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Agency Relationships – NYS Law

Until recently, if you were looking for a home to buy, you only had one way to work with a real estate agent. This involved having an agent or agents show you homes on behalf of the seller of those homes. As a buyer/customer, you were not represented by anyone except yourself. Negotiations over price and terms were entirely your responsibility.

Now there is another way: Buyer Agency. This method of representation would enable you to have your Keller Williams sales associate act on your behalf in all negotiations. This insures that your interests are upheld. You will become the client of that Sales Associate, who will be bound by written agreement to be your advocate in finding and buying your next home.

In some cities across the United States, Buyer Agency is employed in an increasing number of home purchases. It is not mandatory, however, that you choose this form of representation. You may continue to be shown houses by one or more agents who represent the seller and negotiate on your own behalf. Before you make up your mind, we recommend the definition of the different types of agency in this article and make an informed decision.

If you decide that Buyer Agency is for you, your Keller Williams associate has completed special training to act as your Buyer Agent and answer any questions you might have.

AGENCY

The agency relationship is based on one person representing the interests of another person. Real Estate agents are licensed by the state to represent a person for the sale or lease of the property. The responsibility of the Real Estate agent is defined by the state law relating to agents, the realtor’s Code of Ethics and general principles of agency law.

The type of relationship formed between the agent and the client is called a fiduciary relationship. A fiduciary relationship is one based on trust, because the agent owes the following duties to the client: Loyalty, diligence, confidentiality, obedience, disclosure, accounting and reasonable care.

The courts strictly enforce the agency duties so that the client can rely on the agent putting the client’s interest before that of anyone else. The courts also require that the real estate agent be fair and honest in all aspects of the transaction.

TRADITIONAL AGENCY

All agents represent seller

Throughout the country, real estate agents usually have been representing only the seller in real estate transaction. That meant that all agents were representing the seller, even if one agent was working with the buyer.

This was accomplished through a system called sub-agency. The real estate company that lists the property is called the listing broker. The real estate company working with the buyer is called the sub-agent, or co-operating broker because the company works through the listing broker. Although the buyer had access to a real estate agent, the buyer had only limited representation.

The agency duties are owed directly to the seller in all transactions where there is no Buyer Agent. This is true of every real estate company in the United States.

The system has worked well for many years. So long as the buyer is aware that the agent represents the seller, the buyer should not rely on the agent for assistance in determining an offering price that is other than the asking price.

BUYER AGENCY

Buyer and Seller are Equally Represented

In real estate transactions, an agency is formed between the broker and the client. The client generally works with one agent who is associated with the broker. The client may be either a buyer or a seller.

Recently buyers have become aware that real estate agents have considerable knowledge that could be of great assistance in deciding what property to buy. In many areas of the country, Buyer Agency has become as prevalent as the traditional sub-agency type of business.

When a buyer is represented by an agent, all the fiduciary duties are owed to the buyer and not the seller. The buyer has the freedom to discuss the value of properties, negotiating strategies and personal finances with the agent. The buyer can obtain the opinion of the agent concerning the condition of the property, the effect of improvements, the seller’s motivation which a seller’s agent should not provide.

A buyer’s agent will make a commitment to make every reasonable effort to locate the property described by the buyer. This includes searching for homes that may be available for the sale but are not listed with a real estate company. Although the traditional agent will work hard to find the perfect property for your needs, the traditional agent has some limitation because of the duties to the seller.

DUAL AGENCY

Buyer and Seller are Equally Represented Within the Same Brokerage

Keller Williams Real Estate lists properties for sale, thereby forming an agency relationship with sellers. Throughout the listing period, the seller develops an increasing level of trust with the agent, who is obligated to put the sellers interest first.

Keller Williams may also form agency relationships with buyers, who develop an increasing level of trust with the agent. The agent is obligated to the buyer’s interests first. One example of a buyer agency is an agent working with a close relative, perhaps a mother. It is easy to understand how a mother would expect her son or daughter to give her advice and put her interests first.

A particular buyer may be interested in buying a property that is listed with the same broker, and dual agency arise when one broker (Keller Williams) has a relationship with two clients (buyer and seller). Very often, the clients are working with different agents who don’t have personal relationships with other clients. When a dual agency is formed, Keller Williams must notify each client.

If dual agency arises, the clients and agents can agree to modify the agency relationship. The agents must not disclose any information that would create a negotiating advantage for either client. The agents must treat the interests of the buyer and seller equally.

Dual agency sometimes happens, and when it does, the agency relationship is altered. But everyone’s goals remain the same: to buy or sell the property.