What is Agency?
At its core, agency is a legal relationship where one party (the agent) acts on behalf of another party (the principal). In real estate, agents can represent either the seller, the buyer, or both, depending on the type of agency agreement in place. The relationship between the agent and their client is defined by the duties and responsibilities they owe to each other, which can include loyalty, confidentiality, disclosure, and care.
Types of Agency in Real Estate
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Seller's Agent (Listing Agent):
The listing agent represents the seller in the transaction. Their job is to help the seller price the home, market it, negotiate offers, and guide them through the closing process. They owe a fiduciary duty to the seller, meaning their actions should always be in the seller’s best interest. -
Buyer's Agent:
A buyer’s agent works exclusively on behalf of the buyer. Their role includes helping the buyer find suitable properties, negotiate the price, and navigate the complexities of making an offer. Like the seller's agent, the buyer’s agent has a fiduciary duty to the buyer, ensuring they provide honest advice and work to secure the best deal. -
Dual Agency:
In some cases, an agent might represent both the buyer and the seller in the same transaction. This is known as dual agency and requires the agent to remain neutral and disclose any potential conflicts of interest. While dual agency can streamline the process, it may limit the agent’s ability to advocate fully for either party’s interests. -
Transaction Brokerage:
In certain jurisdictions, a transaction broker may assist both the buyer and seller without representing either party in a fiduciary capacity. This means the agent’s role is more limited, focusing on facilitating the transaction rather than providing advocacy or advice.
Why Does Agency Matter?
Understanding agency ensures that both buyers and sellers are aware of the level of representation they are receiving. Whether you’re looking to buy your first home or sell a property, knowing who your agent represents and the duties they owe you can prevent misunderstandings and help avoid potential conflicts of interest.
For buyers, choosing the right agent can mean receiving expert advice, negotiating leverage, and access to properties that may not be available to the general public. For sellers, a good listing agent brings knowledge of the market, pricing strategies, and negotiation skills to get the best deal.
In conclusion, agency in real estate is more than just a legal term — it’s a foundational aspect of the home buying and selling process. Be sure to understand who your agent represents and how that impacts your interests, and don't hesitate to ask questions if you are unsure of your agency relationship!