10/09/2023
In real estate, the term "agency" plays a critical role in defining the legal responsibilities that a real estate professional has towards you and other parties involved in a transaction.
Seller's Representative: This individual, also known as a listing agent or seller's agent, is hired by and represents the seller. All fiduciary obligations are directed towards the seller's interests, with the primary objective of securing the best possible price and terms for the seller. This agency relationship typically begins with a signed listing contract.
Buyer's Representative: A buyer's representative, also referred to as a buyer's agent, is engaged by prospective buyers to advocate for their interests throughout the transaction. Compensation for the buyer's representative can occur through a negotiated fee paid by the buyer or, alternatively, through payment from the seller or a commission split with the seller's agent.
Subagent: A subagent holds the same fiduciary responsibilities as the agent they represent. Subagency typically arises when a sales associate from another brokerage, who is not the buyer's agent, shows a property to a buyer. While the subagent works with the buyer to view the property, their fiduciary duties remain with the listing broker and the seller. However, the subagent is expected to treat the buyer honestly.
Disclosed Dual Agent: In a disclosed dual agency arrangement, a single agent represents both the buyer and the seller in the same real estate transaction. In such cases, dual agents have limited fiduciary obligations to both the buyer and seller clients. Because of the potential for conflicts of interest, informed consent is typically required from all parties involved. Disclosed dual agency is legal in most states but necessitates written consent.
Designated Agents: These agents, also known as appointed agents, are selected by a managing broker to act exclusively on behalf of either the seller or buyer. This arrangement helps the brokerage avoid conflicts arising from dual-agency situations. Designated agents provide comprehensive representation, including all associated fiduciary duties, to their clients.
Transaction Broker: In states where nonagency relationships are permitted, a transaction broker, sometimes called a facilitator, can be involved. The nature of these relationships varies from state to state. Generally, the duties owed to consumers in nonagency relationships are less comprehensive than the traditional fiduciary duties found in agency relationships.
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