Chapter 5, Unit 2: Agency Relationships and Disclosures
Landlord's Agent
A listing agent who acts alone, acts in cooperation with a listing agent, or acts as a landlord's subagent to find or obtain a tenant for residential real property.
Dual Agent
An agent who is acting as a buyer's agent and a seller's agent or as a tenant's agent and a landlord's agent in the same transaction.
Single Agent
An agent who represents only one person in the transaction, either the buyer or the seller. The other party to the transaction would be the single agent's customer.
Tenant
A lessee in a residential real property transaction. This includes a person who executes an offer to lease residential real property from a landlord through an agent, or who has engaged the services of an agent with the objective of entering into a residential real property transaction as a lessee.
Landlord Agency
-A broker can enter into an agency relationship with a landlord. The landlord could employ the broker to: 1. Market a property for rent to tenants 2. Manage a property under a property management agreement -In either of these cases, the landlord is the principal. The broker owes fiduciary duties to the landlord in this arrangement, just like any other agency relationship. -The broker and the landlord will enter into a written listing agreement or property management agreement to detail the services the broker will perform.
Tenant Agency
-A broker can enter into an agency relationship with a tenant. The tenant could employ the broker to locate property that will meet his or her specific needs. -The tenant is the principal. The broker owes fiduciary duties to the tenant in this arrangement, just like any other agency relationship. -It is very common for a broker to represent tenants in their search for office space or retail space.
Handling Cooperative Sales
-Although several of a broker's properties may be sold in-house, in the majority of cases, a cooperating broker finds the buyer or tenant. For this reason, it is important to clarify early in the transaction whether the cooperating broker is 1. A broker's agent working in cooperation with the listing agent 2. A buyer's (or tenant's) agent 3. A broker's agent working in cooperation with the buyer's (or tenant's) agent -Whenever an agent takes a listing, the agent should be sure to let the seller or landlord know that some of the agents who bring buyers or tenants to see the property will actually be working as representatives of that buyer or tenant. To protect the client's interests, the agent can tell the client that he or she would be happy to attend any showings done by a buyer's agent, if the seller would like that to happen. -With regard to compensation in cooperative sales, the listing broker will be the person who handles the commission splits for the transaction. -Note: All too often buyer customers assume that the licensee they are working with is representing them. Because of this common confusion, it's critical for licensees to clarify their role as the seller's agent. Buyers need to know what information they should and should not share with the agents they work with and they should fully understand what information about the seller the licensee cannot share with them.
Termination of Agency
-An agency relationship is terminated when one of the following occurs (whichever occurs first or earliest): 1. Performance, which means the licensee has performed the tasks set forth in the agency agreement - that is, helped the buyer find a home for purchase or helped the seller find a ready, willing, and able buyer to purchase his or her home. 2. Expiration of the agreement term, which is stated in writing when the relationship is initiated. 3. Termination of the relationship by mutual agreement of the parties. 4. Termination of the relationship by one party, in which case the terminating party must provide notice to the other party that he or she is terminating the relationship. Note: This type of termination does not affect either party's rights under their contract. -Sometimes an agency relationship is terminated even though the parties may not wish it to happen, in other words involuntarily. Some reasons why an agency relationship may terminate in this way include: 1. Death or incapacity of either party - if the contract does not pass to heirs or assigns 2. Agent abandonment 3. Condemnation of the property 4. Destruction of the property through fire, vandalism or natural disaster 5. Renunciation by the client 6. Breach of the contract 7. Bankruptcy 8. Revocation of the agent's license -If the relationship is terminated in this way, there may be legal and financial ramifications for the party who defaulted or canceled. For example, if Seller John renounces his listing agreement, he could be held liable for Broker Sue's expenses. -Unless other arrangements have been mutually agreed to in writing, once the relationship has been terminated, the licensee is no longer considered the principal's agent. As such, the licensee does not owe any further duties to the principal, except for the following: 1. Accounting: The licensee must account for all moneys and property received during the relationship. 2. Confidentiality: The licensee must not disclose confidential information he or she obtained during the relationship.
