Real Estate Agency Relationships

Listing Agent:  Agent of the Seller

A listing agent works for the seller. The fiduciary duties a listing agent owes the seller include:

Undivided Loyalty – the listing agent is prohibited from advancing any interests other than the seller's

Obedience – the listing agent is required to follow the seller's lawful instruction

Reasonable Care and Diligence – the listing agent is required to protect the seller from any foreseeable risks of harm

Confidentiality – the listing agent must keep confidential any personal information that the seller does not want shared. Material defects in the property, however, are NOT confidential

Full Disclosure – the listing agent must share any information that might affect decisions made by the seller

Accounting – the listing agent is required to safeguard money or property held on behalf of the seller and to report promptly any transfer thereof

 

Buyer Agent: Agent of the Buyer

A buyer agent works for the buyer. The fiduciary duties a buyer agent owes the buyer include:

Undivided Loyalty – the buyer's agent is prohibited from advancing any interests other than the buyer's

Obedience – the buyer agent is required to follow the buyer's lawful instruction

Reasonable Care and Diligence – the buyer agent is required to protect the buyer from any foreseeable risks of harm

Confidentiality – the buyer agent must keep confidential any personal information that the buyer does not want shared.

Full Disclosure – the buyer agent must share any information that might affect decisions made by the buyer

Accounting – the buyer agent is required to safeguard money or property held on behalf of the buyer and to report promptly any transfer of money or property

 

Dual Agent: Agent of the Buyer & the Seller

Occasionally an agent is requested to represent both buyer and seller in the same transaction. This creates an obvious conflict of interest because confidentiality to one prevents full disclosure to the other. In this case both buyer and seller are asked to allow the agent to modify the fiduciary duties. However before clients are asked to allow this, each must understand the real effects on the interests of each party in the transaction. Each must then provide written informed consent for the agent to operate as a dual agent.

EXAMPLE of conflict: A buyer approaches a listing agent at an open house and shares that he must find a home by the end of the month and has been waiting for one to come on the market in this particular subdivision. As a representative of the seller, the agent is required to share the buyer's motivation which could lead the seller to be less flexible in his price negotiations. However if both parties request that the agent behave as a dual agent, then the agent is somewhat disarmed of her ability to share pertinent information with either party. The agent is then unable to provide full disclosure while keeping the information shared confidential.

One way to resolve this conflict is for the buyer to be represented by a member of the listing agent's team.