Understanding Agency Relationships in Real Estate
Exploring the concept of agency relationships in real estate transactions, this content discusses the transition from customer to client, the need for written brokerage agreements, distinctions between standard and limited service agents, and the roles of designated and dual agencies. It emphasizes the importance of clarity and intent in establishing these relationships for effective real estate transactions.
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The Agency Relationship WHEN CUSTOMERS BECOME CLIENTS
Every relationship in which a real estate licensee acts for or represents a person as an agent by such person s express authority in a commercial or residential real estate transaction, unless a different legal relationship is intended and agreed to as part of the brokerage agreement What is Agency?
The Agency Relationship How do you get there? The member of the public has now become your Client and you are their Agent. = contractual Brokerage Relationship through express authority A signed Brokerage Agreement (Listing or Buyer)
In writing Definite termination date Brokerage Agreements: Requirements Amount of brokerage fee & when fee is paid Services to be rendered Other agreed-on terms
When a customer becomes a client is based upon the party s intent. A licensee needs to use his judgment based upon a customer s words and actions to make a determination as to when the intent to enter into a brokerage relationship is established and, therefore, requires a brokerage agreement. VREB GUIDANCE DOCUMENT (2016) (EMPHASIS ADDED) When do you need a written brokerage agreement?
Standard vs. Limited Service Agents Standard: Limited Service: Must be disclosed Presumed, unless you specify otherwise Must provide two lists to client: Must follow all duties listed by Code Specific services the licensee WILL provide, and May agree to additional requirements Specific duties the licensee WILL NOT provide, that a standard agent is required to provide.
Designated and Dual Agency Designated Agent: A licensee who has been assigned by a principal or supervising broker to represent a client when a different client is also represented by the same brokerage in the same transaction. Dual Agent: A firm who has a brokerage relationship with both seller and buyer, or both landlord and tenant, in the same transaction.
Q. When must a disclosure of brokerage relationship be made in a transaction? A. Upon having a substantive discussion about a specific property or properties in a residential real estate transaction with an actual or prospective buyer or seller who is not the client of the licensee and who is not represented by another licensee, a licensee shall disclose any broker relationship the licensee has with another party to the transaction. Disclosure If your agency relationship changes with your client/customer at any time, you must re- disclose to all clients and customers already involved in the transaction!
BROKERAGE RELATIONSHIPS ARE CONTRACTUAL AND BILATERAL. Terminating an Agency Relationship WHAT DOES THIS MEAN? BOTH SIDES HAVE RIGHTS AND RESPONSIBILITIES. YOU NEED CAUSE OR A RELEASE TO TERMINATE THE RELATIONSHIP.
Q&A Q. Do I need a written buyer brokerage agreement to show a house to a prospective client? A. It depends on how you define showing property. If you are using your expertise, knowledge, or judgment as a real estate licensee, then the law requires you to have a written agreement with that person.
Q&A Q. What if I represent Seller and an interested buyer wants me to write the offer, but does not want representation? Do I have to sign a Buyer Brokerage Agreement with him? A. No. The law does not require buyers to be represented by an agent. No agreement is required if you limit your assistance to ministerial tasks. You must disclose your relationship with Seller.
Q&A Q. I m the listing agent and had an unrepresented buyer approach me at an Open House about writing an offer on the property. Do I need to be a dual agent to receive the full commission? A. No. The listing broker is entitled to the entire commission, subject to any offer to share with another broker who may bring in a buyer. If there is no other broker involved in the deal, the listing broker keeps the entire commission.