Designated Agents
-An alternate way to handle dual agency situations is called designated agency. -Designated agency means that a broker may designate one or more licensees to act exclusively as the agent of the seller or landlord, and designate one or more licensees to act exclusively as the agent of the buyer or tenant in the same transaction. This arrangement must also be disclosed to both parties and the broker must obtain the written consent of both the buyer and the seller. -The broker is still a dual agent in the transaction, but by designating separate agents for each principal, the individual client's interests are protected. -Designated agency is a form of "limited" agency. What that means is that the clients do not have the full level of fiduciary duties available to them that they would have if they were fully involved in seller agency or buyer agency. What the client gives up in this situation is the fiduciary duty of undivided loyalty. -However, the agents can and are expected to actively advocate for their respective clients just as if the transaction involved separate firms. -As soon as a buyer becomes interested in one of the firm's listings, the broker must disclose the situation to both parties and get their consent to the dual agency arrangement. The broker can explain the benefits of using designated agents and if the parties agree, the broker will appoint the agents. -It's also a good practice to have both parties sign some sort of designated agent agreement, even though signing such a form may not be mandatory in some states.
Informed Consent
-Because of the issues we just discussed, dual agency must be disclosed to both the buyer and the seller. Both parties must agree in writing to the dual agency relationship. -If the dual agency relationship is not disclosed and agreed to in writing, it is known as undisclosed dual agency. If this situation occurs, the agent has breached his or her fiduciary responsibilities to the client and has also violated the license law in most states. -We illustrated with our example on an earlier screen how an in-house listing could easily turn into a dual agency situation. Recall that seller Tom gets a contract on his home and is now interested in purchasing his replacement home from the same firm that has his listing. -As soon as this situation arises, the agent must inform both parties of the potential dual agency and get their permission in writing before proceeding. If both parties agree to the dual agency, they will acknowledge such and sign the appropriate disclosure form. If they do not agree, the situation will have to be handled differently - probably through a designated agent situation. -Dual agency applies to one transaction at a time.
Undisclosed Dual Agency
-Dual agency can arise unintentionally, but if it is not recognized, disclosed and agreed upon in writing, it can pose some serious problems. -The issue of an undisclosed dual agency will never arise if both the buyer and seller are happy with the transaction. But if either of the parties becomes unhappy at any point, it can mean at the very least the undoing of the transaction, even several months after the transaction has closed. -If one of the parties should choose to initiate a legal action over some perceived problem, there is no legal defense the dual agency was unintentionally created or that it was performed with only the best of intentions. If a buyer or seller chooses to consult an attorney about some perceived problem with the transaction and then finds out that he or she did not receive the level of representation he or she should have received, this is a major problem. Cases of unlawful dual agency generally have a high success rate for the person filing the suit and the settlement amounts are usually pretty high. Besides the awarding of monetary damages, the legal process could result in the rescission of the contract for the property transaction. -In addition, if undisclosed dual agency is a violation of the license law, it can result in penalties such as reprimand, fines, and license suspension or revocation.
Dual Agency
-Dual agency exists when a real estate firm or a real estate licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction. Because the goals of the buyer and the seller (or the landlord and tenant) are different, this type of representation can easily result in a conflict of interest for the broker. -For example, if John signs a buyer's agency agreement with salesperson Tim and then John becomes interested in a home that is listed by Tim's broker, the broker becomes a dual agent. -Being a dual agent is extremely difficult, if not impossible. Since an agent owes fiduciary duties to the principal, a dual agency situation puts the agent in the middle of a situation where he or she has to balance the interests of two principals. The interests of each client could be vastly different, if not completely opposite. -The confidential information of one client may be vital to the bargaining position of the other. What if the seller tells the agent that he is willing to take $5,000 less than the asking price? This is key information for the buyer, but can the agent share it? -Even the fairest and most careful of agents would have extreme difficulty in giving undivided loyalty to both parties, or in other words, representing the interests of both parties fully and equally.
