What is Agency ?
In Real Estate, the term agency describes the relationship between a broker and a client. When a broker takes a listing to market and sell a property or help a buyer purchase a property a relationship of agency is created. In this relationship, the real estate broker is employed by their principal (the client) and the fiduciary responsibility is established.
This fiduciary responsibility obligates the broker to perform their duties with the utmost good faith, integrity, honesty, and loyalty to the client. The real estate agent working as a representative of their broker is bound by the same obligations to the client.
Agency comes in three forms, seller agency, buyer agency and dual agency.
Seller agency (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the best interests of the seller. The relationship usually is created by a listing contract.
Buyer agency (also known as a buyer's agent). A buyer's agent is hired by prospective buyers to represent them in a real estate transaction. The buyer's agent works in the buyer's best interest throughout the transaction. The buyers can pay the agency fee directly through a negotiated fee, or the buyers agent may be paid by the seller or by a commission split with the listing broker.
Dual agency is a relationship in which the brokerage represents both the buyer and the seller in the same real estate transaction. This could happen if a buyer chooses a property that is listed by the same brokerage the buyer has engaged as their buyer representative.
A dual agent typically owes limited duties to each of the parties. Because of the potential for conflicts of interest in a dual-agency relationship, it is vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller consent to the agent representing both of them, is legal in most states.
Licensed Arizona REALTOR®