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1. Agency and Fiduciary Relationships.
An agency relationship is a fiduciary relationship. A fiduciary is a person whose function is to act for the benefit of another with regard to matters within his undertaking. Contrary to popular belief, agency and fiduciary relationships are not established solely by means of who is paying the brokerage fee, but rather by agreement of the parties. A real estate broker who forms an agency relationship with a principal, either a seller or purchaser, becomes a fiduciary. A fiduciary's duties include loyalty, disclosure, obedience, confidentiality, and reasonable care and diligence.
2. Duties of Real Estate Brokers and Salespersons.
As fiduciaries, real estate brokers and their associated salespersons owe certain specific duties to their principal, in addition to any duties enumerated in a listing contract or other contract of employment. The specific duties include presenting all offers to the owner promptly; responding honestly and accurately to questions concerning the property; disclosing material facts relating to the property affecting its value or condition about which the salesperson knows; and offering the property without regard to race, creed, sex, religion, nalional origin, handicap and familial status.
3. Agency Election.
Prior to beginning to work with you, whether as a customer or client, our salesperson will discuss the alternatives of our representation and will ask that you elect whether you wish to be a customer (with a Seller Agency relationship) or a client (With a Buyer Agency relationship). The types of agency representation are summarized as follows:
...A. Exclusive Seller Agency. Under this relationship, the seller would be our client and you, the buyer, would be our customer. Our salesperson would act as an agent of the seller only pursuant to either a listing agreement with the seller or a subagency relationship between our company and the listing broker. For example, under a Seller Agency relationship, our salesperson could not, without the seller's express permission, disclose to you, the buyer, that the seller was willing to accept a price or ten-ns less than those stated in the listing agreement.
...B. Exclusive BuyerAgency. Under this relationship, you, the buyer, would be our client. Our salesperson would act as your agent. You would first have to sign an Exclusive Buyer Agency Agreement. For example under a Buyer Agency relationship, our salesperson could not, without your express written permission, disclose to the seller that you would pay a price greater than the initial offer.
4. Dual Agency. In the event, Exclusive Buyer Agency is elected, a Dual Agency relationship could occur. Under a Dual Agency relationship, you, the buyer, and the seller would both be our clients. Our company and its salespersons can legally be the agents of both the seller and the buyer in a transaction, but only with the knowledge and consent of both the seller and the buyer. A Du-II Agency relationship would arise when you, as our buyer client, wish to view one of the houses listed with our company, which house is owned by a seller who is our client. Under a Dual Agency relationship, our company and its salespersons would act as a facilitator and/ or mediator between the seller and you, the buyer, and could not, without the express permission of the respective party, disclose to you that the seller was willing to accept a price or items less than the list price or terms or disclose to the seller that you were willing to pay a price greater than the initial offer. Parties may agree in writing that the Dual Agent can act as a facilitator and/or mediator, and propose or guide a compromise resolution in the event of an impasse. If the Dual Agent, in his sole discretion, can not resolve the impasse, he can declare a conflict and refer the parties to independent counsel or to another Firm.
5. Legal and Tax Assistance. A real estate broker or salesperson is qualified to provide assistance with real estate. If you desire assistance with legal or tax matters, consult with specialists of your choice for such matters.
Before you enter into a discussion with a real estate agent regarding a real estate transaction, you should understand what type of agency relationship you wish to have with that agent. The REALTOR" Code of Ethics requires REALTORS who are acting as agents of buyers or sellers of property to advise the potential buyers or sellers with whom they work of the nature of their agency relationship and the rights and obligations it creates.
You should carefully read all the agreements to ensure that they adequately express your understanding of the transaction. A REALTOR* is a real estate professional subscribing to a strict code of ethics and is qualified to advise about real estate. If legal, tax or other advice is desired, consult a competent professional in that field. throughout the transaction you may receive more than one disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction.
If you are interested in selling real property, you can engage a real estate agent as a seller's agent. A seller's agent, including a listing agent under a listing agreement with the seller, acts solely on behalf of the seller. As a seller you are legally responsible for your own actions and the actions of any agent acting on your behalf. You can authorize a seller's agent io do other things including hire subagents, broker's agents or work with other agents such as buyer's agents on a cooperative basis. A subagent, or "cooperating agent," is one who has agreed to work with the scller's agent, often through a multiple listing service. A subagent may work in a different real estate office. A seller's agent has, without limitation, the following fiduciary duties to the seller: Reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and a duty to account The obligations of an agent are also subject to any specific provisions set forth in an agreement between the agent and the seller. In dealing with the buyer, a seller's agent should (a) exercise reasonable skill and care n performance of the agent's duties; (b) deal honestly, fairly, and in good faith; and (c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law.
If you are interested in buying real property, you can engage a real estate agent as a buyer's agent. A buyer's agent acts solely on behalf of the buyer. You can authorize a buyer's agent to do other things including hire subagents, broker's agents or work with other agents such as seller's agents on a cooperative basis. A buyer's agent has, without limitation, the following fiduciary duties to the buyer: Reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account. The obligations of an agent are also subject to any specific provisions set forth in an agreement between the agent and the buyer. In dealing with the seller, a buyer's agent should (a) exercise reasonable skill and care in performance of the agent's duties; (b) deal honestly, fairly and in good faith and (c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law.
A real estate agent acting directly or through an associated licensee, can be the agent of both the seller and the buyer in a transaction, but only with the knowledge and informed consent, in writing, of both the seller and the buyer. In such a dual agency situation, the agent will not be able to provide the full range of fiduciary duties to the buyer and the seller. The obligations of an agent are also subject to any specific provisions set forth in an agreement between the agent and the buyer and seller or an agreement between the agent and seller. An agent acting as a dual agent must explain carefully to both the buyer and the seller that the agent is acting for the other party as well. The agent should also explain the possible effects of dual representation, including that by consenting to the dual agency relationship the buyer and seller are giving up their right to undivided loyalty. A buyer or seller should carefully consider the possible consequences of dual agency relationship before agreeing to such representation.
Copyright 1992 Charlotte Association of REALTORS, Inc.