Transcript Project Overview

1. Agency Relationships
In this chapter

Evolution of buyer representation

Parties in a real estate transaction

Types of relationships between real estate
brokerage companies and consumers
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Buyer Representation
The practice of real estate
practitioners (brokers and their
agents) representing the buyer as a
client
 The agent of the buyer

1-2
9
Evolution of Buyer
Representation
Seller-representation was default of
most MLSs and state regulations
until ’90s
 Became “out of sync” with realities
of marketplace

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Consumer Survey

Most buyers thought they were
represented by the seller’s agent

Most buyers shared confidential
information with the seller’s agent
because they though the agent was
working their behalf
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Seller Subagency
Any agent who brought a buyer to
the transaction was considered an
agent of the seller
 has virtually disappeared because
brokers do not offer or accept it
 Vicarious liability disappearing too by state statute or practice

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NAR Policy Changes
MLS policy changed to blanket offer
of “cooperation and compensation”
 NAR promotion of 9-point legislative
model:

– clarify agency relationships
– allow designated agency & clarify dual
agency duties
– eliminate vicarious liability
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Market Trends

Percentage of buyers with a buyer
representation agreement
1999 – 47%
2006 – 64%
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Parties in a Real Estate
Transaction
Client/principal
 Broker
 Agent
 Customer
 Transaction broker
 Finder

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Agency Relationships
Agency Relationships
Created by
Express Written
Agreement
Implied
Agreement
Oral
Agreement
Types of Agency
Relationships
Agent
Represents
Single Agency
Buyer OR Seller
Dual Agency
Buyer AND Seller
Designated Agency
Buyer OR Seller
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14
Relationships
Single agency
 Dual agency
 Designated agency
 Transaction broker/facilitator
 Finder

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Single Agency

Exclusive agent of the buyer or seller

All of broker’s salespeople are also
agents of the buyer or seller
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Dual Agency

Requires disclosure and informed consent
 Inherent conflict between full disclosure
and confidentiality
 Not permitted in some states
–
–
–
–
Colorado
Kansas
Florida
New Mexico defaults to transaction facilitator
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Designated Agency
State specific
 Removes agency responsibility from
other agents in firm
 Broker may/may not be a dual agent
 Assigned agents must not share
confidential information

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Non Agency Relationships

Transaction Broker
– VERY state specific – may not apply in
your state
– Acts as an intermediary
– Not an agency relationship
– Reasonable care and accounting

Finder
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Office Policy

Know and comply with your broker’s
policy on types of relationships
offered and accepted

No policy = undisclosed dual agency!
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Skill Builder Tip: Creating an Agency
Policy
Present a brief opening statement of agency policy.
2. Describe how the policy will be implemented.
3. Define the types of agency relationships practiced.
4. Include a rationale for the company’s agency policy.
5. Explain how the consumer is treated in each relationship.
6. Indicate what disclosures must be made.
7. Indicate when and to whom disclosures must be made.
8. Include standard forms licensees are required to use.
9. Specify training the company will provide to licensees.
10. Attorney review for policy for conformance with state laws.
1.
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Building Blocks

What are your broker’s office policies
regarding:
– Types of relationships offered and
accepted?
– How does the buyer benefit?
– How are designated agency or dual
agency situations handled?
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