Agency Relationships In MN
Prandium Group believes that representation is an important aspect of buying and selling properties. We want you to understand representation so that you can make informed decisions about your home buying and selling process.
What is Agency?
Agency is a relationship based on one person representing the interests of another person. Real estate agents are licensed by the state to represent a person for the sale, purchase or leasing of a property. The responsibility of the agent is defined by state law, the REALTOR Code of Ethics and general principles of agency law.
In real estate transactions, an agency is formed between the real estate broker and the client. Generally, the client works with one agent who is associated with the broker. The client may be either a buyer or a seller. The type of relationship formed between the agent and the client is called a fiduciary relationship which is based on trust because the agent owes the following duties to the client:
NOTE: The source of compensation doesn’t determine agency. It can be paid by the buyer, seller or both or neither (subject to restrictions under applicable state law).
Real estate agents have considerable knowledge that can help buyers in deciding what property makes the best sense to buy. Prandium Group firmly believes that buyer representation is an important service to our clients.
When a buyer is represented by an agent, that agent’s fiduciary duties are owed to the buyer not the seller. The exception to this involves transactions involving dual agency. The agent who represents the buyer has more freedom to discuss certain aspects of the transaction. The buyer can obtain information from his/her agent which a seller’s agent may not be able to provide.
The real estate company that lists the property is called the listing broker. The listing agent will market the home and use his or her expertise to locate a buyer for the property. These efforts may include holding open houses, internet or media advertising, direct mail campaigns, networking, and much more.
Under certain circumstances a listing agent may have a legal responsibility to disclose information that is detrimental to the seller. If the agent is aware of adverse material facts about the property, the agent is required by law to disclose those facts to the buyer. In addition, if the agent learns that a party is not intending to perform under their contract, this information must also be discussed.
A buyer represented by a Prandium Group agent may be interested in purchasing a property that is listed by Prandium Group. This situation creates what is called dual agency. Dual Agency arises when the broker has a relationship with two clients, the buyer and seller, who may have differing interests.
Dual agency is an appropriate form of representation and can provide benefits to both parties as long as it is disclosed and agreed upon by both the buyer and seller. Upon agreement, neither agent may disclose any confidential information that would create a negotiating advantage for either client. Confidential information includes such things as the possibility that the seller will accept a price less than the listing price, or that the buyer will pay a price higher than the price offered. In any agency relationship, if the buyer or seller have any legal questions, they should consult an attorney.