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Agency Relationships
What is a buyer’s agent? In a nutshell, it means that the buyer’s agent walks in the shoes of the buyer... and by law must put the client’s best interest first. The services of a buyer’s agent are usually paid for by the seller as part of the listing contact.
It used to be that only the seller was represented in the sale and purchase of a home. There are now five options for agency relationships in Minnesota real estate transactions, and state law requires that they be explained as a Realtor and client begin to work together.
The agency relationship is formed between the Real Estate Broker and the client, either a buyer or a seller, who generally works with one agent associated with the Broker and represents the client’s best interests.
Whether representing the buyer or the seller, this is a fiduciary relationship, much like the relationship between a lawyer and client, and the broker/agent owes the client the following duties:
Loyalty - broker/salesperson will act only in client(s)’ best interest
Obedience - broker/salesperson will carry out all client(s) lawful instructions
Disclosure - broker/salesperson will disclose to client(s) all material facts of which broker/salesperson has knowledge which might reasonably affect the client’s use and enjoyment of the property
Confidentiality - broker/salesperson will keep client(s)’ confidences unless required by law to disclose specific information (such as disclosure of material facts to Buyers)
Reasonable Care - broker/salesperson will use reasonable care in performing duties as an agent
Accounting - broker/salesperson will account to client(s) for all client(s)’ money and property received as agent
Minnesota Law
UnderMinnesota law, a form entitled Agency Relationships in Real Estate Transactionsmust be presented at first substantive contact to a buyer or seller in any real estate transaction. If there is to be any agency representation there must be a written contract with all elements required by statute for the particular agreement.
The courts strictly enforce the agency duties to make sure the agent keeps the client’s interests above anyone else’s interests. The courts also require that the real estate agent be fair and honest to all parties in the transaction.
Seller’s Broker
...representing and acting for the seller only. May be a listing agent, or any Realtor licensed to the listing broker.
Subagent
...a broker or salesperson who is working with a buyer but represents the seller. (for example, a builder’s onsite agent or the agent representing the seller at an open house)
Buyer’s Broker
...representing and acting for the buyer only. As with a listing contract with sellers, an agreement for buyer representation must be in writing.
Dual Agent
...one licensee representing both the seller and the buyer as clients in one transaction...or two agents licensed to the same broker, one of whom represents the seller and one of whom represents the buyer in one transaction.
In a dual agency, all licensees are deemed to represent both the seller and buyer. This relationship requires full disclosure and informed consent of both parties. Dual agents have a limited role, must not advocate or negotiate for either party, and must not act to the detriment of either party.
Facilitator
...a real estate licensee who works for a buyer, a seller or both in a transaction but does not represent either in a fiduciary capacity as a Buyer’s Broker, Seller’s Broker or Dual Agent. Facilitators are bound by license law and common law, but owe only the fiduciary duty of confidentiality unless other fiduciary duties are agreed to between licensee and consumer.
