Do You Know What Agency Is?
One of the terms you will hear in the real estate world is AGENCY. Do you know what agency is?
Well, it’s pretty important, and there is a lot of confusion about it.
Agency, simply, refers to the specific relationship between a principal (a buyer or seller) and another party (in real estate, the brokerage and thereby the agent who you work with). Each state has specific laws defining and regulating the types of agency relationships that can exist. As a buyer or seller, you should understand the relationship that you have (not what is implied, but what the specific nature of the relationship is) because it has a significant impact on your personal interests and whether, and how, they are protected.
Don’t assume a relationship exists, but ASK what it is and what that means. And generally the laws require that the nature of the relationship be disclosed to you, the client. This is critical information for you, the consumer.
An agent can represent a seller (typically called the Listing Agent) and that agent has a fiduciary responsibility to the seller – to protect that person’s interests, to be honest, and loyal, among duties.
The agent who is helping you find a home MAY be acting on your behalf (if a BUYER’S Agent) or may be responsible to the seller (the traditional role of the agent). Do NOT assume an agent is working on YOUR BEHALF unless you specifically ask. This does not mean they cannot and will not help you find a home and assist you throughout the transaction. But if the agent is NOT actually representing your interests, they cannot preserve confidentiality (since they are responsible to the seller) nor assist you in determining an offer strategy (since their duty is to the seller, their role is to get the seller the best price). You deserve to have someone acting on your behalf – make sure you understand if your agent is!
Stay tuned for more discussion on this critical topic. See my earlier post on real estate terms for more information on this and other terminology you will hear.
