7.5 Agency Relationships and Duties

A. Recognized Forms of Agency

The Company generally recognizes five forms of agency:

Single Agency (Seller’s Agent exclusively or Buyer’s Agent exclusively).
Sub-Agency (Sub Agent of listing brokerage in States that use Sub-agency).
Dual Agency (if permitted by State).
Designated Agency (if permitted by State).
Transaction Agency (“aka” a facilitator, when dual or designated agency is not permitted or a client rejects representation).

If the Company has the listing, we represent the seller only, unless you or another licensee working for the Company also brings in the buyer, in which case the office represents both the buyer and the seller and is a dual agent. If the Company is working with the buyer and does not have a listing agreement with the seller, we represent the buyer exclusively. Remember, the agency relationship is created through the Broker. If you have listed the property and another salesperson from this Company brings an offer from a buyer, a dual agency will be created.

B. Duties and Standards of Conduct

When you represent a principal in a transaction you have a fiduciary duty to that person. This means you have a duty of utmost care, integrity, honesty, and loyalty in your dealings with that principal. In addition, a listing agent owes the buyer, and a buyer’s agent owes the seller, the following duties:

Honesty.
Good faith and fair dealing.
Disclosure of known facts materially affecting the value or desirability of the property that is not within the diligent attention or observation of the parties.
The exercise of reasonable skill and care in performance of your duties.

In situations involving dual agency, it is particularly important for each agent to realize that she/he must hold confidential the information of both buyer and seller, regardless of which party the particular agent is working with, in accordance with the agency agreements, State regulators, and the NAR Code of Ethics. As a reminder, dual agency is not permitted in every state. As a Licensed Real Estate Professional you are required to know your state's policies and abide by them.

C. Agency Disclosure Requirements

The agency disclosure law applies to sales, exchanges, and leases for more than one year, involving real property improved with one-to-four dwelling units, stock cooperatives, and mobile homes. The law applies whether or not the property is owner-occupied. You must provide a statutory disclosure form (exact form varies by State) that is titled similar to “Disclosure Regarding Real Estate Agency Relationships” (produced by the State Associations of REALTORS® or similar library) in every applicable transaction.

If you represent the seller, you must provide the disclosure form to the seller BEFORE entering into the listing agreement. Inform the seller of our policy regarding agency as set forth above. Get a signed “Acknowledgement of Receipt.”

If you represent the buyer, the law requires that you must provide the buyer with an agency disclosure as soon as practicable BEFORE executing an offer to purchase. Don’t forget to get a signed acknowledgment of receipt.

When you present an offer and this office is not the listing agent, you must also provide an agency disclosure to the seller as soon as practical BEFORE presenting an offer. Delivery of the disclosure to the listing agent is generally sufficient. Delivery may be made in person, by mail, or by facsimile.

D. Agency Relationships

The Company adopts this written policy identifying and describing the relationships in which the licensees of the Company may engage with sellers, landlords, buyers, or tenants. As used in this policy, the word "Company" means the Company and its affiliated licensees.

The Company acts as listing agents (and/or landlord's agents) through written listing agreements with sellers (and/or landlords). The Company encourages its agents to establish agency relationships with buyers (and tenants) through written buyer (and/or tenant) agency agreements or other written agreements for brokerage services at first substantial contact with buyers (and/or tenants). However, if a buyer (or tenant) is initially unwilling to enter into a written buyer (or tenant) agency agreement, it is permissible for agents of the Company to represent the buyer (or tenant) without a written buyer (or tenant) agency agreement. The Company’s agents should encourage the buyer (or tenant) to put the agency agreement in writing as soon as possible. As required by the real estate law, a buyer (or tenant) agency agreement must be in writing no later than the time an offer to purchase (or lease) is presented to a seller (or lessor) or the seller’s (or lessor’s) agent.

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Dual Agency** (if permitted by State)

If a represented buyer desires to purchase a Company listing (in-house sale), the Company will act as a disclosed dual agent in the transaction with the consent of all parties involved in the transaction. Written consent of all parties to the transaction is required before the Company will act as a disclosed dual agent except in cases where the Company is representing the buyer pursuant to an oral buyer agency agreement. Consent to act as a dual agent shall be obtained from the seller and the buyer at the time of entering into a listing, purchase or lease agreement or written buyer agency agreement through the proper completion of the statutory disclosure form (exact form varies by State) titled similar to “Disclosure Regarding Real Estate Agency Relationships” (produced by the State Associations of REALTORS® or similar libraries). A buyer agency agreement must be in writing no later than the time an offer to purchase is presented to a seller or the seller’s agent and written authority to act as a dual agent must be obtained no later than the time one of the parties represented by the Company makes an offer to purchase, sell, rent, lease, or exchange real estate to the other party.

