Whether you’re a buyer or seller, understanding the different types of agency relationships when you are in the middle of negotiating your home purchase or sale is important. You may not have even given this a thought – but these terms are something you should understand when selling or purchasing a home.
When hiring a real estate agent, it’s important to understand whose side he or she is on, so to speak. Most commonly are when you hire a Realtor to represent you in the sale of your home, we refer to them as a “Listing Agent”, and most always you will hire a Realtor to represent you in the purchase of a home which we refer to as a “Buyers Agent”. But there are circumstances where there will be variable relationships in between that you may not be aware of. By knowing where your agent’s loyalties lie, you will know what you can tell them and what you should not tell them. For example, if you are speaking with the listing agent, one who represents the seller of a home you may want to purchase, you may not want to mention to them that you just love the home so much you would be willing pay anything to make the house your home.
Conversely, if you were a seller speaking to the buyer’s agent you would not want to tell him/ her you would accept less than your list price.
Below are the different types of agency representations to be mindful of when entering the process of selling or buying real estate.
Buyer’s Agency
Buyer’s agent fiduciary duties are with the buyer and represents their best interest in their home purchase. Any information shared with the agent is strictly confidential, regarding price or motivation, unless otherwise instructed by the buyer.
Listing Agency
Listing agent acts on behalf of the seller and their fiduciary duties are with the seller on the sale of their home. Other than material facts, any information shared with the agent regarding price or motivation is strictly confidential, unless otherwise instructed by the seller.
Dual Agency
When a real estate company can be the agent of both the buyer and seller. Dual Agency arises when a Buyer’s Agent shows a property currently listed with the same brokerage. The real estate company can be the agent for both buyer and seller in a transaction providing the relationship is disclosed and is mutually agreed upon in writing by both parties. Dual Agents owe both parties fair treatment, advice, guidance and negotiations to mutual agreeable terms and conditions. Lastly, Dual Agents cannot share price, terms, or motivation of either party or disclose any confidential information without the permission of either the buyer or seller.
Designated Agency
This option is available in the event that either party is not comfortable with Dual Agency. In this case, an agent will be appointed to represent the buyer and seller separately in the transaction.
Understanding agency relationships while having an open dialogue and good communication with your Realtor can only result in a smooth transaction.
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