Real estate agency laws vary from state-to-state, but the principles are for the most part universal: agents must “elect” a form of agency when they begin working with a given client, and that election must be explicitly stated and acknowledged by their client. In Michigan, the state in which my company operates, every Realtor is legally required to have every client sign something entitled “Disclosure Regarding Real Estate Agency Relationships,” a document that specifies the nature of the agency relationship between the Realtor and their client.
Here is an overview of the different types of agency relationships that exist within real estate:
A seller’s agent acts solely on behalf of the seller. Seller’s agents have a fiduciary responsibility to disclose to the seller known information about the buyer Blossoms Condo which may be used to the benefit of the seller. The duties that a seller’s agent owes to the seller include:
o Promoting the best interest of the seller
o Fully disclosing to the seller all facts that might affect or influence the seller’s decision to accept an offer to purchase
o Keeping confidential the seller’s motivations for selling
o Presenting all offers to the seller
o Disclosing the identities of all buyers and all information about the willingness of those buyers to complete the sale or to offer a higher price
A buyer’s agent acts solely on behalf of the buyer. Buyer’s agents have a fiduciary responsibility to disclose to the buyer known information about the seller which may be used to benefit the buyer. The duties that a buyer’s agent owes to the buyer include:
o Promoting the best interest of the buyer
o Fully disclosing to the buyer all facts that might affect or influence the buyer’s decision to tender an offer to purchase
o Keeping confidential the buyer’s motivations for buying
o Presenting all offers on behalf of the buyer
o Disclosing to the buyer all information about the willingness of the seller to complete the sale or to accept a lower price
Disclosed Dual Agent
A real estate 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 licensee will not be able to disclose all known information to either the seller or the buyer. As a dual agent, the licensee will not be able to provide the full range of fiduciary duties to the seller or the buyer.