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Real Estate Relationships Explained
All REALTORS® are required to explain the nature of their relationship with all parties whom they contact in connection with a Real Estate transaction. This is often referred to as "Agency Disclosure" since the REALTOR must establish and disclose whether you will be their "Client" or their "Customer". There are substantial differences in the duties owed and the services provided to Clients and Customers, and you should be familiar with your options before committing to either.





Definitions:
    • Agent:
      While the term "Agent" is not specific to the Real Estate industry, most Real Estate Salespeople, Brokers and REALTORS act as Agents when conducting business. An Agent is commonly defined as any person who represents another person in a business transaction.
    • Fiduciary:
      A person in a position of trust and confidence who must put the interests of another person (their client) above all others.
    • Client:
      Often referred to as a Principal, a Client is a person who asks an Agent to act on his or her behalf during the purchase, sale, exchange or rental of a property or business. An Agent owes their clients full fiduciary duties, such as loyalty, confidentiality, accountability, duty of care, obedience to all lawful instructions, and full disclosure of all pertinent facts.
    • Customer:
      A customer is a person who has not retained an Agent to work on his or her behalf. While a customer does not enjoy the fiduciary duties and benefits of the Client-Agent Relationship, they are nevertheless entitled to be treated fairly, honestly and with due care at all times.


  • Types of Agency Relationships:
    An agency relationship is created when a person, known as the client, asks another person, known as an Agent, to act for and on their behalf in a business transaction. In a typical Real Estate transaction, an Agency Relationship is created when a Seller or Buyer asks a REALTOR to be their Agent.

    There are two basic types of agency relationships:

    1. Single Agency:
      When an Agent exclusively represents a single client's interests in a transaction, it is known as Single Agency.
    2. Dual Agency:
      In certain circumstances an agent may represent both the Seller and the Buyer in a Real Estate transaction. Because a Dual Agent owes the same fiduciary duties to both clients, it is often difficult to ensure that everyone's best interests are being protected. Because of this, the written informed consent of both the Seller and the Buyer is usually required before an Agent may represent both.

    While a complete discussion of agency extends well beyond this short summary, your REALTOR would be happy to answer any questions and provide further details.



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