Agency laws vary from state to state-- and are continuing to evolve. The goal is to provide competent and professional service to the consumer. When there are potential conflicts in those fiduciary duties, the obligation of each agent is to disclose the nature of that conflict and to obtain the consent of the parties involved in the transaction. The following are some of the common terms.
Agency--This is a framework that developed in the law to allow individuals to act through another person or representative. This particularly occurs in commercial transactions. Examples might include hiring an attorney to represent you in a business transaction, working with a stock broker to purchase stocks or other investments, or working with a real estate broker to buy or sell real estate. Your legal agent may have unlimited or limited powers on your behalf. Your legal agent owes you certain fiduciary-like statutory duties which include such things as confidentiality, promoting your best interests, and exercising reasonable skill and care.
Buyer's Agent--Traditionally, buyers of residential real estate worked with a real estate brokers or sales associates on a non-agency basis. In other words, the sales associate you work with acts as the legal agent of the seller and not as the buyer's legal agent. In contrast, buyers in commercial transactions often work with a real estate sales associate as their agent. Now, you may contract with the agent you are working with to represent you. As a buyer, you have access to listings available to your buyer's agent through the Multiple Listing Service. As a buyer, you will also receive other services from your buyer's agent, such as financing information, assistance in determining your particular price range, and assistance in facilitating the closing. Typically, the buyer and the brokerage company will enter into a written brokerage agreement. In addition, the buyer's agent will owe you all of the fiduciary duties as defined in agency law, including loyalty, confidentiality, accountability, and reasonable care and skill. The buyer's agent will represent your best interests during the transaction.
Seller's (Listing) Agent--A seller's agent works to assist the seller in locating a buyer and in negotiating a transaction suitable to the seller's specific needs. A seller's agent has fiduciary duties to the seller, which include loyalty, full disclosure, confidentiality, diligence, obedience, reasonable care, and holding safe moneys entrusted to the agent. Although a seller's agent represents the seller in the fiduciary capacity, they owe the buyer fairness and honesty. If your sales associate is representing the seller, just what kind of service can you, the buyer, hope to get? Plenty. As agent of the seller, real estate professionals fulfill that agency relationship by assisting buyers in all aspects of the home purchase. The law requires that all sales associates treat buyers with honesty and fairness. In addition to the law, there is strong motivation to do so because buyer satisfaction means repeat and referral business. Sales associates want you to think of them the next time you or a friend is selling a home.
Limited or Dual Agency--In this type of situation, both the seller and buyer in a transaction are represented by the same legal agent. In this case, there are specific statutory duties that the dual agent owes to both buyer and seller. However, those duties have a "limitation." Most notably is the duty not to disclose confidential information of one party to the other. Dual Agency is allowed only with your consent. Upon entering into a brokerage agreement (whether as buyer or seller) you will be given a form explaining dual agency that seeks your consent to allow your agent to act as dual agent should the situation arise. If you consent at that time and a dual agency situation actually arises, you will be asked to confirm your prior consent before entering into a contract for the purchase or sale of property. Please note that in a Dual Agency situation, the sales associate will be somewhat limited and you will, at times, have to act on your own behalf when negotiating terms of a sale or purchase.
The Concept of Designated Agent-this simply means that a buyer or seller has designated or selected one or more agents in a brokerage to represent him or her as a buyer's agent or seller's agent.