Section 4: Real Estate Agency Basics.4

Buyer Agency Duties

1) Show them properties that meet their criteria and fall within their budget. 2) Ensure that they receive all required property condition disclosures from the seller. 3) Ensure that they understand the importance of due diligence, including a professional inspection of the property. 4) Review transaction documents with them, clarifying anything that could be confusing, without stepping outside the scope of your license (in other words, refer buyers to an attorney for interpreting any legal consequences or language). 5) Negotiate contract terms that are fair and agreeable to them.

Sub-agent (or subagent)

A licensee from a competing firm who brings the buyer to the deal, but instead of representing the buyer, works under the listing agent as a representative of the seller. when a licensee from a competing firm works under the listing agent to help the agent sell the listed property. Sub-agents work with the buyer in a customer (not a client) relationship, but they owe their allegiance to the seller who's represented by the listing agent. In fact, it's quite possible that you work for a firm that has a policy forbidding sub-agency to cooperating licensees to protect the client from additional vicarious liability (with sub-agency, the seller is liable for the actions of both the listing agent and the sub-agent). Ex. Carol was a sub-agent of Jennifer, the seller, although Jim was Jennifer's listing agent. Carol helped find a buyer for Jennifer's property.

Which one of the following provides the best example of single agency? A broker acts as a dual agent to one party only. An agent from one firm acts as the agent for the buyer. Two agents from different firms each act as a sub-agent for the other. Two agents from one firm act, separately, as the agent for the buyer the agent for the seller.

An agent from one firm acts as the agent for the buyer. The only time single agency exists is when one agent and one firm represent one side of the transaction.

When can a buyer and seller provide this consent? Only at the moment when a possible dual agency situation arises. At any time during the relationship, even before a dual agency situation arises

At any time during the relationship, even before a dual agency situation arises. Right! Consent can be provided in advance or when a possible dual agency situation arises. If advanced consent is given, it's always a good idea to discuss dual agency again when the situation arises.

What's informed consent as it relates to dual agency? The agent represents the sellers and must inform all buyers that he's a seller's agent. The agent represents the buyers and must inform the sellers that he's a buyer's agent. The agent must tell the buyers and sellers that he represents both parties. Both buyers and sellers agree to allow the licensee to represent both parties.

Both buyers and sellers agree to allow the licensee to represent both parties. You got it! Now, what happens if informed consent isn't provided, but the licensee acts as a dual agent anyway?

The buyer wants to buy the home so he can rent it to his sister. Confidential Can Be Shared

CONFIDENTIAL

The seller wants to move because of an ongoing dispute with the neighbor. Confidential Can Be Shared

CONFIDENTIAL

Ned represents Sofia in the sale of her townhome. Luciana represents Sofia's buyer, Arturo. What is Luciana's responsibility to Sofia? Assist Sofia in the performance of tasks that Sofia needs to accomplish in order to get to a successful closing. Contact the tax assessor's office for an estimate of the real property taxes. Disclose that the buyer is a registered sex offender. Disclose that the buyer will not have the funds for the down payment unless he sells his current home.

Disclose that the buyer will not have the funds for the down payment unless he sells his current home. Luciana will not provide direct services for Sofia but must make required disclosures, including material adverse facts and conflicts of interest.

Prohibited Disclosures Under Dual Agency

Disclosing to a buyer that the seller will accept an amount other than the asking or listed price. Disclosing to a seller that the buyer can pay a price other than or greater than the price submitted in a written offer to the seller. Disclosing the motivation of either the buyer or the seller for selling or buying the property. Disclosing to a buyer or seller that opposing parties will agree to financing terms other than those specified in their respective offering.

Erik is acting in a single agency capacity in a transaction. What does this mean? Erik isn't part of a realty team within his brokerage firm. He's representing (and owes undivided loyalty to) either the buyer or the seller. He's working as a non-agent for either the buyer or seller. His firm doesn't allow dual agency.

He's representing (and owes undivided loyalty to) either the buyer or the seller.

Advance informed consent to dual agency

In other words, consent can be provided in advance or when a possible dual agency situation arises. If advanced consent is given, it's always a good idea to discuss dual agency again when the situation arises. Keep in mind this consent must be in writing.

