Last week I talked about what it means to be represented by a buyer's agent..and about the fiduciary responsibilities involved in all agency relationships in real estate transactions. I promised to talk about the other forms of agency representation in real estate transactions in Minnesota this week.
Buyers and sellers are sometimes hesitant to sign a representation contract, but the contract is important to protect the rights of both the client and the real estate agent. The contract specifies the duties of each party, and courts strictly enforce the agency duties to make sure the client's best interests are kept above anyone else's interest. They also require that the real estate agent be fair and honest to all parties in the transaction.
Brief explanations of the five forms of agency relationships in Minnesota real estate transactions are listed below.
- Seller's Broker…representing and acting for the seller only. May be a listing agent, or any Realtor licensed to the listing broker.
- Subagent…a broker or salesperson who is working with a buyer but represents the seller. (for example, a builder’s onsite agent or the agent representing the seller but helping a buyer at an open house)
- Buyer's Broker…representing and acting for the buyer only. As with a listing contract with sellers, an agreement for buyer representation must be in writing.
- Dual agency…one licensee representing both the seller and the buyer as clients in one transaction…or two agents licensed to the same broker, one of whom has a contract with the seller and one of whom has a contract with the buyer in one transaction. In a dual agency, all licensees are deemed to represent both the seller and buyer. This relationship requires full disclosure and informed consent of both parties. Dual agents have a limited role, must not advocate or negotiate for either party, and must not act to the detriment of either party.
- Facilitator…a real estate licensee who works for a buyer, a seller or both in a transaction but does not represent either in a fiduciary capacity as a Buyer’s Broker, Seller’s Broker or Dual Agent. Facilitators are bound by license law and common law, but owe only the fiduciary duty of confidentiality unless other fiduciary duties are agreed to between licensee and consumer.
Dual agency representation usually raises the most questions and concerns, especially when the same agent is representing both buyer and seller. Both parties must agree to it, and the agent must remain impartial and look out for the best interests of both parties involved. The agent cannot disclose confidential information on price, terms or motivation of either party…but is required to disclose any information about the property that would affect the buyer's use and enjoyment of the property.
Sometimes dual agency can work to everyone's benefit, sometimes not. Dual agency can work well when both clients have trust in the agent and are looking for a win-win situation. It can mean that both parties have confidence that the other side of the transaction is also being ethically represented by a trustworthy agent and don't worry that the sale will fall apart due to misrepresentation or mishandling by the other side. They can also feel confident that no material facts are being withheld.
Sometimes the most important factor in determining whether dual agency is a good idea or not is the agent's character…and the client's confidence in the agent's ability to remain impartial and look out for the best interests of everyone involved.
Sharlene Hensrud, RE/MAX Results – Email – HomesMSP.com
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