In California Real Estate one of the first forms you will see is a Disclosure Regarding Real Estate Agency Relationship (AD). In fact this is required by state law and the language on the form is statutory.
The form is simply a disclosure of the three ways you can have an Agency Relationship with your Real Estate Agent. The agency is confirmed in a Purchase Agreement which will be covered in another post.
The first Agency is Seller’s Agent. This is the Listing Agent for the Seller. For instance if Joe Agent from Top Listing Agency lists a home for sale, he is the listing agent or Seller’s Agent. A Seller’s Agent will have the following affirmative obligations to the Seller:
- A Fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.
The Seller’s Agent will have the following duties to both the Seller & Buyer:
- Diligent exercise of reasonable skill and care in performance of the agent’s duties.
- A duty of honest and fair dealing and good faith.
- A duty to disclosure 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.
The next Agency Relationship is a Buyer’s Agent. With the Buyer’s consent, a Seller Agent can act as agent for the Buyer only. As with the Listing Agent the Buyer’s Agent duties are the same as outlined above for the Seller’s Agent but the Fiduciary duty is given to the Buyer.
If you were to make an offer through Joe Agent on his property, Joe would be acting as the third Agency – Agent Representing Both Buyer and Seller (Dual Agent). Joe would not be able to represent you as a Buyer’s Agency because he is the Seller’s Agent for the Seller.
Dual Agency is the most complex of the three relationships. A real estate agent in California can legally be the agent of both the Buyer and the Seller in a transaction, but only with the knowledge and consent of both the Seller and Buyer. In a dual agency situation the agent has the following affirmative obligations to both the Buyer and Seller.
- A fiduciary duty of utmost care, integrity, honesty an loyalty in the dealings with either the Seller or Buyer.
- Other duties to the Seller and Buyer as noted above.
In representing both Seller and Buyer, the agent may not, without express permission of the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the priced offered.
Okay, now that you should be really confused let me take it a step further. Let’s say that you want to make an offer on the home listed by Joe Agent of Top Agency. You have been working with Susie Sales who is also working for Top Agency. Because the Broker for the Company employs both agents, you are in a Dual Agency Situation.
In my career as a real estate agent I prefer to be a Seller’s or Buyer’s agent and avoid dual agency. That is not to say that I have not been a Dual Agent over the years, it is just much harder to serve two masters.
Agency is one of my favorite subjects and this post could go on for thousands of words. I have posted a copy of the Disclosure Regarding Real Estate Agency Relationship. If you have any specific questions regarding Agency Relationship please post a comment here, or send me an e-mail.
Please click here to view a Disclosure Regarding Real Estate Agency Relationship. Also note it has been digitally signed by me for an example of how that looks.
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