Dual Agency Risks
-Dual agency is permitted in many states only with disclosure and informed consent. This is known as consensual dual agency. -But even so, there are inherent risks in trying to represent both parties in the transaction. Since the agent represents both parties as clients, he or she owes the same fiduciary duties to both. However, the agent cannot possibly provide full client-level service to both. Even though the agent owes full disclosure to both parties, he or she cannot tell the seller the highest amount the buyer would be willing to pay, nor could the agent tell the buyer the lowest amount the seller would be willing to accept. -Both buyer and seller must understand that in accepting the dual agency relationship, he or she will be receiving less than full representation. Each client must realize what level of service he or she will relinquish when consenting to the dual agency. -The dual agent must do his or her best to avoid any situations in which he or she might unintentionally compromise one client over another.
In-House Sales with Seller Agency
-Even though most real estate firms are not exclusively seller agency, seller agency is the norm, simply because most real estate firms deal heavily in taking listings. -When dealing with an in-house sale, even though the agent for the seller may be different from the agent for the buyer, the firm's broker would be a dual agent. Since these firms can and must offer consensual dual agency for sales that take place in-house, it would be a good practice for agents to advise any potential seller of the possibility of a dual agency situation arising and explain to the seller just how that could happen. -The agent needs to tell the seller that if another agent in the firm has a buyer who is interested in purchasing the seller's property, since both agents work for the same broker, a dual agency situation would arise. The agent should inform the seller of this possibility at the time the listing is taken. -Remember that dual agency must be disclosed at the time it arises, so the seller does not need to agree to dual agency at the time he or she signs the listing. The seller can make that choice if and when the dual agency situation actually arises.
Obligations to the Buyer
-Even though subagents are working for the seller, they must also deal honestly and ethically with all their buyer customers. In addition, subagents are bound to disclose any pertinent information that may affect the value of the specific property they are showing their buyers. -For example, Sally, a subagent to the seller, is preparing an offer from buyer customer Amanda in which Amanda is agreeing to assume the seller's loan. Amanda asks Sally to review the seller's note and mortgage. Upon review, Sally discovers an excessively large prepayment penalty clause in the note. Even though Sally is the seller's agent, she should be honest with Amanda if she sees something that is unfair. In this case, Sally should either point out the information about the excessive charge or encourage Amanda to get legal help.
Principal - Subagent Relationship
-If a cooperating broker accepts the offer of subagency, that broker is then working through the listing broker and is the subagent of the seller. As a subagent of the seller, the cooperating broker has the same fiduciary responsibilities to the seller as does the listing broker and his or her affiliated licensees. In other words, the cooperating broker is working for the best interests of the seller, NOT for the best interests of any prospective buyers to whom he or she may show the property. -There are some definite advantages to the seller allowing the use of subagents. In addition to the seller's listing broker and his or her affiliated licensees, the seller will potentially have the efforts of all the members of the MLS working on his or her behalf. With all these people working for the seller, it's conceivable to think that the property will sell much faster. -There is a negative side however. The seller as the principal is liable for the actions not only of the listing broker, but also of any subagents. So increasing the number of agents who work for the seller also increases the seller's exposure to any potential liability caused by a subagent. -Therefore, it's important for the listing broker to explain to sellers that they can be held responsible for the conduct of any of the authorized subagents, many of whom they will not have met and whose actions they cannot control.
Seller Agency
-If the agent enters into an agency agreement with the seller, the agent becomes the seller's agent. The seller is the principal or client. Any buyers who want to view the property are customers. -In this arrangement, the agent is accountable only to the seller. The buyer in the transaction either is representing himself or is being represented by a cooperating agent from another firm. -The listing agreement is the document that creates the seller agency. This is an example of express agency. Seller agency could also be created through the actions of the seller and the broker prior to the signing of - or in the absence of - any written agreement, but this type of implied agency is not a recommended course of action.
