Understanding Agency
Joe Scuteri • January 29, 2025
It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.
- Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
- Subagent. A subagent owes the same fiduciary duties to the agent's principal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer’s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
- Buyer's representative (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
- Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them is legal in most states.
- Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
- Nonagency relationship (called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Get at least three written estimates Get references and call to check on the work. If possible, go by and visit earlier jobs. Check with the local Chamber of Commerce or Better Business Bureau for complaints. Be sure that the contract states exactly what is to be done and how change orders will be handled. Make as small a downpayment as possible so you won’t lose a lot if the contractor fails to complete the job. Be sure that the contractor has the necessary permits, licenses, and insurance. Be sure that the contract states when the work will be completed and what recourse you have if it isn’t. Also remember that in many instances you can cancel a contract within three business days of signing it. Ask if the contractor’s workers will do the entire job or whether subcontractors will do parts. Get the contractor to indemnify you if work does not meet any local building codes or regulations. Be sure that the contract specifies the contractor will clean up after the job and be responsible for any damage. Guarantee that materials used meet your specifications. Don’t make the final payment until you’re satisfied with the work.
Upgrading your home is always appealing, but which enhancements really get you a good return for your money when it’s time to sell? A 2002 survey by Remodeling Magazine and REALTOR® Magazine has the answer. To see the complete article, visit http://www.realtor.org/rmomag.nsf/pages/costvaluedec02
The answers to these questions will help you decide:
When you sell a stock, you owe taxes on your gain—the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.
It’s an objective opinion of value, but it’s not an exact science so appraisals may differ. For buying and selling purposes, appraisals are usually based on market value—what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes. Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value. Appraised value doesn’t consider special considerations, like the need to sell rapidly. Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.
Make your home more appealing for yourself and for potential buyers with these quick and easy tips.
Owner’s manuals for items left in the house Warranties for any items left in the house A list of local service providers—the best dry cleaner, yard service, etc. Garage door opener Extra sets of house keys Code to burglar alarm and phone number of monitoring service if not discontinued.
Give your forwarding address to the post office, usually 2-4 weeks ahead of the move. Notify our charge cards, magazine subscriptions, and bank of the change of address. Develop a list of friends, relatives, and business colleagues who need to be notified of the move. Arrange to have utilities disconnected at your old home and connected at your new one. Cancel the newspaper. Check insurance coverage for moved items. Usually movers only cover what they pack. Clean out appliances and prepare them for moving, if applicable. Note the weight of the goods you’ll have moved, since long-distance moves are usually billed according to weight. Watch for movers that use excessive padding to add weight. Check with your condo or co-op about restrictions on using the elevator or particular exits. Have a “first open” box with the things you’ll need most—toilet paper, soap, trash bags, scissors, hammer, screwdriver, pencils and paper, cups and plates, water, snacks, and toothpaste.
To find out how much money you’ll net from your house, add up your closing costs and subtract them from the sale price of the house.
The closing date. See if the date the buyer wants to take title is reasonable for you. Date of possession. See if the date the buyer wants to move in is reasonable for you. The earnest money. Look for the largest earnest money deposit possible; since it is forfeited if the buyer backs out, a large deposit is usually a good indication of a sincere buyer. Fixtures and personal property. Check the list of items that the buyer expects to remain with the property and be sure it’s acceptable. Repairs. Determine what the requested repairs will cost and whether you’re willing to do the work or would rather lower the price by that amount. Contingencies. See what other factors the buyer wants met before the contract is final—inspections, selling a home, obtaining a mortgage, review of the contract by an attorney. Set time limits on contingencies so that they won’t drag on and keep your sale from becoming final. The contract expiration date. See how long you have to make a decision on the offer
