Real Estate Course Level 9

Facts of a Feather Level 9 c) subagency.

. I involve two unaffiliated brokers working together to achieve a real estate transaction. . I am a cooperating broker helping an unaffiliated broker find a buyer for his seller-client. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 a) dual agency.

. I represent both parties to an in-house real estate transaction. . My agent is also the agent for the person from whom I'm buying a home. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 b) single agency.

. I represent only one side of the transaction. . Buyer-only agents practice this form of agency. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 d) no agency.

. Rather than represent the interests of either principal, I perform ministerial acts to facilitate the transaction. . I am a transaction coordinator with NO agency relationship with either party to the transaction. a) dual agency. b) single agency. c) subagency. d) no agency.

Level Assessment Level 9 b) fulfilling fiduciary duties to both clients. A challenge that is somewhat unique to the role of a dual agent is fulfilling fiduciary duties to both clients.

A challenge that is somewhat unique to the role of a dual agent is: a) determining which client should be responsible for agent compensation. b) fulfilling fiduciary duties to both clients. c) determining the proper sales price for a property. d) balancing the deadlines of both clients.

Cooperating Brokerage

A cooperating brokerage or a cooperating broker is an agency arrangement in which two brokerages collaborate to achieve a real estate transaction for a specific piece of property. A cooperating broker can be a subagent if they accept an offer of subagency from an unaffiliated broker. In this sense, subagency is two unaffiliated brokerages working together, or cooperating, in order to realize a real estate transaction. This can be referred to as a cooperating sale. So, a broker who brings a buyer to another broker (who has a listing) is a cooperating broker. Let's look at an example to see how fiduciary duties can shift with cooperating brokers and subagency. Casa and Haus Brokerage: . Breck, a broker, works for Casa Brokerage. . Breck is the listing agent for Seller Simone. . Dillon, a broker, works for Haus Brokerage. . Dillon is the buyer's agent for Buyer Janine. Broker Dillon sees Seller Simone's property and just knows Buyer Janine will love it. Broker Dillon (who originally worked with Buyer Janine) enters into a subagency agreement with Broker Breck to help bring Buyer Janine to the transaction and realize the transaction. Working Together: This all sounds pretty good, right? Seller Simone sells his house, Buyer Janine buys a house she loves, and both brokers help fulfill their clients' transactions. What could be bad about that? Well, the problem is the shift in fiduciary duties. When Broker Dillon enters into a subagency relationship with Broker Breck, Broker Dillon is now a subagent of Seller Simone, NOT Buyer Janine's agent. Broker Dillon will need to immediately disclose this information to Buyer Janine and ensure he gives Seller Simone all fiduciary duties. See how that could get confusing, Yoni? Broker Dillon will likely still feel loyal to Buyer Janine even though his duties have shifted to another party. And Buyer Janine will need to know she is no longer represented. Remember: A buyer brought to a real estate transaction by a seller's subagent has no one looking out for their interests. MLS: Unaffiliated brokers (such as Brokers Breck and Dillon) might find each other by chance. Perhaps they see an advertisement for a property their client will like, etc. However, most unaffiliated brokers find each other through their local MLS, or multiple listing service. You'll learn what an MLS is and how it works later on. For now, just think of an MLS as a collective internet database that lists an area's available properties. It's kind of like a matchmaking service for brokerages; it's an easy way to connect buyers with sellers and vice versa. Compensation: Compensation can be a bit funky when it comes to cooperating brokers. If cooperating brokers are NOT operating as subagents of a seller, they can still get compensated for bringing a buyer to the transaction. It is hard work, after all! Agents should make sure they know what compensation terms are BEFORE putting in hours and hours of work on a transaction.

Landlord's Agent

A landlord's agent is similar to a seller's agent. The landlord's agent is a single agent who has agreed to represent the landlord's interests in a real estate transaction (to lease, not sell, a property). The landlord is the principal/client of the landlord's agent, and the landlord's agent owes all fiduciary duties to the landlord. The agency relationship between the landlord and the landlord's agent is documented in a listing agreement. The landlord's agent works for the landlord and with the tenant. A landlord's agent can also be involved in property management, something we'll talk about later.

Quiz Level 9 a) customer. A subagent works FOR the principal and WITH the customer.

A subagent works for the principal and with the: a) customer. b) buyer. c) seller. d) landlord.

Quiz Level 9 c) tenant. The tenant is the principal/client of the tenant's agent, and the tenant's agent owes all fiduciary duties to the tenant.

A tenant's agent's principal/client is the: a) seller. b) buyer. c) tenant. d) landlord.

Tenant's Agent

A tenant's agent, also known as a tenant representative, is most similar to a buyer's agent. The tenant's agent is a single agent who has agreed to represent the tenant's interests in a real estate transaction (to rent, not buy, a property). The tenant is the principal/client of the tenant's agent, and the tenant's agent owes all fiduciary duties to the tenant. The agency relationship between the tenant and the tenant's agent is documented in a tenant-broker agreement. The tenant's agent works for the tenant and with the landlord. A tenant's agent is very similar to a buyer's agent, but tenant's agents will need to have a slightly different area of expertise. They'll have to know the specifics of leasing agreements and tenant rights that wouldn't be as important for an agent acting only as a buyer's agent.

Transaction Coordinator

A transaction coordinator, a.k.a. facilitator or intermediary, is a broker who facilitates a transaction absent of any agency relationship with either party to the contract. The broker has no fiduciary duties for ministerial acts they perform. When this occurs, it is known as no agency. In Georgia, a transaction coordinator is sometimes called a middleman, and the theory of no agency is sometimes called the middleman principle. Pro tip: It makes sense that agents who practice no agency are called transaction coordinators, facilitators, or intermediaries: . They ONLY coordinate or facilitate a transaction and don't involve those complicated and binding fiduciary duties. . They act as ONLY intermediaries between buyers and sellers, landlords and tenants. For the most part, I'll be referring to agents practicing no agency as transaction coordinators, but I might throw in the other terms to keep you on your toes. Just know they all mean the same thing. Takeaway: Transaction coordinators do not enter into an agency relationship with either party to the transaction. What That Looks Like: In the absence of an agency relationship (and fiduciary duties), the transaction coordinator does not represent the interests of one principal over the other. Instead, they fulfill ministerial acts to assist in the completion of the transaction. So, a transaction coordinator will: . Handle funds, documents, and other materials. . Present all offers and counteroffers. . Keep parties informed of progress in the transaction. . Assist in closing the transaction. They're kind of like an impartial parent to two opposing children.

Quiz Level 9 b) mortgage lender The various people involved in a brokerage include the broker, agent, associate broker, and cooperating broker.

All of the following are people in brokerage EXCEPT: a) broker b) mortgage lender c) cooperating broker d) agent

Quiz Level 9 b) A buyer brought to a real estate transaction by a seller's subagent has an agent looking out for their interests. One of the trickiest parts of subagency is the fact that buyers brought to a real estate transaction by a seller's subagent are NOT represented.

All the following applies to the concept of subagency EXCEPT: a) A subagent can be an unaffiliated cooperating broker. b) A buyer brought to a real estate transaction by a seller's subagent has an agent looking out for their interests. c) A subagent is an agent of an agent. d) Subagency offers are typically communicated to cooperating brokers via the MLS.

Quiz Level 9 d) Jenny wanted to give both clients at least some degree of individual representation in the in-house real estate transaction. Broker Jenny likely chose to establish designated sales agents to give both clients at least some degree of individual representation in the in-house real estate transaction.

Although Agent Sally brought both the buyer and the seller to the brokerage, Broker Jenny assigned Sally as a designated agent for the seller and assigned a different agent to the buyer. What is the most likely explanation for Jenny's actions? a) Jenny likely didn't think Sally could handle more than one client at a time. b) Jenny was required by law to handle the situation that way. c) Jenny wanted to ensure commission would be earned on both sides of the transaction. d) Jenny wanted to give both clients at least some degree of individual representation in the in-house real estate transaction.

Brokers and Brokerage

As a Verb: To "broker" describes the various efforts and acts that bring real estate transactions to completion. These acts involve buyers, sellers, tenants, and landlords. Can you use it in a sentence? Geraldine, a buyer's agent, negotiated the selling price for a residential property: It was a tough deal to broker! As a Noun: The word "brokerage" refers to a for-profit business specifically formed to complete real estate transactions. Can you use it in a sentence? Marisol, a newly licensed agent, is excited to start working as a seller's agent at Bluebird Realty, the biggest brokerage in town. In Short... The words broker and brokerage sound pretty similar - and they are! But with either use, brokers and brokerages relate to business activity. And the law of agency (which you already know a lot about) is what governs that activity. Real estate brokers act as agents and advocate on behalf of their clients. This means that a real estate brokerage will engage in the sale, purchase, lease, or management of property. The brokerage can take the form of a sole proprietorship, partnership, or corporation (we'll talk more about these later). And, of course, brokers work at brokerages and carry out these activities. Duties: Let's go over a few of the main duties brokers and brokerages will be responsible for: . Fulfill the responsibilities set out in the agent-client contract . Promptly disclose all offers on a property . Seek out the other party to a transaction . Disclose material facts . Advise clients appropriately and direct clients to seek legal advice when needed . Be lawful . Maintain client confidentiality But never fear, we'll go over all of these things in detail throughout this level.

Level Assessment Level 9 b) disclose it even if advance consent was previously given. As soon as your single agency relationship begins to morph into a dual agency transaction, disclose it! Even if advance consent was previously given, you should still inform all parties that you'll be moving forward according to dual agency procedures and explain all the ramifications of that.

As soon as your single agency relationship begins to morph into a dual agency transaction, you should: a) NOT disclose it as long as it won't adversely affect the parties. b) disclose it even if advance consent was previously given. c) disclose it only if advance consent was NOT previously given. d) NOT disclose it if advance consent was previously given.