Single Agency
-In a single agency relationship, the agent can represent only one party - either the buyer or the seller - in a single transaction, but never both. He or she owes fiduciary duties to one principal and can provide advice to that client. All other parties to the transaction receive services as customers, not clients. In other words, the licensee owes honesty and fair dealing to those customers. -A broker who offers single agency may choose to represent either buyers or sellers exclusively. If a firm chooses to represent sellers only, then all buyers who come to that firm are considered customers. If a firm chooses to represent buyers only, then the sellers of the homes that firm shows are the customers. -A broker can enter into a single agency agreement with a 1. Seller 2. Buyer 3. Landlord 4. Tenant
Blanket Unilateral Offer
-Most residential properties are listed in the local MLS. This is important to sellers, since listing in the MLS will give the sellers the opportunity for their properties to be seen by large numbers of licensees who are MLS members. The more agents who see the listing, the more potential buyers will have the chance to view the property. -Because so many licensees belong to the MLS, it is a good way to offer subagency and arrange to allocate the commission. -Early in its history, the multiple listing service was simply a system put in place to distribute information about various listings. However, in the 1970s the National Association of REALTORS® (NAR) wrote guidelines that prompted the MLS to rewrite their regulations. The new regulations stipulated that if a seller gave permission to a broker to submit the property to the MLS, the seller was authorizing the broker to make a blanket unilateral offer of subagency to all the other members of that MLS. -The acceptance of this unilateral blanket offer came in the form of a cooperating broker showing the property and bringing a purchase offer from the buyer. So in effect, any agent that showed the listed property automatically became a subagent of the listing broker and the seller. -In today's real estate world, however, placing a listing in the MLS does not create a blanket unilateral offer of subagency. Although listing a property in the MLS may permit subagency, it does not automatically create it or require it. The assumption is often made that when the broker places a listing, he or she is offering subagency on the seller's behalf and that any cooperating licensee who tries to find a buyer for the property is a subagent of the seller. However, this is merely an assumption. -A seller can agree to accept or reject the option of subagency when he or she signs the listing contract. -Even if the seller chooses to allow the broker to offer subagency, a cooperating broker may reject the offer and work as the buyer's broker or agent. -Since a buyer's agent CANNOT be the subagent of the listing broker and seller, any licensee acting as a buyer's agent must make their agency status known to the listing broker before showing the property. This is important in order to avoid any misperceptions or wrongful assumptions. -So, can brokerage be conducted without the unilateral offer of subagency? It can - by both using the MLS to make the blanket offer of subagency AND offering compensation to any cooperating brokers working as agents for the buyers.
Broker Dual Agency
-Occurs when two agents in the broker's firm represent both the seller and the buyer in a single transaction. Even though the parties are represented by two different agents, the broker is a dual agent. -Another example of broker dual agency is that of a broker offering to help the buyer of one of his listings negotiate a mortgage. An additional illustration is that of a broker helping the buyer negotiate the purchase agreement on one of the broker's listings. -Although difficult, dual agency can work as long as it is consensual, which means there is full disclosure and both parties have given informed consent in writing. One way to handle consensual dual agency is through a designated agent arrangement.
How is Dual Agency Created?
-Since a dual agency situation can create a conflict of interest for the broker, we can be sure that brokers do not intentionally seek out these arrangements. -In many cases, dual agency arises unintentionally when the actions of a broker or an agent create an implied agency with a buyer. Or the appearance of dual agency can arise in the case of a client becoming a customer. -For example, Tom's home is listed with ABC Realty, so he is the principal of broker Sam. When Tom gets a contract on his property, he is now ready to look for a replacement property. He becomes interested in another of ABC Realty's listings. Broker Sam is acting on Tom's behalf in the transaction involving Tom's property. In this capacity, Sam knows a lot about Tom and his situation. However, Sam must act on behalf of the seller of the property that Tom is interested in. A conflict now exists between the duty of confidentiality and the duty of full disclosure. -You can see from this brief illustration how difficult the dual agency situation can become. By its very nature, dual agency may involve the less-than-full representation of each of the parties involved.
