The concept of agency is not one that I had given much thought to until I started my real estate pre-licensure course work, and then it became pretty obvious really quickly, that in the world of real estate, agency is a really big deal. If you are looking to buy or sell a home, it is important and you should understand what it means.
I am a real estate AGENT. This means that the relationships that I have with my clients involves a degree of agency. Agency is (according to this website):
A consensual relationship created by contract or by law where one party, the principal, grants authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party. An agency relationship is fiduciary in nature, and the actions and words of an agent exchanged with a third party bind the principal.
My agency relationship with my clients is written; we have a buyer's agreement or a listing agreement, signed by all parties, that outlines the ways in which I can legally represent my clients. These agreements also outline how I will be paid, what happens if it's not a good fit and my clients don't want to work with me anymore, how long the agency relationship will last, and other important items. My legal right to represent my clients, to be their agent, is limited. I can't, for example, go negotiate the purchase of a new car for them (although I am really good at this, in case anybody was wondering).
What does that mention of "fiduciary" mean in the definition, you might be wondering? Well, it doesn't just include money. From the same website:
An individual in whom another has placed the utmost trust and confidence to manage and protect property or money, The relationship wherein one person has an obligation to act for another's benefit.
Having a fiduciary duty to my clients means that in everything I do, their best interest comes first. Always. This is so important, and a very good reason to work with a real estate agent that you really trust and have good communication with. In an industry where the money I make is 100% dependent on how much I can either sell your house for, or the list price of the house I help you purchase, your trust in me - that I will work just as hard for you if you are buying a $100,000 house as a $400,000 house - is huge.
So - work with someone you trust, that you have good communication with, and make sure that your agency relationship with that agent is clearly defined and in your best interest.
I know, I know. So exciting. But very important when you are talking about the single most expensive investment most people make!
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