When to Disclose

Because disclosures are so important, you're probably wondering when those disclosures should be made. The exact timing will look different depending on the type of agency involved and the unique situation. However, as a general rule, disclose when a customer becomes a client. This means an agent should always disclose before signing a listing agreement with a customer/client. Let's review two important terms you learned previously. First Substantive Contact: First substantive contact is a trigger for agency disclosure. Remember that this is the critical point at which agency disclosure is required. It generally occurs at the first face-to-face meeting with the customer, prior to the sharing of any confidential information or the initiation of any action regarding a specific property. Situations that would constitute first substantive contact include: . A buyer conveying their general interest in purchasing real estate. . A buyer meeting a seller's agent at a showing or an open house. . A seller sharing their financial status or motivations to purchase. For example, if you met a prospective buyer at an open house, that would count as the first substantive contact. You would need to disclose your agency relationship (to the seller) right away. Let's Get Specific: Here are some important things to note about first substantive contact: When a listing agent represents an owner, the agent needs to disclose their relationship with the owner before or during the first substantive contact with a prospective tenant or buyer. This might be when the agent: . Shows a property . Discusses compromising or confidential information with the client. . Establishes an agency agreement document (such as a listing agreement). . If the first substantive contact occurs over the phone, the agent should disclose their relationship verbally, over the phone, and then confirm that disclosure in writing as soon as possible. Not Very Substantial: These instances do NOT qualify as first substantive contact: . A non-confidential interaction at an open house. . A fact-based conversation about details such as location or architectural style. . Factually answering questions regarding an advertisement. I'll reference situation-specific guidelines for first substantive contact in the coming chapters on single, dual, sub-, and non-existent agency. Keep an eye out! Informed Consent: Remember, informed consent, or advance informed consent, is the principle that a client or customer must understand and agree to certain actions or agency relationships prior to implementation. Basically, a client should be informed of the agency in a situation, and then they need to consent to that situation before any action is taken. If an agency relationship changes, agents should seek new informed consent. I'll be referencing both of these terms in our discussions on specific forms of agency, so write them on your arm, put them on a sticky note, write them in chocolate sauce - do whatever you need to do to remember them.

Level Assessment Level 9 c) should provide written disclosure of that lack of agency relationship to both parties involved. Because facilitators (transaction brokers) operate under a non-agency status in a real estate transaction, they should disclose, in writing, that lack of agency relationship to both parties to the transaction.

Because facilitators (transaction brokers) operate under a non-agency status in a transaction, they: a) should disclose that lack of agency but it does NOT have to be in writing. b) have no agency disclosure responsibilities. c) should provide written disclosure of that lack of agency relationship to both parties involved. d) should disclose that lack of agency if asked about it.

Level Summary

Brokerage usually refers to the physical real estate business. Broker can be a noun or a verb: to broker a deal means performing the acts that bring a real estate transaction to completion. Vicarious Liability: Brokers are responsible for their agents behavior and could even be held liable. Agency Relationships: Brokers can establish single agency, dual agency, subagency or no agency. Dual Agency is the trickiest form of agency, because the clients have opposing interests. It's also the riskiest for a license holder. This form of representation should be avoided. Designated Agency: is similar to dual agency, but it provides more clarity when it comes to the Fiduciary duties owed. Agents who practice No Agency are called transaction coordinator, facilitator, or intermediary. Compensation and commission: Clients pay the brokerage, then the brokerage disperses that money to their sponsored agents. Non broker agents are never paid directly by their clients.

What Is Brokerage?

Brokerage, as a career field, is structured like no other profession in the world. When the term brokerage is used, some people will think it refers only to the specific person (the broker) who owns a real estate office. But in fact, every person who has a real estate license practices the act of brokerage. So, what is the act of brokerage exactly? A simple definition would be the joining of two people to exchange products or services. It's all about one person conducting business on behalf of someone else. But real estate brokerage is so much more than that. . It is the constant searching for new people to work with, whether those people are sellers or buyers. . It is the perpetual solving of problems to get a transaction to closing. The acts of real estate brokerage look like many different things, but they always involve an agent (broker) representing the best interests of a client. Brokerage Acts: Here are the four major categories of real estate brokerage acts: . Listing . Buying . Property management . Leasing Respectively, when an agent actually performs these acts for their brokerage, it is done through a: . Listing or seller's agent . Selling or buyer's agent . Landlord's agent . Leasing agent I'll break each of these down on the upcoming screens. Ready?

Single Agency Co-Op

Brokerages might choose to exclusively engage in only seller agency or only buyer agency. This means that the brokerage would only serve sellers or buyers, respectively. One advantage of doing this is that there would be no conflict of interest regarding fiduciary duties and the parties owed those fiduciary duties. That's why some brokerages may support only sellers or only buyers. However, this is a bit unrealistic! Many brokerages support both sellers and buyers; it's just better for business. Brokerages that serve only sellers or only buyers are missing out on half of the market. That's why many brokerages opt for single agency co-op. Single Agency Co-op: Single agency co-op means that a brokerage ONLY deals with single agency relationships (one agent representing one client, buyer, or seller), but they serve both sellers and landlords, buyers and tenants.

Broker Compensation

But whether the written agency agreement is with a buyer or seller, the matter of how and when the broker is to be compensated needs to be addressed. A couple of guideposts for compensation: . It is negotiable between parties. . Its terms need to be in writing AND signed by the parties. . It can be based on any lawful condition. . It does NOT have to be a commission (percentage of the sale) but can take some other permitted form (more on this later). . It must indicate the timing of payment (more on this later). . It can come from BOTH buyer AND seller (with informed consent of all parties). The Traditions: Although other forms of compensation are permitted, a negotiated commission rate paid upon the final purchase price of the property is traditional. And while a percentage rate range may be commonplace in a given region of the country (or state), an exact percentage rate is NOT set in stone. Rather, it's negotiated in writing between the broker and client. It is traditionally understood — and placed in the written agency agreement — that commission is earned when a "ready, willing, and able buyer is found," and a meeting of the minds between seller and buyer is established. This means when the buyer has agreed to a seller's terms, or the seller has agreed to the buyer's counteroffer. It is also tradition that the earned commission is deferred until closing is completed. No reward until the job is done! What If: When constructed correctly, a compensation clause in a written agreement can often be enforced successfully, even if the broker's client defaults. This means you could still get paid for your hours of hard work, even if the deal ends up falling through. We'll talk more about this when we get into these agreements later on, but it's a good thing to take note of now.

Facts of a Feather Level 9 b) single agency.

Buyer-only agents practice this form of agency. a) dual agency. b) single agency. c) subagency. d) no agency.

Agency vs. Brokerage

By now, you know a lot about agency. Agency refers to agency relationships where agents advocate on behalf of their principals. We've talked about: . What an agent does . Who an agent represents . The duties an agent owes to different parties in a transaction . The parties to agency But we've also thrown around this word brokerage. I mean, what even is that? Well, it's important to know what brokerage is, as you'll be working for a broker (and might even be one someday!). Let's go over exactly what brokerage is and how it works. BRRETA But before we get into brokerage, it's important to highlight BRRETA, or the Brokerage Relationships in Real Estate Transactions Act. Georgia passed this act in 1994 to put extra protective measures around the practice of agency and keep things peachy in the peach state. BRRETA: . Protects both licensees and customers . Outlines protections and guidelines for real estate practices . Attempts to clear up any confusion regarding real estate transactions . Governs relationships between licensees and their customers As we talk about the guidelines for agency and brokerage practices, know that these concepts are outlined in BRRETA and are therefore very important for you to follow. I mean, BRRETA is the law, after all.

The Takeaway

Congrats! You now know the traditional ways you may be compensated as a licensed real estate professional. In a later level, we'll talk about more specific aspects of compensation and the listing agreements and clauses that make compensation happen. But for now, you know how to go with the (cash) flow. In Chapter 5, you learned: ✅ How brokerages handle compensation. ✅ Ways compensation can be split between brokers, cooperating brokers, and agents That's it for this level, Yoni!

Designated Agency

Designated agency is an agency arrangement wherein both parties to the transaction are represented by their own agent, but both agents are employed by the same brokerage. By necessity, each client enjoys an agency relationship exclusively with the named agent within the brokerage. So, a designated sales agent is a license holder (appointed by their broker) who represents the interests of one of the two parties in an in-house real estate transaction. In some states, designated agency is considered dual agency, but in Georgia it is NOT - and is therefore allowed under BRRETA. However, licensees are cautioned to practice designated agency carefully as it can be tricky. When a brokerage commits to practicing designated agency, they are saying that a client will have an exclusive agency relationship with only the named individuals in the agency agreement and no one else in the brokerage. This differs greatly from the standard practice that "a client of one agent in a brokerage is a client of all agents in that brokerage." The named individuals in the agency agreement will be: . The employing broker (or associate/supervising broker). . The one designated licensee working for the client (on the broker's behalf). This variation of dual agency can be looked at as a broker's attempt to provide at least some degree of individual representation during an in-house real estate transaction. With designated agency, the broker assigns sponsored licensees to each principal: . The licensee assigned to the seller will function as a seller's agent. . The licensee assigned to the buyer will function as a buyer's agent. This means that licensees acting as designated agents can give counsel and advice, whereas dual agents cannot. Green Pea Realty: . Jose is a seller. . Antone is Jose's listing agent. . Mary is a buyer. . Avi is Mary's buyer's agent. Antone and Avi work for the same brokerage, Green Pea Realty. Green Pea Realty's sponsoring broker, Heidi, does not want any of her agents in a dual agency relationship. So, she makes Antone and Avi designated agents (for Jose and Mary, respectively). This means that: . Antone owes Jose fiduciary duties. . Avi owes Mary fiduciary duties. . There is still more room for conflict and compromised information than there would be in a single agency relationship, but there should be no sharing of important information. Be Honest: All this said, even with designated agents, buyers and sellers should approach designated agency relationships knowing that they share a broker with the opposing party. License holders should ensure all principals understand this aspect of their agency relationship. Note: In some states, you might hear the term appointed agents in lieu of designated agents. Another Note: Though distinct from dual agency, designated agency and designated agents are still sometimes considered to be a form of dual agency. The Benefits: The benefit of designated agency is that it provides clarity, even in a dual agency environment. The licensee works exclusively for the client, holding confidences no other licensee in the brokerage has. Only the supervising broker and the brokerage would be considered dual agents. Also, this form of agency reduces the liability exposure for brokerages that is common in in-house transactions. Disclosure Obligations: As with dual agency, designated agency must be disclosed, explained, and consented to upfront in an agency disclosure discussion before the client enters into a contractual agency agreement.

