My Beautiful Sacramento

This is often misunderstood by consumers and it is up to the agent to explain the importance of an agency relationship.  Consumers want to be sure that their agent is on their side and representing their best interest. An agency relationship is created to form a fiduciary relationship. 

With an agency relationship, the buyer, seller, and agent are bound together in a legal relationship, with all the duties and rights that go with that connection. 

So, what is Agency?

Agency is the legal relationship an agent has with a buyer and/or a seller.  The law of agency is the one that gives everybody the right to be fairly represented in a real estate transaction where there is a broker involved.

Under the Disclosure of Agency Law

An agent may represent only the buyer, only the seller, or both.  All parties must acknowledge their understanding of who is representing them and sign a disclosure.  

Buyers or sellers can be confident that an agent on their side in the negotiations is representing their best interests.

Seller's Agent

A Seller's agent under a listing agreement with the seller acts as the agent for the seller only.  A Seller's agent or a subagent of that agent has the following affirmative obligations:

To the Seller:

      A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.

To the Buyer and the Seller:

(a)  Diligent exercise of reasonable skill and care in performance of the agent's duties.

(b)  A duty of honest and fair dealing and good faith.

(c)  A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth above.

Buyer's Agent

A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only.  In these situations, the agent is not the Seller's agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the seller. 

An agent acting only for a Buyer has the following affirmative obligations:

To the Buyer:

      A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the buyer.

To the Buyer and the Seller:

(a)  Diligent exercise of reasonable skill and care in performance of the agent's duties.

(b)  A duty of honest and fair dealing and good faith.

(c)  A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.  An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth above.

Agent Representing Both Seller and Buyer

A real estate agent can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer.  This can be difficult to do because the agent knows how much money the buyer is willing to pay AND how low the seller is willing to go to sell the property.  The agent is NOT allowed to disclose this information without the express written consent of both parties. 

It is of the upmost importance for the consumer to understand exactly how his or her agent is representing them.  Never assume the type of agency you have, get it in writing. 

Another very important thing to consider when working with a real estate agent: 

A real estate agent is a person qualified to advise about real estate.  If legal or tax advice is desired, consult a competent professional.  A real estate professional is NOT supposed to offer legal or tax advice.