Planning on buying a home in 2017? My guess is you are searching online and not with a REALTOR®. Potential first time home buyers have a plethora of websites available to search for their dream home and when they find it, they want to see it immediately. But WAIT! Before you grab your phone or tap that link to set up a showing, you need to understand AGENCY.
Agency is the type of relationship a home buyer creates when they work with a real estate agent. In Minnesota, there are different types of relationships available to home buyers and sellers. It is important to understand these before signing a contract or purchase agreement for a home. These relationships are called “agency” relationships and carry with them legal, fiduciary duties and responsibilities for the broker as well as for the buyer and seller.
- Buyer's Agent
- Seller's Agent
- Dual Agent
Buyer’s Agent
A Buyer’s Agent acts solely on behalf of the buyer and owes duties to the buyer including the utmost good faith, loyalty, and fidelity. The agent will negotiate on behalf of, and act as an advocate for, the buyer. The buyer is legally responsible for the actions of the agent when that agent is acting within the scope of the agency. The agent must disclose to sellers all adverse material facts concerning the buyer’s financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property. A separate written buyers’ agreement or contract is required which sets forth the duties and obligations of the parties.
Seller’s Agent
A Seller’s Agent acts solely on behalf of the seller and owes duties to the seller which includes the utmost good faith, loyalty, and fidelity. The agent will negotiate on behalf of, and act as an advocate for; the seller. The seller is legally responsible for the actions of the agent when that agent is acting within the scope of the agency. The agent must disclose to buyers all adverse material facts about the property that are known by the broker. A separate written listing agreement or contract is required which sets forth the duties and obligations of the parties.
In both buyer and seller agency, the following fiduciary duties are owed to the client:
FIDUCIARY DUTIES
- Loyalty
- Obedience
- Disclosure
- Confidentiality
- Reasonable Care
- Accounting
DUAL Agent
A dual agency is created when both the buyer and seller have signed representation agreements with the same broker. The parties may have two different salespersons or they may be the same person. All duties and obligations to the buyers and sellers remain the same in a dual agency. Because it is impossible to disclose all information AND be confidential at the same time, dual agency must be disclosed and agreed to in writing. All material facts regarding the property must be disclosed regardless of agency.
Why is this Important when Buying a Home?
Every house a home buyer sees on Zillow, Realtor.com or the MLS has a written agreement or contract in place between the seller and the listing broker. If a buyer does not sign a contract and contacts the listing agent directly, the agent is under contract to share everything said with their seller. But if a home buyer signs a contract with a REALTOR® before talking with real estate agents and viewing homes, their private information stays private.
AND the best part for MY buyers is that signing a contract does not cost anything. My commission has been negotiated to be paid at the closing by the seller. This means there is NO OUT of POCKET cost to have a REALTOR® in my experience in your corner.
Still have a Home Buying Question?
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