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When buying or selling real property, you may find it
helpful to obtain the assistance of a real estate agent. Real estate agents (brokers and
salesmen) are licensed and regulated by the North Carolina Real Estate Commission.
In today's real estate market, agents can work with you in
many ways. You may choose to work with on who will represent only you. Or one who will
represent only the other party in the transaction. Or an agent who will represent both you
and the other party(s).
If you choose to have an agent represent you, the agent
must promote your best interests. Your agent must also be loyal to you and follow your
lawful instructions; exercise reasonable skill, care and diligence; account for all funds
he handles for you; and disclose any information to you which could influence your
decision in the transaction.
Before a real estate agent can represent you, the agent
must have you sign a written "agency agreement"-typically a "listing
contract", "buyer agency contract", or "dual agency contract".
Real estate agents must disclose to buyers and sellers whom they represent.
This booklet is designed to introduce you to the various
agency relationships you may encounter in real estate transactions, and to answer some of
your agency questions.
FOR THE SELLER
Q: As a
seller, who represents me?
A: The real estate firm with whom you list your
property for sale and its agents represent you. In addition, you may authorize the listing
firm to allow agents with other firms (subagents) to show your property and represent you.
Q: As a seller, what should my
agent do for me?
A: Among other things, your agent should provide
you with an analysis of your property and market it. The agent should also search for a
qualified buyer, help negotiate the best price and terms possible for you, and present and
review with you all written offers. The agent must inform you of all material facts that
could influence your decision to sell and promote your best interests.
Q: How is a seller's agent
compensated?
A: The seller typically pays the listing firm a
brokerage fee or sales commission as agreed upon in the listing contract. The commission
is usually a percentage of the selling price. The firm then pays a portion of its
commission to the individual agents involved in the sale (including seller's subagents
associated with other firms). In addition, the listing agent may sometimes (with the
seller's permission) pay part of the commission to the buyer's agent.
Q: As a seller, how will I know
whether the agent working with the buyer is his agent or mine?
A: An agent working for a buyer must tell you or
your agent that he is a buyer's agent at his initial contact with you. And if his
principal (the buyer) makes an offer to purchase your property, he must state again in the
offer or in some other written statement that he represents the buyer.
FOR THE BUYER
Q: As a buyer, who represents me?
A: An agent may agree in writing to represent you as
your "buyer's agent". If you are instead working with an agent of the seller,
then no one represents you in the transaction. However, seller's agent must still be fair
and honest to you and report to you any material facts about the property itself (leaky
basement, broken furnace, etc.), or that relate directly to the property (pending zoning
changes or the planned widening of an adjacent street), or that relate directly to the
seller's ability to complete the transaction (a pending foreclosure, etc.).
Q: As a buyer, what should my
agent do for me?
A: Your agent should assist you in determining what
price you can afford and help you locate property that suits your needs. The buyer's agent
should also provide you with all relevant information about the property, help arrange for
inspections and financing, assist you in bargaining for the lowest price and best terms
possible, and promote your best interests.
Q: As a buyer, if I contact an
agent by telephone, will that agent automatically represent me?
A: No. Consequently, you should avoid disclosing
any personal, financial or other confidential information during an initial telephone call
to a real estate agent. Real estate brokers and salesmen, on the other hand, can provide
you with information about themselves or available properties even before any agency (or
non-agency) relationship is established. Whether talking by telephone or in person, you
and the agent should agree at your first substantial contact whether the agent would
represent you. If the agent will be representing you, he will ask you to sign a buyer agency
agreement. If not, he will ask you to sign a "Disclosure to Buyer from Seller's Agent
or Subagent" form advising you that he represents the seller-not you.
Q: If I go to an "open
house", what kind of agency relationship will be created with the agent on duty
there?
A: Generally none. Open houses are typically
conducted by agents of the seller. Therefore, before you begin any serious discussions
with the person(s) on duty about purchasing the house, he should ask you to sign a
"Disclosure to Buyer from Seller's Agent or Subagent" form advising you that he
represents the seller.