Dual Agency: What NOT to Disclose

Disclosure is super important when it comes to dual agency. But, for those agents who do practice dual agency, there are some things that shouldn't be disclosed to the compromised party. A dual agent should NOT disclose to a party: . The other party's willingness to pay more or take less for a property. . The other party's motivations to buy or sell a property. . The other party's willingness to accept different terms than appear in the offer. . The financial condition of the other party. The exception to this would be if the principal has explicitly permitted or requested the information be shared. If so, protect yourself and get that permission or request documented in writing. Before we wrap up our chapter on dual agency, let's go over a similar concept to dual agency: designated agency.

Compensation

Do you like money, Yoni? Me, too — and I don't even have pockets to put it in! Did you know that some licensees put their hard-earned cash at risk by not properly documenting in their agency agreements how they will be paid? As enthused as you are about real estate, I doubt you'd do it for free. So, in this chapter, you'll learn a few basics regarding licensee compensation. Your (human) instructor, Matt Hernandez, will even let you listen in on a conversation he had with two successful agents about this very topic. We've broken up that discussion into three parts, which we have spread out over the course of this chapter — the first one coming r-i-i-i-g-h-t now!...

Forms of Dual Agency

Dual agency can take a few different forms. One Agent, Two Principals: In some cases of dual agency, one agent might represent both principals involved in a transaction. This is the simplest form of dual agency. Scenario: Ms. DeVille's Dalmatians: Ms. DeVille is looking to sell her Dalmatian farm, and real estate license holder Boris is helping her do so. Boris is Ms. Deville's listing agent. It just so happens that Boris has another client, Anita, who is looking to buy a Dalmatian farm. Now, Dalmatian farms are very niche markets: they don't come up for sale very often. As such, Boris ends up on both ends of the same property deal, helping Ms. Deville sell to Anita while also helping Anita buy from Ms. Deville. He is sure to inform Ms. Deville and Anita to the change to a dual agency relationship before helping them further the transaction. Two Agents, Two Principals: In other scenarios, one agent might represent a buyer, while a second agent represents a seller. But if both agents are sponsored by the same broker, then the principals are technically working with the same broker. That makes it an in-house transaction and an example of dual agency. Rockstar Realty: Kiara and Landon are license holders working for Rockstar Realty. Jasmine is the sponsoring broker for both Kiara and Landon. . Kiara is helping Katie, a seller, list her home. . Landon is helping Wyatt, a buyer, find a home. If Wyatt ends up wanting to put in an offer on Katie's home, dual agency will be created. Though Kiara and Landon can keep their information separate, there is still a lot of potential for a conflict of interest. Let's say Kiara tells Jasmine (the sponsoring broker) that her seller (Katie) needs to move right away, so she's willing to accept an extremely low offer. What happens when Landon comes to Jasmine to ask for advice on how to negotiate the asking price on Wyatt's behalf? Jasmine might spill the beans, even if she doesn't mean to.

Dual Agency

Dual agency is an agency relationship wherein both the buyer and the seller are represented by the same broker in an in-house real estate transaction. It's kind of the opposite of single agency! In Georgia, dual agency is sometimes called divided agency. So, any agent involved in an in-house transaction is a dual agent. Dual agency is tricky, problematic, and even illegal in some states. (Dual agency is legal in Georgia.) If a client is a party to a dual agency relationship, that client MUST consent (in writing through formal, informed consent) to do so. Let's talk about why dual agency is so tricky for both clients and agents, and why consent is so important. Consent to Consenting: Both parties need to (and are legally required to) consent to dual agency in writing for it to be legal. Consent is especially important with dual agency because client representation is compromised, specifically regarding the fiduciary duties of full disclosure and undivided loyalty. When both parties to the transaction are being represented by a single broker, that broker can't possibly promise to pursue the best interests of both parties at the same time. A broker is only one person! And the two parties will have constantly conflicting interests - that's just how transactions work. Certainly, both parties ultimately want the same thing — the transfer of a piece of property from one party to the other. But the two parties' desired price and terms of that transfer are often opposed. It's a conflict of interest: . The seller wants the highest price; the buyer the lowest price. . The seller wants no contingencies; the buyer wants as many as are needed to protect themselves. But these are merely two examples (of many) in which the interests of the parties create a conflict of interest for the dual agent. As long as there is informed consent from BOTH parties, dual agents are allowed to represent both of those parties. Dual Your Best: The best that a broker can commit to in dual agency is making sure the transaction is conducted in a fair and impartial manner, with confidentiality preserved in such a way that neither party obtains an advantage over the other. While this sounds nice and proper, realize that most single agents are NOT trying to act like they are impartial; they are unabashedly partial towards their client's interests, which is exactly what the client expects. And that is what is given up in dual agency. Paco vs. Laurel: Let's compare Paco and Laurel. Paco is in a single agency relationship with a seller's agent, who is helping Paco list his vacation home. Laurel is also a seller who is selling a vacation home, but Laurel is in a dual agency relationship. Her agent is also assisting the buyer, Don, who is planning on buying her vacation home. Paco: . Paco's agent is looking out for Paco's interests, and Paco's interests ONLY. . Paco tells his agent potentially compromising information (he mentions that he is desperate to sell the property before the end of the month, as he really needs the cash) and never worries about that information getting to potential buyers. . Paco knows his agent is telling him every important detail relevant to the property that the agent knows. Laurel: . Laurel's agent is looking out for Laurel's interests, but they are also looking out for the buyer's interests. . Laurel doesn't tell her agent potentially compromising information (she doesn't mention she wants to sell the property before the end of the month because she's moving for her new job) in case that information slips to the buyer. . Laurel knows her agent isn't telling her everything they know about the property; if they did, they would be violating their fiduciary duties to the buyer. In Short...: While dual agency might seem like a nice opportunity for a license holder to get the best of both worlds, that's not really the case. Dual agency can jeopardize agents and result in unhappy, underrepresented clients. That said, some brokerages do practice it. . Make sure you know your brokerage's policy regarding dual agency. . Make sure all parties agree to the dual agency relationship in writing through informed consent.

Brokerage People

Ever heard of the Village People, Yoni? Well, I hope you find the brokerage people we're about to discuss every bit as entertaining. To continue filling in your understanding of brokerage, I'll quickly go through the various people you can expect to encounter in your friendly neighborhood brokerage. The Broker: Brokerages have brokers (surprising, I know!). As mentioned earlier, every brokerage is required to designate a broker who will assume liability (throwback to our discussion on vicarious liability) for all actions flowing from that brokerage. Oftentimes, this individual will have a full or partial ownership stake in the brokerage. The designated or employing broker sponsors a team of licensees (salespersons and/or associate brokers) to be their agents and the subagents of their clients. The broker may also employ non-licensed assistants to carry out various office and administrative duties. The Agent: The agent, a.k.a. the licensee or license holder (a.k.a. future you), must be sponsored by a broker in order to engage in the business of real estate. The licensee is an agent of the sponsoring broker and a subagent of their broker's principals/clients. The agent likely brought many of these principals/clients to their broker (you're welcome). The agent can only act under the authority and supervision of their broker, and they will NOT be listed as a party to any agency agreement a client signs. Listing agreements and buyer-broker agreements will be contracts between the client and the broker, not the sponsored licensee (even if the licensee does all the "heavy lifting" in the transaction). Additionally, the sponsored licensee should receive compensation ONLY through their sponsoring broker. Let's compare agents and brokers. The Associate Broker: An individual licensed as an associate broker (meeting the same requirements as a broker) chooses to work under the sponsorship of a brokerage's designated broker. Associate brokers assume the role of an agent for the employing broker, just as the broker's sponsored salespersons would do. The Cooperating Broker: A cooperating broker is a broker who is NOT affiliated with the brokerage representing a principal in a real estate transaction. Cooperating brokers bring the other party (such as a buyer) to a transaction. A cooperating broker can operate as an agent of the unaffiliated broker (through subagency) or as a buyer's broker. If the cooperating broker is a buyer's broker: . That broker represents the buyer in a transaction . The seller is the cooperating broker's customer A Cooperating Broker Scenario: . Janice is an agent who represents a seller, Cielo. . Gretta works for a separate brokerage and represents a buyer, Sarah. . Gretta brings a buyer to the transaction, and the seller (Cielo) is Gretta's customer. Do you know what that makes Gretta? If you said the cooperating broker, you were right! When cooperating brokers come into play, an agency relationship known as cooperating brokerage is formed. Cooperating brokerage is an agency arrangement in which two brokerages collaborate to achieve a real estate transaction for a specific piece of property. We'll dive deep into cooperating brokers a little later when we discuss subagency. Take Note: In the real world, you'll more likely be interacting with the sponsored licensees of the cooperating broker than the cooperating broker themselves. But the agency relationship is the same since all agents act in the name of their sponsoring broker (but you already knew that, you smarty pants). 👖

Quiz Level 9 b) unimportant to brokerage and agent disclosure but extremely important when seeking financing. First substantive contact is the critical point at which agency disclosure is required. It generally occurs at the first face-to-face meeting with the customer, prior to the sharing of any confidential information or the initiation of any action regarding a specific property.

First substantive contact is all of the following EXCEPT: a) the critical point at which agency disclosure is required. b) unimportant to brokerage and agent disclosure but extremely important when seeking financing. c) something that generally occurs at the first face-to face meeting with the customer. d) something that occurs prior to the sharing of any confidential information or the initiation of any action regarding a specific property.