Seller's Agent Duties

Invest your time and energy in marketing and selling the property. Inform the seller of the responsibility to make all required property condition disclosures. Negotiate contract terms in accordance with the seller's wishes. Ensure that the buyer's earnest money is deposited by the contracted deadline. Communicate all offers and counter-offers to the seller.

Designated Agency

Is one way that states allow individual agents to avoid dual agency. The broker-in-charge designates two of the brokerage's agents: one to represent the buyer and one to represent the seller. This allows each client to have the benefit of single agency, but the brokerage earns the commission from both sides in the transaction.

Thinking about the fiduciary duties an agent owes a client, what duty becomes essentially impossible when representing both the buyer and seller?

LOYALTY You've got it! Remember that in terms of fiduciary duties, when you owe a client loyalty, you're expected to provide undivided loyalty, looking out for that client's best interests above all others, even our own. Undivided loyalty is impossible when representing both sides. One duty that isn't impossible is confidentiality. Let's talk more about this next.

Dual Agency

Representing both parties to a transaction. A state may have laws that define how dual agency may be used, or it may prohibit dual agency completely. Dual agents are required to provide all fiduciary duties to each party, except for the duty of undivided loyalty. Loyalty: yes. Undivided loyalty: no. Because both sides are represented, undivided loyalty is a legal impossibility. Ex. Dual agency may be either a singular dual agency, where one agent represents both the buyer and seller in a transaction, or a dual agency with designated agents where two agents from the same firm each represent a side of a transaction and their broker is the dual agent.

You may only engage in dual agency if what 3 reasons?

State law allows it, and you follow the state law Your brokerage specifically allows it according to the written rules your broker has established. Both the buyer and seller consent to you acting as a dual agent.

T/F: You must disclose to the buyer that you don't represent them.

TRUE. Obtain the buyer's acknowledgment of this fact in writing. This can best be done by use of the mandatory disclosure form. Note that when you're representing a seller, you may list other properties for sale, even if they're competing.

When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale? The licensee isn't permitted to list other properties for sale. The licensee is permitted to list other properties for sale as long as they're not competing properties. The licensee is permitted to list other properties for sale, even if they're competing properties. The licensee must list the seller's property only for the first 90 days, after which the licensee may list other properties.

The licensee is permitted to list other properties for sale, even if they're competing properties. When representing a seller, the licensee is permitted to list other properties for sale, even if they're competing properties. Doing so doesn't breach any fiduciary duties the licensee owes the seller.

Single-license dual agency

The licensee represents both the buyer and seller in a real estate transaction. Ex. Since Jake represented both the buyer and seller in a transaction in a single-license dual agency relationship, he had to be especially careful not to disclose confidential information that would benefit one party over another.

What Duties Are Owed to Those Who Aren't Clients?

Treat honestly and fairly Disclose all material facts Correct inaccurate material facts Cooperate with buyer agents on showings, offers, and paperwork Present offers from other parties to the seller

Single Agency

When a licensee/brokerage firm acts in a fiduciary capacity for either the buyer/tenant or the seller/landlord in a real estate transaction, but not for both. Single agency firms prohibit their licensees from representing opposing sides in a transaction. Real estate matters are the only items you should advise clients on. Leave mortgage, legal, and appraisal (among others outside your scope) to those experts. Ex. Because North Star was acting as a single agent for the Johnsons in the sale of their home, every agent in the brokerage owed fiduciary responsibilities to them.

Which of these is an example of legal single license dual agency? You represent both the buyer and seller in a single transaction with appropriate consent from both. You represent the buyer and a colleague from your firm represents the seller. You represent the seller and a colleague from another firm represents the buyer. You represent the seller and a colleague from your firm represents the buyer.

You represent both the buyer and seller in a single transaction with appropriate consent from both.

Dual-license dual agency

exists when two agents from the same brokerage represent the buyer and seller in a transaction. Ex. Rory is a listing agent for a property. Dawn's client makes an offer on that property. Because Rory and Dawn both work for the same broker, this is dual agency (sometimes called in-house agency). Their broker is also filling the role of dual agent in the transaction.

informed consent

means that all parties fully understand the ramifications and purpose of dual agency. This requires foreknowledge of the fiduciary duty that will be lost when agreeing to dual agency: undivided loyalty. Dual agency must be consensual, and written consent must be received from both parties.