1. 1. Agency Relationships In this chapter
Evolution of buyer representation
Parties in a real estate transaction
Types of relationships between real estate brokerage companies and consumers 9

2. Buyer Representation
The practice of real estate practitioners (brokers and their agents) representing the buyer as a client
The agent of the buyer 9

3. Evolution of Buyer Representation
Seller-representation was default of most MLSs and state regulations until ’90s
Became “out of sync” with realities of marketplace 9

4. Consumer Survey
Most buyers thought they were represented by the seller’s agent
Most buyers shared confidential information with the seller’s agent because they though the agent was working their behalf 10

5. Seller Subagency
Any agent who brought a buyer to the transaction was considered an agent of the seller
has virtually disappeared because brokers do not offer or accept it
Vicarious liability disappearing too - by state statute or practice 10

6. NAR Policy Changes
MLS policy changed to blanket offer of “cooperation and compensation”
NAR promotion of 9-point legislative model:
clarify agency relationships
allow designated agency & clarify dual agency duties
eliminate vicarious liability 11

7. Market Trends
Percentage of buyers with a buyer representation agreement
1999 – 47%
2006 – 64% 12

8. Parties in a Real Estate Transaction
Client/principal
Broker
Agent
Customer
Transaction broker
Finder 13

9. Agency Relationships Created by Types of Agency Relationships
Express Written
Agreement
Implied Agreement
Oral
Agency Relationships Created by
Single Agency
Dual Agency
Designated Agency
Buyer OR Seller
Buyer AND Seller
Types of Agency Relationships
Agent
Represents 14

10. Relationships Single agency Dual agency Designated agency
Transaction broker/facilitator
Finder 15

11. Single Agency Exclusive agent of the buyer or seller
All of broker’s salespeople are also agents of the buyer or seller 16

12. Dual Agency Requires disclosure and informed consent
Inherent conflict between full disclosure and confidentiality
Not permitted in some states
Colorado
Kansas
Florida
New Mexico defaults to transaction facilitator 16

13. Designated Agency State specific
Removes agency responsibility from other agents in firm
Broker may/may not be a dual agent
Assigned agents must not share confidential information 17

14. Non Agency Relationships
Transaction Broker
VERY state specific – may not apply in your state
Acts as an intermediary
Not an agency relationship
Reasonable care and accounting
Finder 18

15. Office Policy
Know and comply with your broker’s policy on types of relationships offered and accepted
No policy = undisclosed dual agency! 20

16. Skill Builder Tip: Creating an Agency Policy
Present a brief opening statement of agency policy.
Describe how the policy will be implemented.
Define the types of agency relationships practiced.
Include a rationale for the company’s agency policy.
Explain how the consumer is treated in each relationship.
Indicate what disclosures must be made.
Indicate when and to whom disclosures must be made.
Include standard forms licensees are required to use.
Specify training the company will provide to licensees.
Attorney review for policy for conformance with state laws. 21

17. Building Blocks What are your broker’s office policies regarding:
Types of relationships offered and accepted?
How does the buyer benefit?
How are designated agency or dual agency situations handled? 22