- Special Sections
- Public Notices
By MARGIE HARPER
Selling or buying a home can be a challenging experience if you try to do it by yourself. Enlisting the help of a Realtor can aid you with the process. There are laws to make sure that you are provided with the type of relationship you need and what you can expect from an agent when buying or selling your home.
Agency is the term that describes the special relationship between a licensed real estate professional and principal they represent. The broker (and through the broker, the salesperson) is the agent, and the seller/buyer is the principal. For an agency relationship to exist, the principal must delegate responsibility to the agent, and the agent must consent to accept that responsibility and agrees to represent the principal’s interest in a specific transaction. The most important principle to remember is that an agency relationship requires both knowledge and consent. Without such knowledge and consent, no agency relationship exists.
Most agency relationships in real estate are created by written agreement, but a formal document is not required. Although discouraged, agency relationships also can be created by the words, actions, or deeds of the parties, and do not require any form of compensation.
An agency relationship with a seller is commonly created by a written listing agreement between a seller and a real estate broker. If a licensee represents you as an agent, then certain fiduciary duties are attached to that representation. These fiduciary duties owed to you as a client are disclosure, loyalty, accounting, confidentiality, reasonable care and diligence, and obedience to lawful instructions. It is important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction.
The types of real estate agency available in Kentucky are as follows: seller’s agent, buyer’s agent, limited dual agent, designated agent or transaction broker. In Kentucky it is required that licensees disclose these relationships through Agency Disclosure Statements for Buyers and Sellers.
Seller's representative (also known as a listing agent or seller's agent). A seller's representative is hired by and represents the best interests of the seller. The relationship usually is created by a listing contract.
Buyer's representative (also known as a buyer's agent). This type of licensee is hired by prospective buyers to represent them in a real estate transaction. The buyer's representative works in the buyers’ best interest throughout the transaction. The buyers can pay the licensee directly through a negotiated fee, or the buyers’ representative may be paid by the seller or by a commission split with the listing broker.
Dual agent. Dual agency is a relationship in which the brokerage represents both the buyer and the seller in the same real estate transaction. Dual agents must remain loyal to both parties in the transaction. They may not advocate the position of one client over the best interests of the other or disclose any confidential information to the other party without written consent. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties agree and give their informed consent. When a brokerage and its agents become a dual agent. An agent could also represent another party in a deal and you may not be represented. In this case, you would be treated as a customer. A customer is to be treated with honesty and fair dealing; however, the other fiduciary duties mentioned before do not apply.
Designated agent or transaction broker. This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as representatives of the seller and which will act as representatives of the buyer. Designated agency avoids the problem of dual agency. The designated agents give their respective clients full representation. The broker has the responsibility of supervising both groups of licensees.
Remember, an agency relationship requires both knowledge and consent and you have the right to be represented by whomever you wish.
Margie Harper is executive vice president of the Heart of Kentucky Association of Realtors.