Quiz Level 9 a) Clarity of agency relationship. Single agency provides the client with clarity about the agency relationship. The client knows that agent is working exclusively in their best interests.

From a client's perspective, which of the following is a major advantage of single agency? a) Clarity of agency relationship. b) Only one agent in the brokerage looks out for your best interests. c) Agent refrains from taking on multiple clients. d) Just one point of contact.

Level Assessment Level 9 c) a buyer's agent. Since Heather wants an agent that will look after her best interests and give her undivided loyalty, she should hire a broker who practices single agency as a buyer's agent.

Heather is looking for a house to buy. She does not want to go unrepresented in the transaction, so she looks for an agent to look after her best interests and give her undivided loyalty. What kind of agent is Heather looking for? a) a subagent. b) a seller's agent. c) a buyer's agent. d) a dual agent.

Subagency Recap

Here are some major points to remember about subagency: . A subagent is an agent of an agent. . A subagent can be an unaffiliated cooperating broker. . Subagency offers are typically communicated to cooperating brokers via the MLS. . The subagent owes all the same fiduciary duties to the principal that the principal's representing broker owes. . A buyer brought to a real estate transaction by a seller's subagent has no one looking out for their interests. Informed Consent: Disclosing the nature of subagency relationships and shifts in the fiduciary duties is especially important in subagency relationships with cooperating brokers. Because relationships shift and change, agents should be extra aware of the conflict and confusion this could cause for their clients. Disclose your agency relationship, obtain informed consent when any changes occur, and make sure your client always understands who represents them and to what extent.

Facts of a Feather Level 9 c) subagency.

I am a cooperating broker helping an unaffiliated broker find a buyer for his seller-client. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 d) no agency.

I am a transaction coordinator with NO agency relationship with either party to the transaction. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 c) subagency.

I involve two unaffiliated brokers working together to achieve a real estate transaction. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 a) dual agency.

I represent both parties to an in-house real estate transaction. a) dual agency. b) single agency. c) subagency. d) no agency.

Facts of a Feather Level 9 b) single agency.

I represent only one side of the transaction. a) dual agency. b) single agency. c) subagency. d) no agency.

Quiz Level 9 c) does NOT have an agency relationship or fiduciary duties with either party. In a no agency transaction, the transaction coordinator (facilitator) does not have an agency relationship or fiduciary duties with either party.

In a no agency transaction, the transaction coordinator (facilitator): a) inspects the property once on behalf of both parties. b) will fulfill all fiduciary duties to both parties equally. c) does NOT have an agency relationship or fiduciary duties with either party. d) provides advice and offers judgement to clients before the transaction closes.

What's in a Name?

In the real estate industry, license holders are often generically referred to as agents (as in the phrase "real estate agent") and indeed often act as agents for their clients. We should remember, though, that there is a distinction between this generic term and the legal concept of agency: only certain individuals may legally act as agents in a real estate transaction. Brokers are the only real estate professionals who can officially enter into an agency relationship with a buyer or seller. Any sales agent involved in a transaction then represents the broker. The sales agent cannot act as an agent without a broker. One more time, because it's important: The sales agent cannot act as an agent without a broker. Before we close out this chapter, let's talk a little more about one of the most important things a brokerage is responsible for when interacting with clients: disclosure.

Guided Practice Answer: As a transaction coordinator, Irma must be impartial to both parties to the transaction. This means that she should NOT inspect the property and provide advice. Irma should remind the buyer of her impartiality and direct her to seek legal advice (or maybe switch to single agency with another agent!).

Irma is an agent acting as a transaction coordinator, presiding over the sale of a rental property downtown. The clients seem happy and the transaction seems to be going smoothly. A few days before closing, the buyer starts to get a little nervous (it is a big purchase, after all) and asks Irma if she will inspect the property and give her advice on whether or not to go through with the deal. The buyer wants to make sure the seller's claims about the recent roof repairs are true. Question: How should Irma respond to the buyer?

Level Assessment Level 9 d) Kelly should have disclosed the offer to the seller regardless of her opinion. Agents must disclose all offers within a reasonable time frame, regardless of what they personally think about the offer.

Kelly is an agent representing a seller. Kelly receives an offer on the seller's property but does not mention the offer, as it is far below the asking price. Which of the following is TRUE? a) Kelly can disclose offers under her discretion. It is the seller's responsibility to stay updated on offers. b) Kelly should disclose the offer in a month if no better offers come in. c) Kelly was right to ignore the offer. It is her job as the agent to filter out low offers. d) Kelly should have disclosed the offer to the seller regardless of her opinion.

Agency Acts at a Brokerage

Let's get started! First up, we're all about listing. Listing: Listing or Seller's Agent: Sellers will employ the services of a licensed agent to represent their fiduciary interests in the sale of their real estate. The broker who represents a client selling a home is most often called a seller's agent or listing agent. This relationship is formed in writing when the agent and client sign a listing agreement. Buying: Selling or Buyer's Agent: Buyers will also often employ the services of a licensed agent to represent their fiduciary interests when they are seeking to purchase real estate. The broker who represents a client buying a property is most often called a buyer's agent. Another less commonly used term for a buyer's agent is "selling agent." Why "selling agent"? Because they are assisting the listing agent in selling the property by representing a buyer. (Yeah, I know. It's silly and confusing... and a rarely used term in practice. But if it ever comes up, at least you know!) Property Management: Landlord's Agent: Landlords may also employ the services of a licensed agent to represent their fiduciary interests when they are seeking to rent out a property that they own. The broker who represents a client renting a home is most often a landlord's agent. This relationship is formed in writing when the agent and principal sign a Property Management Agreement. Leasing: Leasing Agent: Tenants can employ the services of a licensed agent to represent their fiduciary interests when they are seeking to lease real estate. The broker who represents a client wanting to lease a residence is most often a tenant's agent. This relationship is formed in writing when the agent and principal sign a buyer/tenant representation agreement.

Compensation Paid By...

Let's look at how compensation works in different scenarios, when compensation is paid by: The Seller: When a listing broker takes on a client as their principal, the broker negotiates: . How compensation is earned . What form compensation will take . Who will be eligible for compensation* *This includes cooperating brokers operating as the principal's subagent or a buyer's agent. Understandably, the amounts or percentages a seller agrees to pay a cooperative broker could vary. It depends on what roles the cooperating broker plays and what they negotiate in the agreement. The Buyer: When a buyer enters into a buyer-broker agreement with a broker, they negotiate how the buyer broker will be compensated. Often, there is language stating that the buyer broker's compensation will come from the commission split offered by the seller (as outlined in the MLS). Even then, the buyer-broker agreement typically ensures compensation for the buyer broker in the event compensation is not derived from the seller. So no matter what happens, you'll get paid. Multiple Parties: There may even be occasions when a broker is eligible to receive compensation from both the buyer and seller. While that sounds like heaven, a license holder needs to tread carefully in these situations to stay on the right side of licensing law. In order to legally receive compensation from both parties in a real estate transaction, a license holder MUST: . Fully disclose to all parties to the transaction that they are receiving compensation from both sides . Receive informed consent (in writing) to this arrangement of joint compensation from both parties Dual Agency: Dual Compensation: Speaking of compensation from multiple parties, it's important to note that dual agency poses some particularly sticky problems when it comes to compensation. You already know that in dual agency, a broker represents both sides of a transaction. This means that they can get paid by both parties to the transaction. But there are many, many caveats to dual agency. As a licensee, you'll need to provide disclosure regarding the dual compensation and obtain informed consent from both parties before proceeding.

Important Disclosures Answer1) Angelo did NOT do the right thing. As an agent, it is Angelo's responsibility to disclose all offers and then let Omar decide whether or not to accept or deny the offer. If Angelo thought another, more attractive offer would come in soon, he should have disclosed the actual offer and then given Omar advice, suggesting Omar wait a few days before accepting.

Let's take a second to talk a little more about two of these disclosures. Disclose All Offers: It's important for a license holder to disclose all offers made on a property within a reasonable amount of time. This might seem like a weird thing to say: If someone put an offer in on a property, of course you'll want to let a client know, right? Well, maybe. What if that offer doesn't seem like a good offer to you? For example, let's say Janine is a seller's agent helping Alberto sell his home. Janine knows Alberto wants to sell his property quickly and would likely accept a low offer. So, when a buyer makes an offer that is far below the asking price, she decides NOT to tell Alberto about it. She knows a better offer will come around soon (and, after all, a better offer means a fatter commission). While Janine may be right - a higher offer might come in the next day - it should be Alberto's choice to accept or deny the offer. It is Janine's responsibility to disclose the offer, and any offer, right away. This is especially important for listing agents who represent a seller because they'll be the ones reviewing offers from buyers. Verbal vs. Nonverbal: Georgia regulations state that all signed offers must be disclosed, so what does that mean for verbal offers? Licensees shouldn't just case verbal offers to the wind, thinking they are not governed by the law of the land. Agents must disclose both signed and verbal offers to sellers. Disclose Financial Condition: A buyer or seller's financial condition or motivation can impact negotiations. Agents need to protect their clients' information, as well as use what they learn about the other party to their clients' benefit. Here are a few ways that financial condition or motivation can impact real estate negotiations: . A buyer who is known to have more than ample funds may find it hard to negotiate down a purchase price. . A buyer with a poor financial profile (maybe making an offer contingent on the ability to get financing) will look less competitive than other offers. . A seller who is known to be selling because they've accepted an out-of-state job might find it harder to hold firm on their desired selling price. A Time and a Place: While it is important that a buyer's agent handles their buyer-client's financial information with care, it is appropriate to tell a seller that a buyer has the ability to get the financing needed to make the purchase. Otherwise, an offer from the buyer won't seem very attractive - or even realistic! Agency Disclosures In this level, we'll be focusing on disclosure as it relates to agency relationships. We'll talk about agency disclosure in: . Single agency . Subagency . Dual agency . Other (weird) types of agency . Compensation We'll also go over some of the specific agency disclosure regulations that apply to Georgia. Why? Well, it's the law, so you kind of have to know it. But agency disclosure laws also help ensure both customers and clients know who an agent represents. This keeps clients protected and cared for (which is what every wholesome Aceable Agent wants!). Agency disclosures MUST be made: . When a customer becomes a client . Immediately, if an agency relationship changes It's also important because each brokerage decides what kind of agency it wants to practice. The designated broker (along with those important people, such as company owners) make strategic decisions regarding which types of agency relationships they allow in their brokerage. They make these decisions to: . Gain a marketing advantage . Mitigate risk . Ensure their sales force is competent You'll need to carry these decisions through to completion, Yoni. Question 1) Angelo is an agent representing Omar. Omar is selling his home and is desperate to sell. Angelo receives a low offer on Wednesday but doesn't tell Omar about it because another buyer will likely put in a better offer by Friday. Did Angelo do the right thing? Explain why or why not.

