It's important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.
1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract. Let’s say you are selling a hot piece of property and you have accepted an offer. It now becomes a contract, but not before it gets delivered back to the Buyer. A moment before your Broker is going to make timely delivery of your offer he/she hears of another offer being prepared by a separate party at a substantially higher price. Before final delivery of your contract is made to your original buyer, your Broker’s fiduciary duty should elicit a call to let you know that your property may be worth more than you think. This is an example of fiduciary duty to a seller.
2. Subagent. A subagent owes the same fiduciary duties to the agent's principal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer's representative, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers. Working together within a REALTOR association’s Multiple Listing Service, most agents perform their duties in a subagency capacity. That is unless the buyer has engaged their service as a buyer’s representative.
3.Buyer's representative (also known as a buyer's agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
4.Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them is legal in most states.
Agency is designed from a trust that business is being conducted fairly, ethically and in a parties best interest. Specifying whose interest is best serve determines what type of agency one should ask for. For more information ask your real estate agent at your first meeting. They will gladly provide you with a Disclosure of Real Estate Agency form. This is always the best way to validate the ground you will both be treading upon. A copy of the disclosure of real estate agency form representing seller subagency is available online at, http://www.doorcountyrealestate.com/wi_discloreal.pdf.
Kevin Nordahl is a life-long resident of Door County, a REALTORŪ and a member of the Door County MLS. He is a Past President of the Door County Board of REALTORS® and a Senior Sales Consultant at Coldwell Banker Door County Horizons in Fish Creek. He may be reached online at knordahl@doorcountyrealestate.com or by phone at (920) 493-4004.
Kevin Nordahl is a life-long resident of Door County, a REALTORŪ and a member of the Door County MLS. He is a Past President of the Door County Board of REALTORS® and a Senior Sales Consultant at Coldwell Banker Door County Horizons in Fish Creek. He may be reached online at