This is a difficult topic to explain to buyers and sellers. The laws differ from state-to-state, so this article will only apply to the state of Florida.
- Let's start with the basic foundational rule that the broker of a real estate company, owns all the listings (seller's interests) and sales (buyer's interests) that are processed through that company.
- Next to be built upon that foundation is, the broker (and every agent who works with that broker) cannot represent the best interests of the parties on opposite ends of a transaction.
Home Buyers: When you call a Realtor to ask about a particular listing or listings, you should be aware of whom that Realtor is representing. If you've called the listing agent, that Realtor may be representing the seller in the form of "Single Agent" and is working in the best interests of the seller.
However, in the state of Florida, as soon as a listing agent, or anyone in that same brokerage, begins to work with a buyer on that particular property, they can no longer represent the seller or the buyer as a "Single Agent". They must now transition to a "Transaction Broker" relationship, which in the simplest terms means, they now represent the "Transaction" to a certain extent. They can now work with both the buyer and the seller, in a neutral capacity. But neither of these types of representation will allow the agent to disclose any privileged information to the opposite party.
Home Sellers: Keep in mind how these laws effect you. If the agent who listed your property, along with any agent who works at the brokerage with whom you're listed, produces the buyer for your home, they may not represent your interests above the interests of your buyer. It's the law. The agents at that brokerage must remain neutral.
Does it sound unfair? Maybe. But remember, under no circumstances may your agent disclose your confidential information to the other party. (Details are below)
In the state of Florida, the only way to have the representation of a "Single Agent" is if the listing and selling agents work for different brokerage companies. In that case, there can be a Seller's Agent and a Buyer's Agent.
Be prepared for this though. The Florida Association of Realtors is planning to do away with all forms of Single Agency within the next couple of years. Already, about 95% of the real estate brokerages, only offer the representation of "Transaction Broker". The reason? Less liability for the brokerage. As a single agent, what a listing agent says to a buyer, and vice versa, can be assumed to be directly from the mouth of the seller or buyer, which means the agent can be sued for misrepresentation, even though the seller or buyer may have given false information to the agent. And since the agents often have no way of knowing if the information is false, the only alternative is to not function in a capacity that allows the agents to speak directly for the client. There has to be absolute honesty and trust for this representation to be advantageous to the client or the agent.
Now let's compare the differences in these two types of representation. Here is the verbiage of these relationships.
SINGLE AGENCY
- Dealing honesty and fairly
- Loyalty
- Confidentiality
- Obedience
- Full disclosure
- Accounting for all funds
- Skill, care and diligence in the transaction
- Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing; and
- Disclosing all known facts that materially affect the value of the residential real property and are not readily observable.
TRANSACTION BROKER
- Dealing honestly and fairly
- Accounting for all funds
- Using skill, care and diligence in the transaction
- Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer
- Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing;
- Limited confidentiality, unless waived in writing by a party. This limited confidentiality will prevent disclosure that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, of the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information requested by a party to remain confidential;
- And additional duties that are entered into by this or by separate written agreement.
Limited representation means that a buyer or seller is not responsible for the acts of the licensee. Additionally, parties are giving up their rights to the undivided loyalty of the licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and seller, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties.
If you have specific questions about the laws of representation, you may wish to consult a real estate attorney, before entering into any type of agreement with your licensee. However, all real estate licensees must disclose how they will be representing you, BEFORE they can begin to work with you.
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