What it is and what it means to you.
An agent is someone you appoint to act on your behalf. In so doing, the
agent then becomes bound by certain fiduciary duties, which include obedience, loyalty,
disclosure, confidentiality, accountability and reasonable care and diligence. An agency
relationship can be created by a desire to be represented and a consent to represent,
however it is more often created as a result of a listing agreement or a buyer
There are generally four types of agency relationships.
Seller agency. In this
relationship, the agent represents the seller and owes all the above mentioned fiduciary
duties to the seller. In the real estate industry, this is the oldest and most often
practiced type of agency relationship. Sometimes, especially in years past, a seller's
agent extends the seller agency relationship to other agents who are then called
subagents. Subagents are bound to the seller just the same as the principal listing agent.
Of course, the extension of the seller agency relationship to subagents requires the
Buyer agency. The
buyer agency relationship is usually created when a buyer and an agent agree between
themselves to enter such a relationship. In this case, the agent works in the buyer's best
interest and owes fiduciary duties to the buyer. In today's world, it is not uncommon to
have a real estate transaction in which both parties have their respective agents
Disclosed dual agency. Disclosed
dual agency is created when an agent represents both parties to a real estate transaction.
In such a relationship, the above mentioned fiduciary duties are somewhat limited because
it would be impossible to exercise them all to both parties. Both parties in a dual agency
relationship are made aware of this limited representation and consent to it in advance.
Undisclosed dual agency. This
practice is very similar to disclosed dual agency except it is practiced without the
principle's consent, therefore it is illegal. Undisclosed dual agency is very often
accidentally created when a subagent representing a seller by his words, acts or deeds
unwittingly creates an impression in a buyer's mind that the subagent represents the
buyer. Agency disclosure requirements vary widely from state to state. Nevertheless, most
professional companies and their agents make complete disclosure in writing so that the
public can be fully informed as to what the consumer can expect and the rights they have
regarding representation. If you have any further questions, you can contact your local
association of REALTORS® for more information.