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Agency


Agency relationships are based on one person representing the best interests of another. Real estate agents are licensed by the state to represent a person in the sale or management of a property. North Carolina state laws, the REALTORS Code of Ethics and a general principle of agency law define the responsibility of the agent.

The type of relationship formed between the agent and the client is called a fiduciary relationship. A fiduciary relationship is one based on trust and confidence because the agent owes the following duties to the client:

  • Safeguard and account for any money handled for you.
  • Be loyal and follow reasonable and lawful instructions.
  • Act with reasonable skill, care, and diligence.
  • Disclose to you any information, which might influence your decision to buy or sell.

The courts strictly enforce the agency duties so that the client can rely on the agent putting the client's interest before that of anyone else. The courts also require the real estate agent to be fair and honest in all aspects of the transaction. In short, the agent owes its' allegiance to the client.

The source of compensation does not, in and of itself, determine agency. The buyer, seller, or both parties can pay the compensation. However, there must be full disclosure as to who is paying.

In real estate transactions, an agency relationship is formed between the Real Estate Broker and the client. The client generally works with a sales agent who is associated with the Broker. The client may either be a buyer or a seller. If you wish to be represented as a buyer or seller, it is required that you put your agreement in writing.

 

Buyer's Agency

Recently buyers have become aware that there can be great benefit to them in having a real estate agent represent them in a transaction.

If the real estate firm and its agents represent you, they must promote your best interest, be loyal to you follow your lawful instructions, provide you with all material facts that could influence your decisions, use reasonable skill, care and diligence and account for all monies they handle for you. Once you have agreed (either orally or in writing) for the firm and its agents to be your buyer’s agent, they may not give any confidential information about you to sellers or their agents without your permission. But until you make this agreement with your buyer’s agent, you should avoid telling the agent anything you would not want a seller to know.

Unwritten Agreements: To make sure that you and the real estate firm have a clear understanding of what your relationship will be and what the firm will do for you, you may want to have a written agreement. However, some firms may be willing to represent and assist you for a time as a buyer’s agent without a written agreement. But if you decide to make an offer to purchase a particular property, the agent must obtain a written agency agreement. If you do not sign it, the agent will be unable to represent and assist you and is no longer required to keep information about you confidential. Furthermore, if you later purchase the property through an agent with another firm, the agent who first showed you the property may seek compensation from the other firm.

Be sure to read and understand any agency agreement before you sign it.

Services and Compensation: Whether you have a written or unwritten agreement, a buyer’s agent will perform a number of services for you. These may include helping you find a suitable property, arrange financing, learn more about the property and otherwise promote your best interest. If you have a written agency agreement, the agent can also help you prepare and submit a written offer to the seller.

A buyer’s agent can be compensated in different ways. For example, you pay the agent out of your own pocket. Or the agent may seek compensation from the seller or listing agent first, but require you to pay if the listing agent refuses. Whatever, the case, be sure your compensation arrangement with you buyer’s agent is spelled out in a buyers agency agreement before you make an offer to purchase property and that you carefully read and understand the compensation provision.

 

Seller's Agency

If you are selling real estate, you may want to "list" your property for sale with a real estate firm. If so, you will sign a "listing agreement" authorizing the firm and its agents to represent you and your dealings with buyers as your seller’s agent. You may also be asked to allow agents from other firms to help find a buyer for your property.

Be sure to read and understand the listing agreement before you sign it.

Duties to seller: The listing firm and its agents must

Promote your best interest
Be loyal to you
Follow your lawful instructions
Provide you with all material facts that could influence your decisions
Use reasonable skill, care and diligence, and
Account for all monies they handle for you.
Once you signed the listing agreement, Realty World/Carolina Living and our agents may not give any confidential information about you to prospective buyers or their agents without permission. But until you sign the listing agreement, you should avoid telling the listing agent anything you would not want a buyer to know.

Services and Compensation: To help you sell your property, the listing firm and its agents will offer to perform a number of services for you. These may include:

Helping you price your property
Advertising and marketing your property
Giving you all required property disclosure forms for you to complete
Negotiating for you the best possible price and terms
Reviewing all written offers with you and
Otherwise promoting your interest
For representing you and helping you sell your property, you will pay the listing firm a sales commission fee. The listing agreement must state the amount or method for determining the commission or fee and whether you will allow the firm to share it’s commission with agents representing the buyer.

 

Dual Agency

At Prudential The McMillen Real Estate Group, we take pride in the fact we have many great properties in the area listed for sale. When we list a property, an agency relationship is created between Prudential The McMillen Real Estate Group and the seller. In other words, Prudential The McMillen Real Estate Group represents the seller. Prudential The McMillen Real Estate Group may also form an agency relationship with buyers. These buyers develop a level of trust in the agent, who is obligated to put their interest first.

You may even permit the listing firm and its agents to represent you and a buyer at the same time. This " Dual Agency Relationship " is most likely to happen if an agent with your listing firm is working as a buyer's agent with someone who wants to purchase your property. If this occurs, and you have not already agreed to a dual agency relationship in your listing agreement, your listing agreement will ask you to sign a separate agreement or document permitting the agent to act as agent for both you and the buyer.

It may be difficult for a dual agent to advance the interest of both the buyer and seller. Nevertheless, a dual agent must treat the buyers and sellers fairly and equally. Although the dual agent owes them the same duties, buyers and sellers can prohibit dual agents from divulging certain confidential information about them to the other party.

If you choose the "dual agency" option, remember that since a dual agent's loyalties is divided between parties with competing interest, it is especially important that you have a clear understanding of what your relationship is.


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