Real Estate
Agency (Real Estate)
Agency is a legal relationship where a real estate agent (agent) is authorized to act on behalf of a client (principal) in a real estate transaction.
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Exam Tip
OLD CAR = agent duties. Dual agency needs written consent from BOTH parties.
What is Agency in Real Estate?
Agency is the fiduciary relationship between a real estate professional and their client. The agent owes specific duties to the principal (client) and must act in their best interest.
Types of Agency Relationships
| Type | Description |
|---|---|
| Seller's Agent | Represents seller's interests |
| Buyer's Agent | Represents buyer's interests |
| Dual Agent | Represents both (with consent) |
| Transaction Broker | Facilitates deal, represents neither |
| Designated Agent | Two agents from same brokerage represent each party |
Agent Duties (OLD CAR)
| Duty | Meaning |
|---|---|
| Obedience | Follow lawful instructions |
| Loyalty | Put client's interests first |
| Disclosure | Reveal all material facts |
| Confidentiality | Protect client's private information |
| Accounting | Handle funds properly |
| Reasonable Care | Use professional skill and care |
Agency Disclosure
Agents must disclose who they represent:
- Usually required at first substantive contact
- Written disclosure required in most states
- Client must acknowledge the relationship
Dual Agency Concerns
| Risk | Description |
|---|---|
| Conflict of interest | Can't fully advocate for both |
| Confidentiality issues | Can't share negotiation info |
| Reduced representation | Neither party fully served |
Must have written consent from both parties.
Creating Agency
- Express agency: Written agreement (listing, buyer agency)
- Implied agency: Created by actions
- Agency by ratification: After-the-fact approval