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What is Agency?
Agency, simply defined, is a relationship between a principal (Buyer or Seller) and an agent (REALTOR®). An agent, the REALTOR®, is a person who has received the power to act on behalf of the principal, the Buyer or Seller, binding the principal as if the principal was making the decisions. Agents, REALTOR®, owe their fiduciary responsibilities to their principal, Seller or Buyer, and to no one else. Any discussions between agents and principals are confidential unless the information directly relates to a material fact that must be disclosed under the law. Any personal information must be kept confidential by the agent, REALTOR®.
The agent also owes the principal full disclosure of any information they know, or may discover, as well as the obligation to act diligently and obediently on the client’s behalf. (An exception to the duty of obedience would be in the case of the principal asking the agent to do something unlawful.) The agent owes the client a full accounting of any escrow funds held as well. Lastly, an agent owes their loyalty to their client.
What is the responsibility of the Seller’s Agent in a real estate transaction?
A Seller’s agent has the obligation to act lawfully and diligently on behalf of their client, the Seller. They must always put their client’s interest ahead of their own. The contract between the agent and the Seller sets out the responsibilities of each of the parties. Contracts vary, but generally spell out the agent’s duties as well as the terms of the contract, the compensation and how it is to be paid, and any special, lawful provisions upon which the parties may agree.
What is the Buyer Agent’s responsibility?
A Buyer’s Agent owes all of their fiduciary responsibility to their client, the Buyer. The same obligations apply under the law of agency to Seller’s Agents as Buyer’s Agents. As long as you are representing a client, or principal, you owe that client confidentiality, diligence, full disclosure, obedience, loyalty, and a full accounting of all funds.
Buyer’s Agents can assist and guide Buyer clients in determining property value, framing offers, and in navigating the complex process of negotiation. Their diligence is extremely valuable to their clients, and their counseling abilities may afford Buyers an added level of confidence in the buying process.
What is Dual Agency?
In some states, including the Commonwealth of Massachusetts, dual agency is legal. As of the writing of this explanation, 38 states have chosen to explore the question of agency through some form of legislative or regulatory vehicle. Massachusetts has come very close on a couple of occasions, and has appointed a task force to examine the options that exist in the marketplace in order to make recommendations to the Board of Registration and the State Legislature. Until that happens, dual agency, which allows a licensee to represent more than one party in the transaction, is legal with informed consent.
Some states have opted to do away with dual agency altogether, and clarified the responsibilities of agents in various ways. Many states have instituted a facilitator relationship, while others have chosen designated agency.
Whatever your needs are, make sure that you know that you have choices. If you have any questions, ask them. If you need help framing the question, call us @ 978-922-3683. Believe us, agency questions are amongst the greatest number of questions REALTORS® have as well
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