Before you disclose confidential information to a real estate
licensee regarding a real estate transaction, you should understand
what type of business relationship you have with that licensee.
There are four business relationships: (1) seller's agent; (2) buyer's
agent; (3) disclosed dual agent; and (4) transaction broker. Each
or these relationships imposes certain legal duties and responsibilities
on the licensee as well as on the seller or buyer represented. These
four relationships are defined in greater detail below. Please read
carefully before making your choice.
SELLER'S AGENT
A seller's agent WORKS ONLY FOR THE SELLER
and has legal obligations, called fiduciary duties, to the seller.
These include reasonable care, undivided loyalty, confidentiality
and full disclosure. Seller's agents often work with buyers, but
do not represent the buyers. However, in working with buyers a seller's
agent must act honestly. In dealing with both parties, a seller's
agent may not make any misrepresentations to either party on matters
material to the transaction, such as the buyer's financial ability
to pay, and must disclose defects of a material nature affecting
the physical condition of the property which a reasonable inspection
by the licensee would disclose.
Seller's agents include all persons licensed
with the brokerage firm which has been authorized through a listing
agreement to work as the seller's agent. In addition, other brokerage
firms may accept an offer to work with the listing broker's firm
as the seller's agent. In such cases, those firms and all persons
licensed with such firms, are called "sub-agents." Sellers who do
not desire to have their property marketed through sub-agents should
so inform the seller's agent.
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BUYER'S
AGENT
A buyer's agent WORKS ONLY FOR
THE BUYER. A buyer's agent had fiduciary duties to the buyer which
include reasonable care, undivided loyalty, confidentiality and
full disclosure. However, in dealing with sellers, a buyer's agent
must act honestly. In dealing with both parties, a buyer's agent
may not make any misrepresentations on matters material to the transaction,
such as the buyer's financial ability to pay, and must disclose
defects of a material nature affecting the physical condition of
the property which a reasonable inspection by the licensee would
disclose.
A buyer wishing to be represented by a buyer's
agent is advised to enter into a separate written buyer agency contract
with the brokerage firm which is to work as their agent.
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DISCLOSED
DUAL AGENT
A disclosed dual agent WORKS
FOR BOTH THE BUYER AND SELLER. To work as a dual agent, a firm must
first obtain the informed written consent of the buyer and the seller.
Therefore, before acting as a disclosed dual agent, brokerage firms
must make written disclosure to both parties. Disclosed dual agency
is most likely to occur when a licensee with a real estate firm
working as a buyer's agent shows the buyer properties owned by sellers
for whom that firm is also working as a seller's agent or sub-agent.
A real estate licensee working as a disclosed
dual agent must carefully explain to each party that, in addition
to working as their agent, their firm will also work as the agent
for the other party. They must also explain what effect their working
as a disclosed dual agent will have on the fiduciary duties their
firm owes to the buyer and to the seller. When working as a disclosed
dual agent, a brokerage firm must have the express permission of
a party prior to disclosing confidential information to the other
party. Such information includes the highest price a buyer can afford
to pay and the lowest price a seller will accept and the parties'
motivation to buy or sell. Remember, a brokerage firm acting as
a disclosed dual agent will not be able to put one party's interests
ahead of those of the other party and cannot advise or counsel either
party on how to gain an advantage at the expense of the other party
on the basis of confidential information obtained from or about
the other party.
If you decide to enter into an agency relationship
with a firm which is to work as a disclosed dual agent, you are
advised to sigh a written agreement with that firm.
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TRANSACTION
BROKER
The Licensing Laws of many jurisdictions
do not require licensees to work in the capacity of an "agent" when
providing brokerage services. A transaction broker works with a
buyer or a seller or both in the sales transaction without representing
anyone. A TRANSACTION BROKER DOES NOT PROMOTE THE INTERESTS OF ONE
PARTY OVER THOSE OF THE OTHER PARTY TO THE TRANSACTION.
Licensees with such a firm would be required
to treat all parties honestly and to act in a competent manner,
but they would not be required to keep confidential any information.
A transaction broker can locate qualified buyers for a seller or
suitable properties for a buyer. They can then work with both parties
in an effort to arrive at an agreement on the sale or rental of
real estate and perform tasks to facilitate the closing of a transaction.
A transaction broker primarily serves as a
manager of the transaction, communicating information between the
parties to assist them in arriving at a mutually acceptable agreement
and in closing the transaction, but cannot advise or counsel either
party on how to gain an advantage at the expense of the other party.
Owners considering working with transaction brokers are advised
to sign a written agreement with that firm which clearly states
what services that firm will perform and how it will be paid. In
addition, any transaction brokerage agreement with a seller should
specifically state whether a notice on the property to be sold will
or will not be circulated in any or all Multiple Listing System(s)
of which that firm is a member.
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YOU MAY OBTAIN LEGAL ADVICE
ABOUT THESE
BUSINESS RELATIONSHIPS FROM YOUR OWN LAWYER.
THIS STATEMENT IS NOT A
CONTRACT AND IS
PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
Should you choose to list your property,
a copy of this information statement will be provided at the beginning
of the listing agreement before you are asked any information about
your property. That version of this document will contain a signed
acknowledgment area which must be signed and returned with the listing
agreement before we will service you.
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