One of the most under-reported topics in real estate are the relationships real estate consumers have with real estate agents. Known as agency, the type of agency relationship you have with a real estate professional could impact the purchase or sale of a home. Mark Nash author of 1001 Tips for Buying and Selling a Home shares the ins' and outs of agency in residential real estate.
-Agency. The relationship between someone who is licensed as a real estate broker or salesperson and the person he or she represents, who is the principal. State laws vary on agency relationships, verify in your state what and how agency is defined.
-Fiduciary. Agents under agency laws have a relationship with the principal or client based on trust and confidence.
-Establishing an agency relationship. Written or oral (depending on state law) where brokerage services are provided to a buyer, renter, or seller in return for compensation. In some situations an implied agency relationship is created, through mutual consent and actions. You attend an open house and the host who is the listing agent offers to show you other properties and you consent.
-Dual agency. You are shown a home you are interested in by the listing agent, who has a brokerage agreement and an agency relationship with the seller. You decided to purchase the home and use the listing agent as your representative. This agent must disclose to you that they are now a dual agent, representing both the seller and buyer in the transaction. Not recommended. Undisclosed dual agency is against the law.
-Disclosure of agency by real estate agents. Mandatory in all states. An agent must disclose who they have a fiduciary relationship with.
-Buyer agency. The formal or informal agency relationship between a buyer and an agent who has a fiduciary relationship to the buyer. Preferred.
-How buyers agents can be compensated. Either the buyer pays compensation to their agent or the seller can compensate the buyers agent. Even though the buyers agent has a fiduciary relationship with the buyer, the agent can still be compensated by the seller through the sellers agent.
Mark Nash is the author of Fundamentals of Marketing for the Real Estate Professional, Starting & Succeeding in Real Estate, Reaching Out: The Financial Power of Niche Marketing, and 1001 Tips for Buying and Selling a Home. Mark is a contributing writer for: Realtor (R) Magazine Online, Broker Agent News, Real Estate Executive Magazine, Principal Broker, and Realty Times. His tried and true real estate tips has been featured on Business Week, CBS The Early Show, CNN, HGTVpro.com, The New York Times, and USA Today. Purchase his books at http://www.1001RealEstateTips.com.
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