Can't Buy My Love (or Loyalty)

Listing agreements and buyer-broker agreements should spell out who gets paid and how. We'll go over these agreements in detail in a later level. For now, we'll be focusing on the general flow of money only. Oftentimes, compensation includes payment of a cooperating broker, regardless of whether or not the cooperating broker represented the best interests of the principal who is paying. This is why it's important for license holders and clients alike to understand that compensation ≠ loyalty, agency relationship, or fiduciary duty. Alright, let's get into what compensation looks like when paid by various parties, such as: . The seller. . The buyer. . Multiple parties at once.

Facts of a Feather Level 9 a) dual agency.

My agent is also the agent for the person from whom I'm buying a home. a) dual agency. b) single agency. c) subagency. d) no agency.

Vicarious Liability Within a Brokerage

Normally, when something is not your fault, you can steal the words of Shaggy, say, "It wasn't me," and point to your neighbor. But that is NOT the case with brokers. All agency relationships are between the principal and the broker, NOT the principal and the agent they may be working with. This means that, if the agent makes a mistake, doesn't disclose, or violates the law, the broker can ultimately be held liable. Consider that... . Agents working at a brokerage are technically working in the name of their sponsoring broker. . Principals have a direct agent (the broker), and licensees are the agents of their broker. . So, liability trickles through the chain of command: from the agent, up the ladder to the broker. Still Confused? Me too, Yoni. Let's go through a few examples to help this make sense. H2O Realty: Lenny is an agent at H2O Realty (the most well-hydrated brokerage in town). Shira is Lenny's sponsoring broker. H2O Realty serves both buyers and sellers, but they prefer to work with buyers. Lenny and Shira are both thrilled when DeAndre seeks H20 Realty's help to find a new mansion (he got sick of the marble staircase in his first mansion, it was too marble-y). . Shira is technically DeAndre's agent. She is the sponsoring broker, so she is technically the agent of every client that goes through her brokerage. . Lenny is Shira's agent. This is pretty self-explanatory. Lenny works for Shira. . So Shira is liable for Lenny's actions. This is because of vicarious liability.

No Agency

One last form of agency I want to teach you about is known as no agency. Sounds odd, but there are times when it's the best form of agency to use. Before we get into no agency and transaction coordinators, however, let's take a second to talk about ministerial acts. They're important to our definition of transaction coordinator. Ministerial Acts: Ministerial acts are acts that are purely fact-based. They don't require judgment, and they don't provide any counsel, advice, or moral guidance. Ministerial acts for license holders include: . Showing properties. . Disclosing actual facts about property condition. . Comparing a property to other properties on the market. Alright, now that we know what ministerial facts are, let's get back to the no-man's-land of no agency.

To Close, Disclose

One of a brokerage's most important responsibilities is disclosure. (Yes, you're right! We went over a few aspects of disclosure during our discussion on agency. Good memory.) Because it is a broker's responsibility to disclose, it is also the responsibility of the broker's agents to disclose. Why? Because agents are in an agency relationship with their brokers. Agency disclosure serves to: . Keep clients informed about who owes fiduciary duties to whom. . Make clients aware they are free to choose their representation. Required Disclosures: Agents are required to make full disclosures to their clients. This means that agents should err on the side of disclosing everything, rather than withholding information. Keep your client up-to-date and informed on: . Compensation sources. . Your agency relationship with them and other parties. . Changes in agency relationships. . Market conditions. . Property value. . Useful details about customers and third parties (i.e., that a seller will accept a much lower offer than the listed price). . Offers made on the property. . Material facts* *Material facts are vital details to a transaction: They are facts that a person should know before engaging in a real estate transaction because they might impact that person's decision. We'll get into material facts in a later level. For now, just put them on your list of necessary disclosures. The Differing Needs for Disclosure: Take a peek at this chart to see a short list of some major disclosures that might be triggered in a single real estate transaction. They are presented in the order in which they typically come up — although that is always subject to change from one transaction to the next. Don't worry, we'll look closely at each of these disclosures throughout this course. But it's a good idea to get acquainted with the different scenarios that require disclosure, as all of these disclosures are extremely important to an agent's role in a real estate transaction.

Answer 1) Miguel is Carlisle's agent. This means that Carlisle could be held liable for Miguel's actions if Miguel doesn't disclose or violates the law. This is because Carlisle is the sponsoring broker, so Miguel and Carlisle are in an agency relationship. This concept is known as vicarious liability.

Question 1) Carlisle is the sponsoring broker at a brokerage. He has several agents: Miguel, Dominic, and Chase. A seller comes to Carlisle's brokerage looking for a listing agent and Miguel becomes that listing agent. Who could ultimately be held responsible for Miguel's actions and why? What is this called? I Need Some Advice: Brokerages are tasked with a difficult objective: they need to advise their clients and help them through the real estate transaction, but they cannot give advice outside their area of expertise. Agents can be held liable and may receive serious consequences if they overstep their boundaries. License holders CAN: . Advise clients about changes in the market. . Discuss reasonable offers. . Describe how real estate processes (such as property taxes or financing) work. License holders CANNOT: . Tell clients where they can and cannot live . Guarantee a specific price . Calculate property taxes for a client As a general rule, teach your clients and customers. Give them the tools they need to seek their own success and specific answers. Do NOT provide legal advice or step outside of your scope as an agent. If your client has a question you shouldn't answer, simply refer them to their attorney. Legal Advice and Contracts: This is especially important when it comes to contracts such as listing contracts, sales contracts, or buyer-broker agreements. Agents can explain what a contract is literally saying, but they should not interpret or pass judgment on the contents of the contract. (Though interpretive dancing is always welcome.) Mitigating Vicarious Liability: So is that it? Are brokers at the mercy of their agents? Well, not exactly. It's a good idea to use a comprehensive office policy manual to mitigate the vicarious liability a broker faces. This is a broker's opportunity to put an in-depth description of the scope of authority of the sponsored salespersons under the broker's supervision and control in writing. It protects the brokerage, the broker, the sponsored salespersons, and even the broker's clients. Sponsored salespersons should become familiar with their manual's contents and refer to their manual when they have questions. Back to Brokerage: Now that we understand: . What agency is . Who is liable in agency relationships Let's get back to our discussion on agency, brokerages, and what they mean to each other.

Facts of a Feather Level 9 d) no agency.

Rather than represent the interests of either principal, I perform ministerial acts to facilitate the transaction. a) dual agency. b) single agency. c) subagency. d) no agency.

Quiz Level 9 a) Real estate brokers act as AGENTS and advocate on behalf of CLIENTS. Real estate brokers act as agents and advocate on behalf of their clients.

Real estate brokers act as WHAT and advocate on behalf of WHOM? a) Real estate brokers act as AGENTS and advocate on behalf of CLIENTS. b) Real estate brokers act as LAWYERS and advocate on behalf of THEMSELVES. c) Real estate brokers act as AGENTS and advocate on behalf of THEMSELVES. d) Real estate brokers act as LAWYERS and advocate on behalf of CLIENTS.

Vicarious Liability

Remember how we talked about vicarious liability a while ago? Well, it applies to cooperating brokers, as well. Brokers who enter into subagency agreements with (unaffiliated) cooperating brokers assume vicarious liability for those cooperating broker's actions. Agents Gone Wild: Imagine you're a broker with a handful of sponsored salespersons acting as your agents as they work with your clients. Given they likely have varying levels of competency and experience, the vicarious liability you have for each one of them has got to make you a little nervous, right? Subagents Gone Wild: Well, think how much more nervous you, as a broker, would be about the vicarious liability exposure that comes when someone you don't sponsor (a cooperating broker) operates as your agent? It's gotta loom even larger, right? And that is why some brokers will NOT offer subagency opportunities to cooperating brokers in the MLS listings they place for their clients.

First Substantive Contact

Remember that first substantive contact stuff we talked about in the last chapter? Well, even though the agency relationship is pretty clear when it comes to single agency, first substantive contact is still important. Seller's and Landlord's Agents: For an agent supporting a seller or landlord, first substantive contact would probably take the form of: . Discussing confidential, and potentially compromising, information with the seller . Drawing up a contract to sell or lease Buyer's and Tenant's Agents: For an agent supporting a buyer or tenant, first substantive contact would probably take the form of: . Showing the buyer or tenant a property Remember: Informed consent should be established in writing during first substantive contact, and all disclosures should be made in writing before the representation agreement is drawn up and signed.

Quiz Level 9 d) their sponsoring broker. Sales agents (licensees) should only receive compensation from their sponsoring broker.

Sales agents (licensees) should only receive compensation from: a) the cooperating broker. b) the customer. c) the client. d) their sponsoring broker.

Level Assessment Level 9 b) the listing agent and the seller. Seller agency is an agency relationship between the listing agent and the seller.

Seller agency is a single agency relationship between: a) the buyer's agent and the buyer. b) the listing agent and the seller. c) the listing agent and the buyer. d) the buyer's agent and the seller.

Quiz Level 9 c) If Haley has not already done so, she needs to obtain informed consent from Shana. Even with clear agency relationships such as single agency, it is important that agents assume the responsibility of obtaining written informed consent from all customers/clients before exchanging confidential information.

