know.
Sellers' agents are compensated by the
sellers.
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