In-House Sales with Buyer Agency
-Some real estate firms do take some listings, but make it a practice to represent more buyers than they do sellers. -When entering into a buyer's agency agreement with their buyers, the agents in such a firm should also inform their buyer clients that a dual agency situation could arise if the buyer becomes interested in one of the firm's in-house listings. -If such a situation would arise, the firm must inform both parties immediately and then the broker can offer choices to the clients to handle the situation. 1. The buyer and seller could consent to the dual agency arrangement, so that the broker can represent both of them. 2. The buyer could cancel the buyer's agency agreement with the broker and represent him or herself or find another agent outside the firm to represent him or her, while the broker represents the seller. 3. The seller could cancel the agency agreement with the broker and represent him or herself or find another agent outside the firm to represent him or her, while the broker represents the buyer.
Non-Agency
-Some states also allow a licensee to act in a non-agency capacity. Depending on the state, the licensee could be known as a transaction broker, facilitator, or coordinator. -A transaction broker is not an agent for either party, but instead acts as a neutral party between both sides. When serving in this capacity, a licensee: 1. Must advise the consumer that he or she is not acting as an agent or advocate for the consumer and should not be provided with confidential information 2. Owes the additional duty of limited confidentiality and may not disclose the following information: The seller or landlord will accept a price that is less than the asking listing price. The buyer or tenant will pay a price greater than the price submitted in a written offer. The seller or landlord or the buyer or tenant will agree to financing terms other than those offered. -Important Note: This non-agency relationship is not allowed in all states. Be sure to check with your state license laws to determine if this option is legal in your state.
Agency Disclosures
-State laws require that licensees disclose information to consumers about the kinds of relationships they can form. These disclosures serve to remove any confusion about who the agent is working for and give the consumer a clear understanding of the services that licensees provide to clients and customers. -In most states, a licensee must provide a written disclosure of any existing agency relationships to all parties for whom he or she provides real estate brokerage services. Typically, this disclosure must be made when they make their first substantive contact, but must certainly be made before either party signs an offer for a purchase. The disclosure must be given whether the licensee represents the buyer, the seller, both parties, or neither party. -Note: Depending on the state, these forms may require the signatures of all parties or they may not require signatures at all. You need to check your own state's license laws regarding these agency disclosures. -In some cases, the purchase and sale agreement may include the required disclosure as long as it is set out in a separate paragraph. However, most often, the agency disclosure is a separate document. When all parties sign the disclosure, it gives evidence that they understand and accept the agency relationships as they exist. -Agency disclosures are designed to be used by the licensee who is showing homes to prospective buyers, but if all parties must sign, it effectively discloses the agency status to both the buyers and the sellers in any transaction.
Seller-Paid Fee
-The most common compensation arrangement is the traditional commission arrangement between the listing broker and the cooperating broker. In this arrangement the seller pays the commission, which is split between the listing agent and the buyer agent, and the buyer pays nothing. -Alternatively, the buyer can agree that his or her buyer's agent will receive a certain percentage of the purchase price or a flat fee. If the commission split from the listing broker is equal to or greater than this agreed upon amount, the buyer pays nothing. If the split is less than the agreed upon amount, the buyer pays the difference at closing.
Obligations to the Seller
-The subagent owes the same fiduciary responsibilities to the seller as the listing agent owes to the seller. They must always be working for the seller's best interests and not for the interests of their buyer customers. -For example, Mark, a subagent to the seller, is presenting an offer from a buyer customer that involves a VA loan assumption. Mark would be legally obligated to point out to the seller the risks that would be involved in accepting such an offer. However, if Mark had been acting as a buyer's agent and not a subagent, he would have no such obligation to the seller.
