| When buying or selling
real estate, you may find it helpful to have a real estate agent assist
you. Real estate agents can provide many useful services and work with you
in different ways. In some real estate transactions, the agents work for
the seller. In others, the seller and buyer may each have agents. And
sometimes the same agents work for both the buyer and the seller. It is
important for you to know whether an agent is working for you as your
agent or simply working with you while acting as an agent of the other
party.
This brochure addresses the various types of working
relationships that may be available to you. It should help you decide
which relationship you want to have with a real estate agent. It will also
give you useful information about the various services real estate agents
can provide buyers and sellers, and it will help explain how real estate
agents are paid.
SELLERS
Seller's Agent
If you are selling real estate, you may want to
"list" your property for sale with a real estate firm. If so,
you will sign a "listing agreement" authorizing the firm and its
agents to represent you in your dealings with buyers as your seller's
agent. You may also be asked to allow agents from other firms to help find
a buyer for your property.
Be sure to read and understand the listing agreement
before you sign it.
Duties to Seller:
The listing firm and its agents must promote your
best interests be loyal to you follow your lawful instructions provide you
with all material facts that could influence your decisions use reasonable
skill, care and diligence, and account for all monies they handle for you.
Once you have signed the listing agreement, the firm and its agents may
not give any confidential information about you to prospective buyers or
their agents without your permission. But until you sign the listing
agreement, you should avoid telling the listing agent anything you would
not want a buyer to know.
Services and Compensation:
To help you sell your property, the listing firm and
its agents will offer to perform a number of services for you. These may
include
- helping you price your property
- advertising and marketing your property
- giving you all required property disclosure forms
for you to complete
- negotiating for you the best possible price and
terms
- reviewing all written offers with you and
- otherwise promoting your interests.
For representing you and helping you sell your property, you will pay
the listing firm a sales commission or fee. The listing agreement must
state the amount or method for determining the commission or fee and
whether you will allow the firm to share its commission with agents
representing the buyer.
Dual Agent
#1
You may even permit the listing firm and its
agents to represent you and a buyer at the same time. This
"dual agency relationship" is most likely to happen if an
agent with your listing firm is working as a buyer's agent with
someone who wants to purchase your property. If this occurs and you
have not already agreed to a dual agency relationship in your listing
agreement, your listing agent will ask you to sign a separate
agreement or document permitting the agent to act as agent for both
you and the buyer.
It may be difficult for a dual agent to
advance the interests of both the buyer and seller. Nevertheless, a dual
agent must treat buyers and sellers fairly and equally. Although
the dual agent owes them the same duties, buyers and sellers
can prohibit dual agents from divulging certain confidential
information about them to the other party.
Some firms also offer a form of dual agency
called "designated agency" where one agent in the firm
represents the seller and another agent represents the buyer. This
option (when available) may allow each "designated agent" to
more fully represent each party.
If you choose the "dual agency"
option, remember that since a dual agent's loyalty is divided between
parties with competing interests, it is especially important that you
have a clear understanding of
- what your relationship is with the dual agent and
- what the agent will be doing for you in the
transaction.
BUYERS
When buying real estate, you may have several
choices as to how you want a real estate firm and its agents to work
with you. For example, you may want them to represent only you (as a buyer's
agent). You may be willing for them to represent both you and the
seller at the same time (as a dual agent). Or you may agree to
let them represent only the seller (seller's agent or subagent).
Some agents will offer you a choice of these services. Others may not.
Buyer's Agent
Duties to Buyer:
If the real estate firm and its agents represent
you, they must
- promote your best interests
- be loyal to you
- follow your lawful instructions
- provide you with all material facts that could
influence your decisions
- use reasonable skill, care and diligence, and
- account for all monies they handle for you.
Once you have agreed (either orally or in writing) for the firm and
its agents to be your buyer's agent, they may not give any
confidential information about you to sellers or their agents without
your permission. But until you make this agreement with your buyer's
agent, you should avoid telling the agent anything you would not want
a seller to know.
Unwritten Agreements:
To make sure that you and the real estate firm
have a clear understanding of what your relationship will be and what
the firm will do for you, you may want to have a written agreement.
However, some firms may be willing to represent and assist you for a
time as a buyer's agent without a written agreement. But if you decide
to make an offer to purchase a particular property, the agent must
obtain a written agency agreement. If you do not sign it, the agent
can no longer represent and assist you and is no longer required to
keep information about you confidential. Furthermore, if you later
purchase the property through an agent with another firm, the agent
who first showed you the property may seek compensation from the other
firm.
Be sure to read and understand any agency
agreement before you sign it.
Services and
Compensation:
Whether you have a written or unwritten
agreement, a buyer's agent will perform a number of services for you.
These may include helping you
- find a suitable property
- arrange financing
- learn more about the property and
- other-wise promote your best interests.
If you have a written agency agreement, the agent can also help
you prepare and submit a written offer to the seller.
A buyer's agent can be compensated in
different ways. For example, you can pay the agent out of your own
pocket. Or the agent may seek compensation from the seller or listing
agent first, but require you to pay if the listing agent refuses.
Whatever the case, be sure your compensation arrangement with your
buyer's agent is spelled out in a buyer agency agreement before you
make an offer to purchase property and that you carefully read and
understand the compensation provision.
Dual Agent
#2
You may permit an agent or firm to represent you
and the seller at the same time. This "dual agency
relationship" is most likely to happen if you become interested
in a property listed with your buyer's agent or the agent's firm. If
this occurs and you have not already agreed to a dual agency
relationship in your (written or oral) buyer agency agreement, your buyer's
agent will ask you to sign a separate agreement or document
permitting him or her to act as agent for both you and the seller. It
may be difficult for a dual agent to advance the interests of both the
buyer and seller. Nevertheless, a dual agent must treat buyers
and sellers fairly and equally. Although the dual agent owes them the
same duties, buyers and sellers can prohibit dual agents from
divulging certain confidential information about them to the other
party.
Some firms also offer a form of dual agency
called "designated agency" where one agent in the firm
represents the seller and another agent represents the buyer. This
option (when available) may allow each "designated agent" to
more fully represent each party.
If you choose the "dual agency"
option, remember that since a dual agent's loyalty is divided
between parties with competing interests, it is especially important
that you have a clear understanding of
- what your relationship is with the dual agent
and
- what the agent will be doing for you in the
transaction.
This can best be accomplished by putting the agreement in writing at
the earliest possible time.
Seller's
Agent Working With a Buyer
If the real estate agent or firm that you
contact does not offer buyer agency or you do not want them to
act as your buyer agent, you can still work with the firm and
its agents. However, they will be acting as the seller's agent
(or "subagent"). The agent can still help you find and
purchase property and provide many of the same services as a buyer's
agent. The agent must be fair with you and provide you with any
"material facts" (such as a leaky roof) about properties.
But remember, the agent represents the
seller—not you— and therefore must try to obtain for the seller
the best possible price and terms for the seller's property.
Furthermore, a seller's agent is required to give the seller
any information about you (even personal, financial or confidential
information) that would help the seller in the sale of his or her
property. Agents must tell you in writing if they are sellers'
agents before you say anything that can help the seller. But until
you are sure that an agent is not a seller's agent, you should avoid
saying anything you do not want a seller to know.
Sellers' agents are compensated by the sellers.
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