Shana is a buyer working with an agent, Haley. While touring an apartment, Shana tells Haley some confidential information about her financial situation. Which of the following is MOST TRUE? a) Haley and Shana's next face-to-face meeting will qualify as first substantive contact. b) Shana is required to ask Haley for informed consent before she shares more confidential information. c) If Haley has not already done so, she needs to obtain informed consent from Shana. d) It is Shana's responsibility to wait to share confidential information until after she has signed a contractual agreement with Haley.

Forms of Agency

Single Agency: Agent ----> Client Subagency: Agent ----> Client, subagent works with both. Dual Agency: Agent works with 2 clients (buyer and seller). Designated Agency: Same Broker has 2 agents with 2 clients buyer and seller on a transaction. No Agency: Agent has no fiduciary duties with clients.

Let's Recap

Single agency can take many forms. You just learned: A seller's agent, a.k.a. listing agent, owes fiduciary duties to ONLY the seller. . A buyer's agent owes fiduciary duties to ONLY the buyer. . A landlord's agent owes fiduciary duties to ONLY the landlord. . A tenant's agent owes fiduciary duties to ONLY the tenant. I know, the names make these concepts pretty simple. Of course a seller's agent owes fiduciary duties ONLY to the seller! But it's still important to note. Many clients seek single agency because they know they will receive the purest delivery of fiduciary duties, and they know their interests are always being looked out for. So you, as a license holder, will need to make sure you are honoring those fiduciary duties to one client in a transaction, and one client only. But brokerages will likely be dealing with both buyers and sellers, right? Can a brokerage practice single agency AND serve both? Is it possible to have the best of both worlds? Can ice cream be both sweet and salty?? Read on to find out...

The Takeaway

Single agency is a popular option when it comes to agency relationships. Why? Because a client in a single agency relationship always knows they are being taken care of by their faithful, undivided agent. In Chapter 2, you learned: ✅ What single agency is. ✅ What single agency looks like in various scenarios. ✅ What disclosures should be made in single agency relationships. You're doing a great job, Yoni! I think you're ready to take on the challenge of dual agency.

Single Agency

Single agency is an agency arrangement in which one agent represents one party in a real estate transaction; the party may be either a seller or a buyer. This is also known as exclusive agency, which makes sense! The agent is exclusively responsible for their client and their client only. So, when a brokerage makes the decision to exclusively practice single agency, they are saying they will represent ONLY one side of the transaction. (Though a brokerage will likely represent more than one client at a time.) The single agent is an agent who represents only one party to the transaction. This other party could be a: . Buyer . Seller . Landlord . Tenant The good ol' single agent is faithful to the very end: They represent the traditional approach to real estate transactions and provide the "singular" benefit of a clear agency relationship. The single agent works for the client and with the customer. This agency relationship is documented with either a listing agreement or a buyer-broker agreement, depending on which side the single agent represents. Depending on who single agents represent, they can look like: . Seller's or landlord's agents. . Buyer's or tenant's agents. It makes sense that sellers and landlords are paired, and then buyers and tenants are paired. Though each of these parties is distinct from one another, there are some similarities: . A seller is looking to put their property in someone else's hands, hopefully making money off of the transaction. The same goes for landlords. . A buyer is looking to procure a property for their use. The same goes for tenants. We'll go over each of these agency arrangements separately, but we'll look at some of the similarities between them. Hopefully, this will help you get these concepts straight!

Quiz Level 9 d) exclusive agency Single agency is also called exclusive agency because it involved a client working exclusively with one agent.

Single agency is an agency arrangement in which one agent represents one party in a real estate transaction; the party may be either a seller or a buyer. This is also known as: a) fiduciary agency b) vicarious agency c) dual agency d) exclusive agency

No Subagents Allowed

Some states are moving away from subagency and are doing so to remove potential confusion about who represents whom in a transaction. This makes sense: it is a confusing concept both for agents and for clients. That's why it's key to remember, and disclose to clients, that if a cooperating broker accepts an offer of subagency in an MLS listing, any buyer the broker brings to the transaction is NOT represented. 😱 States that choose to move away from subagency mandate the use of seller-only and buyer-only agency (that's the single agency we just learned about!). A broker can represent one party or the other in a transaction, but no subs are allowed. Under this requirement, an MLS listing would only allow cooperating brokers to enter the transaction as buyer's agents, NEVER as subagents to the seller.

Quiz Level 9 a) True. True: Subagency is a form of agency that arises when an agent enlists the use of other agents to accomplish the goal of the principal of the agent.

Subagency is a form of agency that arises when an agent (Agent A) enlists the use of other agents (Agent B) to accomplish the goal of that agent's (Agent A's) principal. a) True. b) False.

Subagency

Subagency is a form of agency that arises when an agent enlists the use of other agents to accomplish a client's goal. In short: A subagent is an agent of an agent. But subagents have nothing to do with sub sandwiches. I am sorry to disappoint you, Yoni. If a subagent is the agent of an agent, then any licensee working under their sponsoring broker is a subagent, right? Right! But in the world of real estate, the concepts of subagents and subagency are usually referring to cooperating brokers (or those brokers' employed licensees) working with an unaffiliated brokerage. It is important to note that subagency is legal in Georgia, but it is barely practiced. You'll still need to know what it is in case your specific brokerage chooses to practice it (and it might be on the exam!). We'll get into cooperating brokers and what this looks like. But first, take note: no matter the situation, subagents always owe their principals the same fiduciary duties a "normal" agent would owe that principal. The subagent still works for the principal and with the customer. That never changes. Alright, let's dive deep into cooperating brokers. Think you can handle cooperating with your buddy Ace to get the job done?

Buyer's Agent

The buyer's agent is a single agent who has agreed to represent the buyer's interests in a real estate transaction. This means they do NOT owe the seller fiduciary duties. The agency relationship between the buyer and the buyer's agent is documented in a buyer-broker agreement. The buyer's agent works for the buyer and with the seller. The Poodle Rescue: Alejandra is looking to buy a new parcel of property to start a poodle rescue. She hires Clark, an agent, to represent her. Clark discloses his agency relationship to Alejandra at their first substantive contact (which is when Alejandra comes into Clark's brokerage to speak with an agent). Soon after, Alejandra and Clark record Alejandra's informed consent in writing so they can proceed with the transaction. This is a single agency transaction, so Alejandra knows Clark owes her, and only her, fiduciary duties. Compensation: You might have guessed that a seller's agent gets compensated from the proceeds of the sale of the seller's property, but how a buyer's agent gets paid can be a little less obvious. The buyer-broker agreement, like the listing agreement, will spell out how that agent is to be compensated. Usually, it will indicate that the buyer's agent will look first to the seller's offer to cooperating brokers, via the MLS, for compensation but will hold the buyer responsible for any shortfall if the seller either fails to pay or pays less than the full amount the buyer agreed upon. But the buyer's agent should and will be paid. Life would be hard if you were expected to work for free! Not to mention the fact that there would be very little incentive to be a buyer's agent. Important Disclosures: Buyer's agents are responsible for making the usual disclosures, but it is especially important for a buyer's agent to disclose the value of the property to the buyer. Why? Because the entire sale hinges on this information! It's important buyer's agents disclose the appropriate value. Buyer's agents will typically do this with a competitive market analysis (CMA). A CMA is a report that compares the prices of recently sold or listed homes ("comparables") in order to estimate the market value of a similar property (the "subject property") located in the same area. You'll learn more about these later on when you learn about property valuation. For now, just keep the term in your back pocket (along with a snack for later). Responsibilities: Once the fiduciary duties have been established and a license holder obtains a new buyer-client, a buyer's agent will be responsible for: 1. Locating a suitable property for the buyer 2. Negotiating the best possible offer for the buyer 3. Preparing the buyer for closing

The Split

The compensation payment from the broker to the sponsored licensee is what is known as the commission split. The licensee should already know the details of the split, as they will have negotiated these terms with the broker long before the money is earned. Typically: . The licensee operates under the broker's sponsorship. . The broker takes a cut of the licensee's business commission. . The broker then pays the licensee the agreed-upon portion. The Split Before the Split: Remember how we talked about cooperating brokers during our discussion on subagency? Well, when there is a cooperating broker involved, the total commission earned on the sale of a property gets split between the two brokers BEFORE they can each turn around and split their portion with their respective licensees (if involved) in the transaction. The licensees could be: Listing brokers or agents Buying brokers or agents Take a look below to see exactly how money gets divided. Seller pays buyers broker and listing broker and buyer's broker pays the listing agent and the buyer's broker pays buyer's agent. Check the MLS: A cooperating broker generally finds out right away (from the MLS) what the commission split between brokerages is. That amount or percentage could vary, depending on whether the cooperating broker is considered a subagent of the seller or the buyer's agent. The compensation to be paid to cooperating brokers is also something the seller will have negotiated with the listing broker when the listing agreement is first signed.

Vicarious Liability

The employing broker of a brokerage, by necessity, will likely authorize a number of sponsored license holders (licensees, associate brokers, and cooperating brokers) to act as agents and carry out the activities and roles of the brokerage, many of which happen concurrently. Brokers need to do this if they want to serve more than one client (it's hard - nearly impossible - to run a one-person show!). In the process of authorizing license holders to act on their behalf, brokers knowingly open themselves up to what is referred to as vicarious liability, the common law concept which states that a person is liable for the actions of those acting with authority on that individual's behalf. Vicarious liability is a larger concern when subagency and cooperating brokers come into play, something we'll talk about later on. For now, we'll look at vicarious liability through the lens of a single brokerage. It is important to note, however, that brokers and agents cannot be held liable for providing wrong information if they didn't know the information was wrong.