Why Buyer Brokerage
-Today's consumers realize how much they can benefit from client-level representation in a real estate transaction - whether they are sellers or buyers. Sellers who sign listing agreements with a broker automatically become clients and receive that level of service. -For many years, brokers who specialize in commercial and industrial properties have offered client-level services to buyers and lessees. More recently, residential brokers are offering this same opportunity and level of service to home buyers. Buyers realize how important it is to have a broker who will help them negotiate a good and fair price and to have someone in their corner to advise them of how to handle a particular offer. Their broker can also help them find a good mortgage or give them advice on alternative financing strategies. -When a buyer signs an agency agreement with a broker, the broker owes all of the fiduciary responsibilities to that buyer and not to the seller. The agreement they sign outlines all of the specifics of their relationship and prevents any potential disputes. -Before a buyer broker shows a property, he or she must disclose his or her buyer agency relationship to the seller.
In-House Sales
-When a seller (or a landlord) lists a property with a broker, that client expects that everyone employed in that firm will do all they can to find a buyer (or tenant) for the property. So not only the listing agent, but also all the other associates will be working for the principal. -Often, brokers prefer to sell their own in-house listings because they can maintain more control over the transaction and potentially get the full commission. But as you know, this situation has the potential to set up a conflict of interest. -The broker really has just two options in such a situation: 1. The broker can treat the buyer (or tenant) strictly as a customer, being sure the buyer (or tenant) understands that the firm is employed by the seller (or landlord) and working for the seller's (landlord's) best interests. 2. If the buyer (tenant) wants client representation from the broker, the broker must inform both parties of the potential for dual agency, and then can broach the idea of either consensual dual agency or designated agency, as described earlier in this unit.
Buyer Customer
-Even though a real estate firm specializes in buyer brokerage, the firm can still accept listings from sellers. In those cases, the sellers would be the firm's clients. If a buyer expresses interest in one of the firm's listings, the broker must disclose his or her agency status with the seller at which point the buyer can choose to receive customer-level service when dealing with properties that are listed by that firm. -Most buyer brokerage firms will define as part of their company policy whether they are willing to deal with buyers as customers or whether they will only take on buyers as clients.
Buyer Agency
-If an agent enters into an agency agreement with a buyer, the agent becomes the buyer's agent. This is also known as buyer brokerage. The buyer is the principal or client. Any sellers whose property is viewed by the buyer are customers. -In this arrangement, the agent is accountable only to the buyer. A buyer's agent is required to disclose to the listing broker that he or she is representing the buyer. If there is no listing broker, the agent must make the disclosure to the seller.
Company Policy
-Some firms may choose to represent sellers exclusively. In this situation, the seller is always the client and the buyer is always the customer. On the other hand, if a firm chooses to represent only buyers exclusively, the buyer would always be the client and the seller would always be the customer. -Even though seller agency was the traditional format years ago, in today's real estate arena, most firms believe that it is their duty to represent people, regardless of whether they are buying or selling property. -The major advantage to practicing real estate exclusively with either sellers or buyers is the clarification of agency relationships for in-house sales. However, the potential for undisclosed dual agency increases in an exclusive arrangement. So these days, finding a firm that represents sellers or buyers exclusively is rare.
Subagency Advantages and Disadvantages
-Subagency is the most confusing type of agency relationship. It is important to make an early decision about whether or not the cooperating broker is a subagent of the seller or the agent of the buyer. -There are both advantages and disadvantages to a subagency arrangement. Here they are in a nutshell. Advantages 1. It is an easy way for the cooperating broker to share in the commission. 2. It does not require any written agreement from the buyer. Disadvantages 1. It can be too easy for the subagent to act like a buyer's agent and run the risk of undisclosed dual agency. 2. Both the seller and the listing broker are liable for the actions of the subagents. 3. The subagent owes fiduciary responsibilities to the listing broker and to a seller the subagent doesn't really know. 4. Problems can come up if a licensee acts as a subagent with a buyer customer and a buyer's agent with another buyer on the same property.
