REALTORS work within a legal idea called agency. An agent is legally obligated to look after the best interests of the person he or she is working for. The agent must be loyal to that person. A REALTOR may be your agent - if you have clearly established an agency relationship with that REALTOR. But often, you may assume such an obligation exists when it does not. REALTORS believe it is important that the people they work with understand when an agency relationship exists and when it does not - and to understand what it means. In real estate, there are three different forms of agency relationship: 1. Seller's Agent A real estate company may be an agent of the Vendor. In this case, a Vendor can expect the REALTOR to represent his or her best interests. This is the traditional and most common agency relationship in real estate. Vendors contract REALTORS to sell their homes by signing a "listing" agreement. This is the agreement that establishes the formal agency relationship between the real estate company and the Vendor. A seller's agent is expected to tell the Vendor anything that might influence the Vendor's decisions (such as the decision to accept an offer to purchase). The REALTOR must also maintain the confidentiality of information discussed with the vendor. And the REALTOR must tell the Seller if the buyer is willing to offer a higher price. A buyer can expect competent service, knowing the Seller's agent is bound by ethics and law to be honest and thorough in representing the property for sale. Buyers can expect help identifying how much they can afford to spend on a home; they will be shown properties for sale, and REALTORS will help buyers complete the forms for an offer to purchase a home. A buyer can also expect from a Vendor's REALTOR disclosure of pertinent information about a property, assurance that nothing about the property will be misrepresented and honest answers to all questions about the property. REALTORS working for Vendors can offer buyers access to a vast storehouse of information about homes being sold in the community. They also can provide specific information about particular homes. Buyers should know, however, that information shared with a seller's agent - such as how much they ultimately are willing to pay for a particular property - must be shared by that REALTOR with the Vendor. 2. Buyer's Agent A real estate company may be an agent of the buyer. In this case, it is the buyer who can expect the REALTOR to represent his or her best interests. REALTORS will fully disclose to buyers all the pertinent facts about a given property. A REALTOR working for a buyer will also keep information about the buyer confidential from the seller. Buyer agency is established through a written contract between the purchaser and a REALTOR. That agreement will explain exactly what services the REALTOR will provide the buyer, who will pay for these services and what obligations the buyer will have. For instance, a typical buyer's agency agreement will commit a purchaser to work exclusively with that REALTOR for a period of time. A Vendor can expect from a buyer's agent an honest representation of a buyer's offer to purchase. 3.Dual Agency Occasionally a real estate company will be the agent of both the vendor and the purchaser. This is called "dual agency". Under this arrangement, a REALTOR is obligated to look after the interests of both the buyer and seller. Dual agency most often occurs when a REALTOR is working on a transaction with two people he or she has an agency relationship with. This could be a vendor and a potential purchaser who is also a vendor with the same REALTOR. In a dual agency situation, a REALTOR owes full disclosure to both the buyer and the seller. Any confidential information must be shared with both parties. But the aim of the REALTOR remains the same: putting together a willing seller and a willing purchaser to complete a transaction. Whenever a dual agency situation arises, the REALTOR is obligated to represent both the buyer and seller in the transaction. A dual agent REALTOR has an obligation to be honest to both the buyer and seller. WHO PAYS? Usually the seller's agent earns a fee or commission from the seller of a property. This fee is agreed upon in the listing agreement - the same agreement that establishes the formal agency relationship between the REALTOR and the vendor. A buyer can expect service from a seller's agent (as described above) but that service will be paid for by the vendor. The fee of a buyer's agent must be negotiated between the purchaser and the REALTOR. In the simplest case, a buyer's REALTOR would be paid directly by the buyer. Payment for a dual agent must be agreed upon in contracts between the REALTOR, the vendor and the purchaser. When more than one REALTOR is involved Often, a buyer will work with one REALTOR and a seller will work with another REALTOR. It may appear that the REALTOR working with the buyer is working for that buyer and is in an agency relationship with the buyer. That is not necessarily the case. Most homes are sold through a system of cooperation among REALTOR known as the Multiple Listing Service or MLS. Under this system, a REALTOR working with a seller offers to co-operate in the sale of that property with other REALTOR. Any co-operating REALTOR then becomes a "sub-agent" of the original "listing" REALTOR - even though agents of the Vendor and must represent the interests of the Vendor. It is possible for a buyer's agent to co-operate through the MLS with a Vendor's agent. A Buyer's agent REALTOR would simply have to identify himself to the listing REALTOR as a Buyer's agent in advance of any negotiation, and receive written permission. How to Know Who's Working for Whom? A REALTOR will be pleased to discuss with you his or her agency responsibilities between you and a REALTOR, ask the REALTOR to explain it. REALTOR work under a strict Code of Ethics. One provision of that Code requires REALTOR to seek written acknowledgement from buyers and seller that they understand the agency relationship. Once you are comfortable with the relationship you are forming with a REALTOR, sign an agency acknowledgement. The REALTOR will keep the form on file to show he or she has discussed agency with you. You may keep this brochure as a reminder of who the REALTOR is actually working for. Honesty and Integrity Most real estate professionals in our area are members of the National Association of Realtors(NAR) - and only members of NAR can call themselves REALTOR. When you deal with a REALTOR, you can expect not only strict adherence to national and state laws, but very important to you - because it assures you will receive the highest level of service, honesty and integrity. Highest Professional Standards Before receiving a real estate licence, candidates must successfully complete an extensive course of study approved by the state. And that is only the beginning: in the two years after receiving their licence, the new professionals are required to successfully complete additional courses, and after that they are required to attend yearly legal update classes. |
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Vicki's Real Estate Guide -
General / Area Information
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