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
The practice of real estate
practitioners (brokers and their
agents) representing the buyer as a
The agent of the buyer
Evolution of Buyer
Seller-representation was default of
most MLSs and state regulations
Became “out of sync” with realities
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
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
NAR Policy Changes
MLS policy changed to blanket offer
of “cooperation and compensation”
NAR promotion of 9-point legislative
– clarify agency relationships
– allow designated agency & clarify dual
– eliminate vicarious liability
Percentage of buyers with a buyer
1999 – 47%
2006 – 64%
Parties in a Real Estate
Agency Relationships Types of Agency Agent
Created by Relationships Represents
Express Written Single Agency Buyer OR Seller
Agreement Dual Agency Buyer AND Seller
Designated Agency Buyer OR Seller
Exclusive agent of the buyer or seller
All of broker’s salespeople are also
agents of the buyer or seller
Requires disclosure and informed consent
Inherent conflict between full disclosure
Not permitted in some states
– New Mexico defaults to transaction facilitator
Removes agency responsibility from
other agents in firm
Broker may/may not be a dual agent
Assigned agents must not share
Non Agency Relationships
– VERY state specific – may not apply in
– Acts as an intermediary
– Not an agency relationship
– Reasonable care and accounting
Know and comply with your broker’s
policy on types of relationships
offered and accepted
No policy = undisclosed dual agency!
Skill Builder Tip: Creating an Agency
1. 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.
What are your broker’s office policies
– Types of relationships offered and
– How does the buyer benefit?
– How are designated agency or dual
agency situations handled?