Undisclosed Dual Agency

The last thing you want, Yoni, (other than a plate of mushy liver or an expensive parking ticket) is to practice undisclosed dual agency. Undisclosed dual agency is the term for when both parties to a real estate transaction are unknowingly represented by the same broker. The practice of undisclosed agency is a violation of fiduciary duties to both parties in the transaction. In most states, undisclosed dual agency is illegal. Implied Dual Agency Leads to Undisclosed Agency Let's stay with Demetri (that nice guy from our last example). If Demetri does not immediately correct the couple's misunderstanding and disclose the dual agency relationship, Demetri will enter into implied dual agency (cue dramatic music). But maybe Demetri goes rogue and takes it one step further. If Demetri attempts to work for the couple AND his new seller client without clarifying the newly created dual agency, he will have left implied agency and gone into the territory of undisclosed dual agency (cue music that is even MORE dramatic). And that's a big no-no for license holders. Undisclosed dual agency is illegal. Avoid it like the plague. Actions Have Consequences: Undisclosed dual agency is illegal and, as such, agents who knowingly practice undisclosed dual agency could: . Lose their license . Lose their commission . Have legal action taken against them None of these consequences are fun ones. How about we agree to avoid undisclosed dual agency altogether, okay?

Level Assessment Level 9 a) dual agency. The opposite of single agency is dual agency. Single agency involves the representation of only one side of a real estate transaction, while dual agency involves the representation of both sides in an in-house transaction.

The opposite of single agency is: a) dual agency. b) seller agency. c) undisclosed agency. d) buyer agency.

Seller's Agent

The seller's agent, also called a listing agent, is a single agent who has agreed to represent the seller's interests in a real estate transaction. This can be called seller agency. The seller is the seller's agent's principal/client, and the agent owes all fiduciary duties to the seller. The agency relationship between the seller and the seller's agent is documented in a listing agreement. The seller's agent works for the seller and with the buyer. There is no confusion about what fiduciary duties are owed to whom. Seller's Agent Scenario: Diego has owned a condo for nineteen years, but he decides to sell his property so he can purchase a home with a small yard. Diego seeks out a seller's agent to help him sell his property. He wants someone to look out for his interests, show the condo to potential buyers, and market the property effectively. He decides to enter into a single agency agreement with Marlo, a local agent. Marlo owes Diego all the fiduciary duties Marlo's heart desires, and because this is single agency, Marlo never has to worry about Diego owing fiduciary duties to any potential buyers - or anyone at all, for that matter! Marlo will need to disclose to Diego their agency relationship on their first substantive contact. Marlo will also need to get informed consent from Diego, in writing, before proceeding with any transactional activity. In doing so, Marlo will be protecting himself, his broker, and Diego. Responsibilities: Once the fiduciary duties have been established and a license holder obtains a new seller-client, a seller's agent will be responsible for: 1. Locating a suitable buyer for the seller 2. Negotiating the best possible offer for the seller 3. Preparing the seller for closing

No Agency = No Fiduciary

There are no fiduciary duties involved in no agency, but customer-level duties still apply, as always. In a no agency transaction, the facilitator will be expected to provide: . Reasonable care and skill. . Honesty and fair dealing. . Confidentiality and impartiality. . Disclosure of material facts regarding the property. On the other hand, the transaction coordinator is NOT expected to inspect the property on behalf of either party or vouch or verify the accuracy of statements made by either party. This only comes with other kinds of agency. Transaction coordinators will remain fair and impartial, not represent either party either positively or negatively, and they will advise both parties to seek expertise and/or legal representation if they so choose. Speaking of fiduciary duties, let's take a second to reiterate disclosure requirements for transaction coordinators... First Substantive Contact and Informed Consent: Have I mentioned first substantive contact and informed consent are important?! (Last time, I promise.) Transaction brokers must disclose their agency relationship, and obtain informed consent to that agency relationship in writing, on their first substantive contact with their soon-to-be-clients (or when they initially become the transaction coordinator, whichever event occurs first). It's important to make sure your clients know that, while you will be overseeing the transaction, you won't be looking out for them in the same way a seller's or buyer's agent might. Disclose everything and obtain informed consent!

The Takeaway

There are so many forms of agency, it might make your head swim, right? But, hey, that's actually a good thing. Swimming is great exercise! 🏊‍♀️ A more helpful way to think about agency, however, is that each form of agency has its purpose... kinda like tools in your toolbox. You do have a toolbox, don't you? Just make sure that, whatever form of agency you decide to employ, you disclose it! In Chapter 4, you learned: ✅ What subagency is and the complications involved. ✅ Who cooperating brokers are and what roles they play. ✅ What a transaction coordinator does and what fiduciary duties they owe to their clients. ✅ The disclosure requirements for transaction coordinators. One more chapter left on compensation, Yoni!

Dual Agency: The Surprise You Never Wanted Answer 1) Alfie's agency relationship is changing to dual agency because Alfie represents both parties to a pending transaction. This poses a lot of conflicts because Jerome's interests and Bo's interests are opposed. Alfie can't give both Jerome and Bo the same fiduciary duties a single agent could. Alfie needs to check with his brokerage to make sure he can actually practice dual agency so he doesn't get himself into trouble. He also needs to obtain informed consent to dual agency from both clients before proceeding with the transaction.

Us robots love surprises, but not everyone does. And principals usually don't love surprises when it comes to the conveyance of their property. License holders (that will be you!) need to be wary of situations where dual agency can be created unintentionally. Even when a license holder works for a brokerage that allows dual agency, that agent doesn't necessarily go into a particular agency relationship knowing dual agency will come into play in that transaction. Sometimes it comes as an unfortunate surprise (like in those examples we went over). Remember: More often than not, dual agency relationships start off as single-agency relationships, with the license holder agreeing to represent only a seller or only a buyer in a transaction. But somewhere down the line, circumstances dictate a move to dual agency. If this is the case, agents need to make their clients aware of the shift in agency immediately. Let's Practice: Surprise dual agency could also occur if a buyer represented by an agent chooses to purchase a property listed by that agent's brokerage: Darius is a buyer's agent helping Chantel purchase a new home. Darius and Chantel look at various listings all across the city. Chantel likes two listings Darius shows her, but she ends up wanting to purchase a house listed through Darius' brokerage. Though the listing is being handled by a different listing agent, this would still be an example of dual agency (remember, all license holders are connected to their sponsoring broker!). To Close, Disclose: Even if you avoid dual agency like the plague or those gross anchovies they sometimes put on pizza, it can still come up. As soon as your single agency relationship becomes one of dual agency, disclose it and document it! Even if advance consent to dual agency was previously given to your client in writing, you should still inform all parties you'll be moving forward according to dual agency procedures. Get that consent in writing yet again. Question 1) Agent Alfie represents Seller Jerome, who is selling his vacation home. Alfie also represents Buyer Bo. Bo comes to Alfie wanting to buy an apartment but ends up being interested in Jerome's property, instead. What agency shifts are happening here? What risks are involved? What action should Alfie take?

Quiz Level 9 a) states a person is liable for the actions of those acting (with authority) on that individual's behalf. Vicarious liability is a common law concept that states a person is liable for the actions of those acting with authority on that individual's behalf.

Vicarious liability is a common law concept that: a) states a person is liable for the actions of those acting (with authority) on that individual's behalf. b) prevents an individual from asserting something contrary to that which was implied by previous words or deeds by that individual. c) reverts liability back to the parties that signed the first documented and legally-approved written agreement (regardless of those parties' titles). d) describes permitted forms of agency relationships and the rights and obligations those relationships entail.

Level Assessment Level 9 d) consent given to a possible in-house transaction prior to the occurrence. Advance consent to dual agency is consent given to a possible in-house transaction prior to the occurrence.

What is advance consent to dual agency? a) consent given to enter into more than one kind of agency agreement. b) consent given to the possibility of one broker replacing the other during the agreement timeframe. c) consent given to be represented by only one broker d) consent given to a possible in-house transaction prior to the occurrence.

Level Assessment Level 9 c) BRRETA. BRRETA is the Brokerage Relationships in Real Estate Transactions Act and it protects and governs agency relationships in real estate transactions.

What is the Georgia-specific legislation that serves to protect all parties to a real estate transaction and govern agency interactions? a) FHA. b) CAN-SPAM. c) BRRETA. d) HOA.

Level Assessment Level 9 b) the critical point at which agency disclosure is required and which generally occurs at the first face to-face meeting with the customer. "First substantive contact" is the critical point at which agency disclosure is required and which generally occurs at the first face-to-face meeting with the customer and prior to the sharing of any confidential information or initiation of any action in regards to a specific property.

What is the most accurate description of the term "first substantive contact"? a) the point at which a customer is prepared to enter into an agency relationship. b) the critical point at which agency disclosure is required and which generally occurs at the first face to-face meeting with the customer. c) any conversation between a license holder and a customer. d) the point at which a license holder and a customer engage in serious conversation about real estate.

Level Assessment Level 9 a) a license holder appointed by their broker to represent the interests of one of the two parties in an in-house real estate transaction. A designated sales agent is a license holder appointed by their broker to represent the interests of one of the two parties in an in-house real estate transaction.

What is the most complete description of a designated sales agent? a) a license holder appointed by their broker to represent the interests of one of the two parties in an in-house real estate transaction. b) a sponsored salesperson appointed by a broker to represent a client. c) an individual upon whom is placed the highest levels of trust and confidence when acting on behalf of another. d) a license holder appointed by the client to represent them in a real estate transaction.

Level Assessment Level 9 d) suggest the client seek out the advice of an attorney. Deferring to the appropriate expert when asked certain questions by a client will reduce an agent's legal exposure. Rather than risk a claim of unauthorized practice of law by giving an educated guess on a legal matter, it's better to suggest the client seek out the advice of an attorney.

What should a license holder do when a client asks questions of a legal nature? a) give their best answer, based on experience. b) confer with the client about passing future blame. c) answer the question but remind the client they (the license holder) can't be held liable. d) suggest the client seek out the advice of an attorney.

Quiz Level 9 b) Compensation between parties does NOT mean fiduciary duties are also owed between parties. Compensation ≠ loyalty, agency relationship, or fiduciary duty.

