1-1 1. agency relationships in this chapter evolution of buyer representation parties in a real...
TRANSCRIPT
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1. Agency Relationships1. Agency Relationships
In this chapter
Evolution of buyer representation
Parties in a real estate transaction
Types of relationships between real estate
brokerage companies and consumers
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Buyer RepresentationBuyer Representation
The practice of real estate practitioners (brokers and their agents) representing the buyer as a client
The agent of the buyer
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Evolution of Buyer Evolution of Buyer RepresentationRepresentation
Seller-representation was default of most MLSs and state regulations until ’90s
Became “out of sync” with realities of marketplace
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Consumer SurveyConsumer Survey
Most buyers thought they were represented by the seller’s agent
Most buyers shared confidential information with the seller’s agent because they though the agent was working their behalf
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Seller SubagencySeller Subagency
Any agent who brought a buyer to the transaction was considered an agent of the seller
has virtually disappeared because brokers do not offer or accept it
Vicarious liability disappearing too - by state statute or practice
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NAR Policy ChangesNAR Policy Changes
MLS policy changed to blanket offer of “cooperation and compensation”
NAR promotion of 9-point legislative model: – clarify agency relationships– allow designated agency & clarify dual
agency duties– eliminate vicarious liability
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Market TrendsMarket Trends
Percentage of buyers with a buyer representation agreement
1999 – 47%
2006 – 64%
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Parties in a Real Estate Parties in a Real Estate TransactionTransactionClient/principalBrokerAgentCustomerTransaction brokerFinder
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Express Written
Agreement
Implied Agreement
Oral Agreement
Agency Relationships
Created by
Single Agency
Dual Agency
Designated Agency
Buyer OR Seller
Buyer AND Seller
Buyer OR Seller
Types of Agency Relationships
Agent Represents
Agency RelationshipsAgency Relationships
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RelationshipsRelationships
Single agencyDual agencyDesignated agencyTransaction broker/facilitatorFinder
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Single AgencySingle Agency
Exclusive agent of the buyer or seller
All of broker’s salespeople are also agents of the buyer or seller
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Dual AgencyDual Agency
Requires disclosure and informed consent Inherent conflict between full disclosure
and confidentiality Not permitted in some states
– Colorado– Kansas– Florida– New Mexico defaults to transaction facilitator
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Designated AgencyDesignated Agency
State specificRemoves agency responsibility from
other agents in firmBroker may/may not be a dual agentAssigned agents must not share
confidential information
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Non Agency RelationshipsNon Agency Relationships
Transaction Broker
– VERY state specific – may not apply in
your state
– Acts as an intermediary
– Not an agency relationship
– Reasonable care and accounting
Finder
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Office PolicyOffice Policy
Know and comply with your broker’s
policy on types of relationships
offered and accepted
No policy = undisclosed dual agency!
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Skill Builder Tip: Creating an Agency Skill Builder Tip: Creating an Agency PolicyPolicy
1. Present a brief opening statement of agency policy.
2. Describe how the policy will be implemented.
3. Define the types of agency relationships practiced.
4. Include a rationale for the company’s agency policy.
5. Explain how the consumer is treated in each relationship.
6. Indicate what disclosures must be made.
7. Indicate when and to whom disclosures must be made.
8. Include standard forms licensees are required to use.
9. Specify training the company will provide to licensees.
10. Attorney review for policy for conformance with state laws.
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Building BlocksBuilding Blocks
What are your broker’s office policies regarding:– Types of relationships offered and
accepted?– How does the buyer benefit?– How are designated agency or dual
agency situations handled?
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