Below are answers to frequently asked questions about “Agency”. If you have a question that you would like answered feel free to submit your question here.
What is “Agency”?
Agency is a word for the consensual “principle-agent” relationship between an agent (broker/salesperson) and the principle (buyer/seller) he or she represents. 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.
Seller as Client: (Single Agency)
If a seller contracts with a broker to market the seller’s property, the broker becomes an agent of the seller; the seller is the principle, the broker’s “Client”. In single agency, a buyer who contacts the broker to review properties listed with the broker’s firm is the broker’s “Customer”. Though obligated to deal fairly with all parties to a transaction and to comply with all aspects of the license law, the broker is strictly accountable only to the principle (in this case, the seller). The customer (in this case, the buyer) represents himself or herself.
The following information may not be disclosed by the agent without the seller’s permission or it would violate the agent’s fiduciary duty to the seller (Client):
- Information about the Seller’s personal life (e.g., health, finances, happenings).
- Why the Seller is selling.
- How long the property has been listed.
- Seller’s anxiousness to sell.
- That the Seller will accept a price or terms other than stated in the listing.
Buyer as Client: (Single Agency)
When a buyer contracts with a broker to locate property and represent his or her best interests in a transaction; the buyer is the principle, the broker’s “Client”. The broker, as agent, is strictly accountable to the buyer. The seller is the “Customer”.
The following information may not be disclosed by the agent without the buyer’s permission or it would violate the agent’s fiduciary duty to the buyer (Client):
- That the Buyer will accept a price or terms other than offered.
Buyer and Seller as Clients: (Dual Agency)
In dual agency, the agent represents two principles in the same transaction. Dual agency requires equal loyalty to two separate principles at the same time.