Q: As a buyer, if I choose not to
have an agent represent me, what can the seller's agent do for me?
A: The seller's agent can provide you with
information about properties and the areas where they're located. He can also assist you
in obtaining financing and inspections, provide information about closing procedures, and
other things. However, you should always remember that he represents the seller-not you!
Therefore, you should never disclose any private or financial information to the agent
that you would not want the seller to know.
Q: How are buyer's agents
compensated?
A: A buyer's agent can be compensated in different
ways, depending upon the method agreed upon in the buyer agency contract. As a buyer, you
can pay the agent out of your own pocket, or the agent could agree to seek a portion of
the listing agent's commission. Often, the buyer's agent will agree to seek compensation
from the listing agent and seller first, but require payment from you if they refuse. The
buyer's agent may also require a non-refundable retainer fee. As a buyer, you should read
the buyer agency agreement carefully to determine what financial obligation, if any, you
have to the agent.
FOR BUYERS AND SELLERS
Q: Can an agent represent a buyer
and a seller at the same time?
A: Yes. An agent or firm may become a "dual
agent" and represent both the buyer and the seller in the same transaction. However,
the buyer and the seller must consent to this arrangement in their listing and buyer
agency agreements, or in a separate dual agency agreement.
Q: When will dual agency occur?
A: Dual agency most often occurs when a buyer who is
being represented by a real estate firm becomes interested in a property listed with the
firm.
Q: As a buyer, if I work with a
seller's agent in finding property and then decide to buy something listed by the firm,
will the firm and its agents be dual agents?
A: No. Since the agent and his firm were not
representing you before, they won't begin representing you simply because you choose to
buy one of their listings. Rather, the firm and its agents will continue to represent only
the seller.
Q: How can a dual agent be loyal
to both buyer and seller?
A: In practical terms, it may be difficult for one
agent or firm to advance the interests of both the buyer and the seller in the same
transaction. After all, the seller wants the highest price and best terms possible, while
the buyer wants the lowest price and best terms possible. Nevertheless, the dual agent
must be fair to both sides and treat each as if he were his only client. Under most dual
agency agreements, the agent will not disclose personal, confidential information relates
to the property. Since the agent's loyalty is divided between parties with conflicting
interests, it is especially important that any dual agency agreement be in writing and
specifically describes the rights and duties of the parties.
Q: What is Designated Agency?
A: "Designated Agency" is a form of dual
agency where one agent in a firm is designated to represent the interests of the seller,
and another agent in the firm is designated to represent the buyer. This form of dual
agency allows the designated agent to more fully represent the interests of the party with
whom he is working.
FOR YOUR INFORMATION
Q: How long does an agency
relationship last?
A: An agency relationship lasts for the time period
specified in the agency contract or until the client's purpose is accomplished (i.e., the
sale or purchase of a property), whichever occurs first.
Q: Once an agency relationship
terminates, will my former agent still keep my confidences?
A: Not necessarily. An agent should never disclose
personal information without good reason. However, should your former agent later
represent another party in a transaction with you, he will have a duty to disclose to his
new client any information that could make a difference to that client or influence his
decision to buy or sell. For example, if an agent who formerly represented you is now
working with a buyer who is interested in purchasing your property, the agent must
disclose to the buyer material facts he knows about you that would help the buyer in the
transaction.
Q: Can I use more that one agent
at the same time?
A: Maybe. It will depend on the type of agreement
you sign with your listing agent or buyer's agent. If you sign an "exclusive"
listing or buyer agency contract, you should avoid contracting with another agent. If you
want to contract with more than one agent, you should contact an attorney first for
advice.
Q: Can an agent stop representing
me in the middle of transaction and start representing the other side?
A: Not without your permission.
Q: Are the laws and rules
governing agency agreements and disclosure the same for residential and commercial
property?
A: Yes. They apply equally to agents involved in
residential and commercial real estate transactions.
The North Carolina Real Estate Commission
P.O. Box 17100
Raleigh, North Carolina 27619-7100
919/875-3700
www.ncrec.state.nc.us
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