A real estate agent is a person who is authorized to conduct real estate business in a given state. As a licensed professional, they are educated in real estate matters and have passed a state board exam. It is important to note that there are significant distinctions between the terms “agent,” “salesperson,” and “broker.” Generally speaking, an “agent” is a salesperson as opposed to a broker, who generally handles higher-level real estate issues.
In some states, an “agent” is referred to as a “real estate broker,” while the broker is referred to as a “qualifying broker.” In some states, such as Colorado, all licensed real estate professionals are considered to be brokers.
Depending on their education, licensing, and certification, real estate agents may perform any number of tasks such as:
- Handling standard client forms and questionnaires;
- Answering any basic questions that buyer or seller clients may have;
- Reviewing real estate contracts;
- Negotiating prices up to the closing of a deal;
- Showcasing property and guiding clients in walk-throughs and open houses; and
- Providing clients with information, up to a certain level of knowledge and expertise.
What Do Real Estate Agents Do For Buyers? What Do Real Estate Agents Do For Sellers?
In addition to the aforementioned duties, real estate agents may also conduct a search for local properties that match their client’s preferences and price range. Doing so generally involves searching online or scouting houses in person, and they may also arrange property showings. Additionally, real estate agents can inform clients about the housing market in their local area.
Once a client has found a home that they are interested in buying, real estate agents help submit bids and negotiate on behalf of a buyer throughout the buying process. They also help arrange home appraisals and inspections, as real estate agents frequently have working relationships with people who are in the housing industry and provide these services.
There is a considerable amount of paperwork that is associated with the process of buying a home. A real estate agent helps guide the buyer through all of the contracts, agreements, and other necessary documents when buying a home. Additionally, real estate agents submit paperwork on behalf of a buyer that they represent.
In terms of selling, homeowners who are wanting to sell their homes frequently work with a listing agent. A listing agent provides clients with valuations of their homes so that a fair listing price can be set, as well as make suggestions for home updates that will help a home sell better in the current market. Listing agents also enter homes into local listing service databases, and network with other real estate agents in order to create advertisements and conduct open houses.
Real estate agents create interest for buyers, and will often check a potential buyer’s finances before arranging a showing or accepting an offer in order to determine whether a potential home buyer can afford to purchase the home.
There are several other aspects of a home sale that real estate agents may negotiate on behalf of a seller. An example of this would be how a real estate agent may negotiate the entire price of a home, or negotiate smaller expenses such as closing costs, warranties, and fees. Most importantly, if there are any legal actions that occur during the process of selling a home, the real estate agent will address them on behalf of their client. This may include:
- Submitting; and/or
- Filing any documents, contracts, and/or agreements.
What Is Dual Agency?
A dual agency refers to when the same brokerage firm represents both the buyer and the seller in the real estate transaction. This is considerably uncommon in some states; however, it can often be acceptable where the same brokerage firm represents the clients, but different agents within the firm represent the buyer and seller, respectively. This arrangement creates a somewhat different agency relationship.
It is imperative to note that dual agency arrangements must always be disclosed to both the buyer and the seller. Undisclosed dual agency work is illegal in every state. When a broker represents both sides of a transaction, the broker must ask for both parties’ consent which must be made in writing. As such, when the parties consent to dual agency, they are accepting limitations to a traditional real estate broker/client relationship. An example of these limitations would be that the agent will deal impartially with both parties.
When a real estate agent represents both parties in a real estate transaction, the agent is considered to be a dual agent. Because the broker is representing both sides of the transaction, the broker is generally unable to maintain all of their specific duties to both parties. The broker’s potential conflict of interest is why the broker must obtain both parties consent to the dual agency.
An example of these duties would be the fiduciary duty. A fiduciary duty requires that one party put their client’s interests ahead of everyone else. As such, fiduciary duties create problems when two parties believe that one professional has their best interest in hand. When this happens, a dual representation issue may arise.
When Would Dual Representation In Real Estate Transactions Be Problematic?
To reiterate, dual representation can be a problem because a professional’s fiduciary duty cannot be completely satisfied if there are two parties with opposing interests, such as a buyer and seller in a real estate transaction. Generally speaking, when only one professional is involved in a transaction, only one party’s fiduciary interests are protected; however, the other party may not be aware that the professional does not have their best interest in mind.
Another example of when dual representation can create a problem in a real estate transaction would be when there are multiple other parties involved. This generally includes the:
- Broker; and/or
- A closing attorney.
The broker and attorney generally owe a fiduciary duty to the seller, and not to the buyer. Because of this, when the seller and buyer enter into a transaction, the broker and attorney will generally do everything that they legally can in order to ensure that the seller receives the best deal possible, while the buyer generally receives the worst deal legally possible.
In terms of what you can do about issues associated with dual representation in real estate transactions, you may ask the professional for clarification. However, as a general rule, if you hire the person they owe you a fiduciary duty. An example of this would be how if you contacted an attorney for the transaction, and you are paying the attorney, they will owe you the fiduciary duty. Alternatively, if you enter into the agreement and the other party provides an attorney for you to interact with, you will not have the fiduciary relationship with that attorney.
When both parties consent to dual agency, the broker or agent will have a duty to disclose information to both parties. They must be honest with both parties, as long as they do not give away information which may weaken or hurt the other party’s bargaining position.
An example of this would be how an agent must disclose known defects about the property. However, there are exceptions to the disclosure policy. The agent will not disclose that:
- The buyer is willing to pay a higher price;
- The seller is willing to sell for a lower price; and
- The buyer or seller is willing to accept different terms
Additionally, the agent will not disclose without prior authorization:
- The motivation of the buyer or seller; and
- Personal information about the buyer or seller.
Do I Need An Attorney For Issues With Dual Representation In Real Estate Transactions?
If you are involved in a dual representation real estate relationship, you should consult with an experienced and local real estate lawyer.
An attorney can ensure you are not being taken advantage of, and will also be able to represent you in court, as needed, should any issues arise.