Listing Agreement
A contract between an owner or owners of residential real property and an agent, by which the agent has been authorized to sell or lease the residential real property or to find or obtain a buyer or lessee for the property.
Designated Sales Agent
A licensed real estate salesperson or associate broker, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction.
Listing Agent
A person who has entered into a listing agreement with a seller or landlord and will act as the agent of the seller or landlord for compensation.
Buyer
A transferee in a residential real property transaction. This includes a person who executes an offer to purchase residential real property from a seller through an agent, or who has engaged the services of an agent with the object of entering into a residential real property transaction as a transferee.
Subagent
An "agent of an agent." A broker who brings the buyer to the listing agent is a subagent of the listing broker. Licensees who work for the listing broker or for the selling (cooperating) broker are the subagents of their respective brokers.
Buyer's Agent
An agent who contracts to locate residential real property for a buyer or who finds a buyer for a property and presents an offer to purchase to the seller or seller's agent and negotiates on behalf of the buyer.
Tenant's Agent
An agent who contracts to locate residential real property for a tenant or who finds a tenant for a property and presents an offer to lease to the landlord or landlord's agent and negotiates on behalf of the tenant.
Subagent Example
Greg and Ginny Coleman listed their property with ABC Realty. Agent Tim took the listing for ABC and licensee Sara, who also works for ABC, has shown the Coleman home. Both Tim and Sara are subagents of the Colemans because they both work for ABC Realty, whose broker actually "owns" the listing. The Coleman home is also listed with the local MLS. Mike, a licensee at Hometown Realty shows the Coleman home to several of his customers. Hometown Realty has agreed to the subagency offer through the MLS. So even though Mike is employed by Hometown Realty, he is also a subagent of the Colemans. That means Mike owes fiduciary responsibilities to the sellers and to the listing broker at ABC Realty. In turn, if the listing broker, Tim, Sara, Mike or any other subagent were to perform any act that resulted in damages to the other party in the transaction, the Colemans could be held liable for those actions. For this reason, it's critical that agents thoroughly explain subagency to their clients when taking a listing, so that the sellers can make an informed choice about whether or not to offer subagency.
Buyer Client
If a buyer decides that he or she wants client-level services, the buyer will sign a document known as an exclusive right to represent agreement. This agreement outlines the broker's obligations to the client and also the client's obligations to the broker. Using this document, the buyer and the broker specify the terms under which they will be working.
Buyer-Paid Fee
In this arrangement, the buyer pays his or her buyer broker directly upon the closing of the property purchase. When this arrangement is in place, the buyer agent will inform the seller and the listing broker that compensation will be direct and the buyer agent will refuse the offer of a commission split for the cooperating sale.
Seller's Agent
Listing agent who acts alone, acts in cooperation with a listing agent, or acts as a seller's subagent to find or obtain a buyer for residential real property.
Single Licensee Dual Agency
Occurs when real estate licensee tries to represent the seller as a client and the buyer as a client in the same transaction.
Residential Real Property
Property improved by a one-to-four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons.
Retainer
Some brokers, more so in commercial than in residential transactions, negotiate their agency agreement to state that they will receive a non-refundable up-front retainer fee. This helps the broker screen out buyers who may not really be serious about buying. In this type of situation, at closing the retainer is credited to the amount of commission the buyer owes and the broker receives the balance.
landlord
The lessor in a residential real property transaction. This includes an owner who lists residential real property for lease with an agent, whether or not a lease results, or who receives an offer to lease residential real property.
Seller
The transferor in a residential real property transaction. This includes an owner who lists residential real property for sale with an agent, whether or not a transfer results, or who receives an offer to purchase residential real property.
