25

2. Creating an Agency Relationship 

In this chapter

–

How relationships are formed

–

Agency disclosure

–

How we work with buyers

–

Advantages of buyer representation

–

Buyer representation agreement issues

2-1

25

Express Agreements 

Written agreements

–

Listing agreement

–

Buyer representation agreement

–

Tenant representation agreement

–

Property management agreement

–

Right-to-lease agreement

2-2

25

Oral Agreements 

Verbal agreement to represent a buyer



Accepting a listing broker’s offer of subagency



Open listing

2-3

25

Implied Agreements 

Accidental



Occurs when a licensee talked and/or acted like an agent and the consumer relied on the action



Usually results in a conflict

2-4

28

NAR's Policy on Agency Disclosure 

Timely



Meaningful



Written

2-5

28

Timely 

Before any contract or agreement is signed



Before substantive discussion

2-6

29

Meaningful 

Disclose all legal forms of relationships



Consumer can make informed consent

2-7

30

Written

Put it in writing!

2-8

32

How We Work With Buyers

Who Is Your Client? Who Is Your Customer?

If you: Represent the seller Represent the buyer Act as a facilitator or transaction broker Your customer is: You provide: The buyer The seller Both buyer and seller Customer service to the buyer Client service to the seller Customer service to the seller Client service to the buyer Services for both according to your state law 2-9

35

Advantages for the Buyer 

Assertive advocate



More information about the property



Can work with a FSBO



Access to market experts



Savvy negotiator

2-10

Advantages for the Seller 

No liability for deeds of buyer’s rep



Reduced chance seller’s agent will divulge confidential information



Motivated, qualified buyers 35



Extended market reach for faster sale

2-11

35

Advantages for the Buyer’s Rep 

Can share information freely



Greater buyer loyalty



Better relationship with buyer-client

2-12

Advantages for a FSBO

36



Buyer’s rep can handle the details



No cost if buyer compensates agent, or



Likely less than full commission to a listing broker (resolve compensation issues before property showing)

2-13

37

Buyer Representation Issues 

Exclusivity



Purpose



Duration



Compensation



Services

2-14

38

When Relationships Change 

Client and customer must both provide informed consent



Both must agree how you will handle the confidential information



Interpersonal dimension

2-15

Compensation

40



Compensation does not determine an agency relationship



All parties must understand who represents whom and how fees will be paid



All representatives’ statements and actions must be consistent with their agency relationships

2-16

42

Building Blocks 

How would you explain the advantages of exclusive buyer agency?



How would you explain the importance of defining purpose, duration, and scope of work?

2-17