It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your real estate agent to explain what type of real estate agency relationship you have with him or her and with the real estate brokerage company.
- Seller’s representative (also known as a listing agent or seller’s real estate agent). A seller’s agent is hired by and represents the real estate seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a real estate listing contract.
- Subagent. A subagent owes the same fiduciary duties to the real estate agent’s principal as the agent does. Subagency usually arises when a cooperating real estate sales associate from another real estate agency, who is not representing the buyer as a buyer’s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
- Buyer’s representative (also known as a real estate buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer’s rep works in the buyer’s best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer’s rep may be paid by the seller or by a commission split with the listing broker.
- Disclosed dual agent. Dual agency is a relationship in which the real estate brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it’s vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the real estate buyer and the real estate seller are told that the real estate agent is representing both of them is legal in most states.
- Designated real estate agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing real estate broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
- Non-agency relationship (called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a non-agency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Reprinted from REALTOR® Magazine Online  with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2014. All rights reserved.