Types of agency relationship

It's not uncommon at all for one or even all parties involved in the buying and selling of property to be represented by an agency. Put simply, an agency relationship is one that consists of one person representing the interests of another person. Licensed real estate agents are granted legal permission by the state to represent an individual in the sale, purchase or lease of a particular piece of property. All agents are required to adhere to the local laws in regards to agencies as well the regulations included in the official Realtor's Code of Ethics, which every agent must agree to before attaining a license. The relationship established between a person and the agent is formally known as a fiduciary relationship. This means that it is a relationship built on trusting the agent. There are quite a few duties that are the responsibility of the agent including loyalty, diligence, disclosure, confidentiality and accountability, in addition to reasonable skill and care. Generally, there are five different kinds of agencies used in terms of real estate transactions. To help you get a better idea of what each one involves, here's a brief overview of the five different types of agencies most commonly used when buying and selling property.

Buyer Agency

This type of agency relationship is formed whenever a buyer's agent is the one representing their own interests in a real estate transaction. A few responsibilities of the buyer's agent include scouting properties that meet the buyer's needs and then setting up appointments to show a selected few to them. It's also the responsibility of the agent to research the property and provide the buyers with information such as zoning, schools in the area, taxes and utilities. They also are usually the ones to prepare a competitive market analysis on the property and gather a few details of other properties recently sold in the community in order to facilitate helpful information for the buyer to review. After reviewing this information and going over it with the buyer, the agent then advises what price they should initially offer the seller. The agent will also assist the buyer in writing an offer while keeping their best interests in mind. If any negotiating needs to take place, the agent will handle this on behalf of the buyer. Once a deal has been reached, the agent will also assist the buyer during the loan application process and attend the closing in order to answer any questions. Not to mention, he or she will also keep track of important dates, appointments and documents so the buyer doesn't have to.

Seller Agency

Another type of real estate agency is called a seller agency. This kind of agency takes place when an agent represents the interests of a seller during a real estate transaction. The seller's agent is responsible for preparing a competitive market analysis for the property and implementing effective marketing strategies in order to help the seller determine the best list price. He or she might also be responsible for staging and positioning the property if there's a need for it. It's also the job of the seller's agent to receive all offers on the property, present them to the buyer and then counsel on what price to accept. As with buyer's agents, the seller's agent will also negotiate pricing and terms on behalf of the seller. A few other designated duties of the seller's agent is preparing an estimate of closing costs on the property and keeping track of all important dates and information. The agent will also represent the seller's interest at showings and attend the closing of the transaction with the seller.

Dual Agency

A dual agency occurs when a buyer's agent is the one showing a piece of property that is also represented by that agent's firm. It works the other way around as well. A dual agency can also take place if the listing agency shows property that is represented by the same firm. This particular type of agency is legal in all 50 states, but in the case of most dual agency situations, both the buyer and the seller will be required to sign a consent agreement. In a dual agency, it is the agent's responsibility to treat both parties fairly and keep their information confidential at all times during a transaction.

Designated Agency

A designated agency is closely related to a dual agency. This type of agency is used to assure both the buyer and the seller that the real estate firm is working at their best interest in the instance of a dual agency. With a designated agency, the buyer and the seller are both provided with an individual representative who will handle the transaction on their behalf. Similarly to a dual agency, both parties must agree to a designated agency and sign consent forms provided by the firm.

Unrepresented Persons

If a buyer or seller hasn't yet signed a representation agreement with an agent, he or she is considered an unrepresented person. Any unrepresented persons have the responsibility to protect their own interests and the real estate agent is not allowed to provide him or her with any advice or counsel in regards to purchasing or selling property. Although some unrepresented persons may believe they'll be saving money by not signing a representative agreement with an agent, that's not true at all. An experienced real estate agent has the skills and knowledge needed to get buyers and sellers the best deal possible. If you're not familiar with the local real estate laws and statutes, it really is best to leave the process up to the professionals.

The type of agency can vary from transaction to transaction. Hopefully this overview has given you a better understanding of the different types of agencies associated with buying and selling real estate. As you can see, it's important to be represented by a qualified real estate agent if buying or selling because they have been trained to properly represent both buyers and sellers. It's recommended you get in touch with your agent today to discuss your options.