What should all agents remember when it comes to how compensation and fiduciary duties relate? a) Compensation between parties means fiduciary duties are also owed between parties in cases of dual agency ONLY. b) Compensation between parties does NOT mean fiduciary duties are also owed between parties. c) Compensation between parties means fiduciary duties are also owed between parties in cases of single agency ONLY. d) Compensation between parties ALWAYS means fiduciary duties are also owed between parties.

Level Assessment Level 9 c) they will represent only one side of the transaction. When a brokerage makes the decision to exclusively practice single agency, they are saying that, in any real estate transaction, they will represent only one side of the transaction.

When a brokerage makes the decision to exclusively practice single agency, they are saying that: a) they will represent clients in only one transaction at a time. b) they will represent only one client at a time. c) they will represent only one side of the transaction. d) they will represent only single clients.

Subagency in Cooperative Sales

When subagency involves subagents who are NOT affiliated with each other (cooperating brokers), things get a little complex. For that reason, it is critical that agents disclose agency relationships and obtain informed consent before taking any action. A cooperative sale can involve a cooperating broker with or without the use of subagency. The seller has ultimate control over that decision. When a seller agrees to list their property through a broker, they can stipulate which types of cooperative brokers — subagents or buyer's agents — they are willing to work with. This is usually communicated through an MLS listing. When a cooperating broker responds to such a listing, they should immediately disclose the role they will play. Remember the Buyers: In cooperative sales, it's also important to remember those dear buyer clients. Remember from our example that buyers may often become unrepresented when subagency and cooperating brokers are involved. If a cooperating broker is a subagent of the seller and shows a buyer a property, no one is representing that buyer while both the broker and the subagent (from an unaffiliated brokerage) are representing the seller. The broker or agent working as a subagent is working with the buyer, but for the seller. This means that the broker or agent represents the seller. Agents need to look out for buyers to make sure they know they are NOT represented.

Ask an Agent: Negotiating Your Commission - Part 1

When you're representing the buyer the payment usually comes from the listing agent and it's whatever is advertised in the MLS, if it's not advertised in the MLS, you get a broker to broker agreement verifying that you are gonna get paid X amount. Now, you do have a split from that, that you share with your brokerage. So, for example: I might be on a 50/50 split, which means my broker keeps 50% of what I bring in. I might be on a 90/10, that means that I keep 90% and the brokerage keeps 10%. And on the listing side, the typical commission is 6% and that 6% is usually split between buyer and seller agents. That is negotiable with the initial listing contract. And they will try to negotiate it.

Level Assessment Level 9 c) dual agency because the represented parties have opposing interests. Dual agency requires the most caution because the represented parties have opposing interests and fiduciary duties are compromised.

Which form of agency requires the most caution, and why? a) buyer agency because the license holder may not get paid. b) single agency because agents only hear one side of the story. c) dual agency because the represented parties have opposing interests. d) subagency because only one client is represented.

Level Assessment Level 9 d) a buyer talking with a seller's agent at a church function about that day's sermon. Scenarios that would constitute first substantive contact for a seller's agent include: a buyer conveying their general interest in purchasing real estate; a buyer meeting a seller's agent at a showing or an open house; or a buyer sharing their financial status or motivations to purchase.

Which of the following do NOT constitute first substantive contact on the part of a seller's agent? a) a buyer sharing their financial status or motivations to purchase a property. b) a buyer conveying their general interest in purchasing real estate. c) a buyer meeting the seller's agent at a showing or an open house. d) a buyer talking with a seller's agent at a church function about that day's sermon.

Quiz Level 9 a) An alternative to agency relationships for licensees in Georgia. BRRETA, or the Brokerage Relationships in Real Estate Transactions Act, is Georgia legislation that aims to protect all parties to a real estate transaction.

Which of the following is BRRETA NOT: a) An alternative to agency relationships for licensees in Georgia. b) Legislation specific to Georgia. c) An abbreviation for the Brokerage Relationships in Real Estate Transactions Act. d) Regulation that aims to protect both licensees and customers/clients.

Level Assessment Level 9 b) seller agents can represent sellers, buyers, or both at the same time. A seller agent is practicing a form of single agency and works FOR a seller and WITH a buyer. They enter an agency relationship with a seller through a listing agreement. They do NOT represent buyers.

Which of the following is NOT true about seller agents? a) seller agents are practicing a form of single agency. b) seller agents can represent sellers, buyers, or both at the same time. c) the seller agent enters an agency relationship through a listing agreement. d) seller agents work FOR a seller and WITH a buyer.

Quiz Level 9 b) Ministerial acts include making factual comparisons. Ministerial acts are acts that are purely fact-based. They don't require judgement, and they don't provide any counsel, advice, or moral guidance.

Which of the following is TRUE of ministerial acts? a) Ministerial acts provide moral guidance. b) Ministerial acts include making factual comparisons. c) Ministerial acts provide counsel. d) Ministerial acts include giving advice.

Quiz Level 9 b) a brokerage office policy manual. The use of a brokerage office policy manual is a great tool for mitigating a brokerage's vicarious liability risks.

Which of the following is a commonly used tool for mitigating a brokerage's vicarious liability risks? a) contracts that place liability on the principal for those acting on their behalf. b) a brokerage office policy manual. c) a practice of only hiring associate brokers. d) requiring all sponsored licensees to get law degrees.

Quiz Level 9 a) It is negotiable between the parties. Among other things, a broker's commission is negotiable between the parties. It does not have to be commission-based but can take multiple forms and must be based on a lawful condition.

Which of the following is true about broker compensation? a) It is negotiable between the parties. b) It MUST take the form of a commission. c) It can come from ONLY the seller. d) It is determined exclusively by the broker.

Level Assessment Level 9 a) The need for different types of disclosure can be triggered at different points or phases of a single real estate transaction. The need for different types of disclosure can be triggered at different points or phases of a single real estate transaction.

Which of the following statements is accurate about the need for disclosure in a single real estate transaction? a) The need for different types of disclosure can be triggered at different points or phases of a single real estate transaction. b) All disclosure triggers in a single real estate transaction originate from the seller side of the transaction. c) There are different possible triggers for disclosure, but the need for disclosure happens only once per real estate transaction. d) Agency disclosure and property condition disclosure are the only two disclosure triggers that occur in a real estate transaction.

Quiz Level 9 c) They are conflicting interests of two parties in a dual agency transaction, both of whom want their agent to be looking out for their best interests. That a seller wants the highest sale price possible while the buyer wants the lowest sale price possible is an example of conflicting interests that can exist between two parties in a dual agency transaction. This can make it difficult, if not impossible, to serve the best interests of both.

Why does the fact that a seller wants the highest sale price possible while the buyer wants the lowest sale price possible create a potential issue in dual agency? a) Only the broker can know the true value of the property. b) The party compensating the agent will always get favored treatment. c) They are conflicting interests of two parties in a dual agency transaction, both of whom want their agent to be looking out for their best interests. d) It forces a premature resolution of the purchase price that might work against either of the two parties to the transaction.

Brokers: "Get on My Level"

You already know that agency is created at the broker level when a sales agent signs an agency agreement with a client. This is because sales agents sign agency agreements on their broker's behalf. Here's a recap: . A broker represents all of their clients . All sales agents represent their broker Liability: But regardless of a brokerage's form, what agency relationships exist, or how many owners there are, a brokerage has only one designated broker who assumes legal liability for that brokerage's activity. Speaking of liability, let's talk about vicarious liability...

First Substantive Contact

You know I didn't forget about first substantive contact and disclosures! We've already talked about this throughout the chapter, but it's worth noting one more time, especially because dual agency is trickier than other forms of agency. An agent may obtain advance informed consent in writing to operate as a dual agent during their first substantive contact with a client, even if that agent plans to operate as a single agent. This is often called advance consent to dual agency. This means that the customer is entering into a single agency relationship but agrees to dual agency in the future, should that opportunity arise. This is usually only sought out by brokers who practice dual agency (otherwise, it wouldn't be very useful). However, as you've learned in this chapter, dual agency can come as a surprise or accident. It's always a good idea to obtain new, clear, informed consent from a client if an agency relationship shifts to dual agency - even if the client agreed to it previously. If a client did not consent to dual agency previously, it is especially crucial agents disclose their dual agency and obtain informed consent from their clients. If not, that is undisclosed dual agency (and a really bad idea). But, as soon as a relationship begins to morph into dual agency, disclose it even if advance consent was previously given.

Licensee Compensation

You might be thinking, "All this is great for the broker, but what about me... the humble but lovable licensee? When do I get paid??" Well, Yoni, let's find out. The first thing you need to remember is that, in order to get your real estate license to begin with, you need to first get sponsored by a broker. And that will be the same person whose name will appear on every listing agreement or buyer-broker agency agreement you write up (until the day you decide to become a broker in your own right). So, because a written agency agreement is always between the client and the broker, it will always be the broker, not the licensee, who earns compensation. This means that licensees always receive their commission from their sponsoring broker. The broker then turns around and pays the sponsored licensee according to the employment agreement (which is completely separate from any contract the client signed). Pro Tip: A licensee should only accept compensation from their sponsoring broker. Anything else could be a conflict of interest and end up causing trouble for the licensee.

Implied Dual Agency

You probably remember from previous lessons that an implied agency relationship arises when a party assumes consent to the relationship based solely upon inferences formed by the actions, conduct, and words of either or both parties. Implied dual agency has many of the same potential problems that implied agency of any form has. This can occur when the words or actions of a license holder make a customer mistakenly feel that they (the license holder) are looking out for that customer's best interests. But in reality, the license holder is actually representing another party. Demetri: A Dual Agent?: An agent, Demetri, helps a couple sell their home. A few months later, the same couple wants to look at and make an offer on a property listed by Demetri's brokerage and would like to work with him again. Given the relationship the couple previously had with Demetri and his brokerage, the couple might assume they are still exclusively represented by Demetri. But in truth, the previous agency relationship ended when its objective was achieved (i.e., when the couple's home sold). Demetri has already moved on and is representing the seller. He can only work for the couple if he establishes a new dual agency relationship.