Designated Agency (if permitted by State)

When the Company represents both the buyer and seller in the same transaction, the firm may, with the prior written consent of the buyer and seller, designate one or more individual brokers associated with the firm to represent only the interests of the seller and one or more other individual agents associated with the firm to represent only the interests of the buyer in the transaction. Sellers and buyers must indicate their consent for the Company to engage in “designated agency.” This can be done with an addendum or revision to the statutory disclosure form (exact form varies by State) that is titled similar to “Disclosure Regarding Real Estate Agency Relationships” (produced by the State Associations of REALTORS® or similar libraries).

It is the Company’s policy that the listing agent will automatically be appointed as the designated agent for the seller and the buyer agent automatically will be appointed as the designated agent for the buyer. Exceptions to this policy are as follows:

A licensee shall not be designated to represent the interests of only one party if the licensee has actually received confidential information concerning the other party in connection with the transaction.
A Broker or Manager shall not act as a designated agent for a party when a provisional agent, associate broker, or manager under her/his supervision will act as a designated agent for the other party.

If one of the above exceptions applies, the Broker or Manager is authorized by this policy to make the appointment of designated agents on behalf of the Company, or, in the alternative, to make a decision that the Company will not engage in designated agency with respect to the transaction.

Mandatory Buyer Agency Events

It is the policy of the Company that any agent working in the following circumstances MUST act as an agent of the buyer:

The agent is buying property for her or himself.
The agent is working with the agent's immediate family, that is, mother, father, brother, sister, children, any of their spouses or any business owned fully or partially by any of these persons.

Strongly Recommended Buyer Agency Events

It is the policy of the Company that any agent working under any of the following circumstances is strongly urged to work as a buyer's agent:

The agent is working with any relative by blood or marriage not in the agent's immediate family as defined above.
The agent is working with a close friend, business associate, or long term past customer or client.
The agent is working with a seller of a currently or previously listed property to find property to buy. The agent may be concurrently working with the seller to sell the property and also working to buy a new property. This event also applies to a seller whose property is under contract or closed and is working to buy a new property.

Buyer Agency Oral Agreement

If a buyer (or tenant) is initially unwilling to enter into a written buyer (or tenant) agency agreement, it is permissible for agents of the Company to undertake to represent the buyer (or tenant) without a written buyer (or tenant) agency agreement. The Company’s agents should encourage the buyer (or tenant) to put the agency agreement in writing as soon as possible. Once an oral agreement is made the agent must submit a letter similar to the one below as soon as possible to the client by postal mail or email. Make sure to receive confirmation to confirm the existence and specific terms of any oral relationships. Associates must document that the Associate attempted to review the firm’s buyer exclusive agency agreement with a buyer prior to representing the buyer on an oral basis.

Example Letter to Client - Oral Agreement of Buyer Agency

Firm Name/Address/Date

Client Name

Address

Dear ___________________:

I am looking forward to working with you in your search for real estate. As we discussed, a buyer has several choices as to how a real estate firm and its agents will work with the buyer. You have indicated your preference that I begin working with you as a buyer’s agent under an unwritten agreement, which is permitted up to a certain point in the relationship. The purpose of this letter is to confirm the most important terms of our agreement.

The terms of our agreement with you are as follows:

I will act as a buyer’s agent for you on behalf of our real estate firm.
I will assist you in locating and buying residential real estate in the following geographical areas_________________.
Our agreement will continue until (1) either of us notifies the other that the agreement is terminated or (2) another

agreement is created in writing between us.

The agreement is non-exclusive.
I will show you any properties where the listing firm or seller will offer compensation to our firm.
Our firm will seek compensation from the listing firm or seller and not from you, and you agree that our firm may

receive any compensation offered, including bonuses.

If you become interested in property where no compensation is offered, we would need to enter into a further

agreement addressing how I would be paid for assisting you in buying the property.

If you become interested in property listed with our firm, the firm may represent both the seller and you as a dual

agent. If our firm acts as a dual agent, the firm may designate an agent to represent you.

You understand that other buyers represented by our firm may seek property, submit offers, and contract to purchase

property through our firm, including the same or similar property in which you may be interested.

You will recall from our discussion of the “Working with Real Estate Agents” brochure that our buyer agency agreement would need to be put in writing no later than the time we might present an offer to purchase on your behalf, or we would be prohibited from continuing to represent you. Sample copies of the buyer agency agreement used by our firm and referred to above are available upon your request.

If you feel that this letter does not reflect the terms of our agreement, or if you have any questions regarding anything in this letter, please contact me at your earliest convenience.

____________________________

Agent Name

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