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General Information
Agency Disclosure
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All real estate agents are required to explain
the nature of their relationship with all parties whom they contact
in connection with a Real Estate transaction. This is often referred
to as "Agency Disclosure" since the real estate agent must establish
and disclose whether you will be their "Client" or their "Customer".
There are substantial differences in the duties owed and the services
provided to Clients and Customers, and you should be familiar with
your options before committing to either.
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Definitions:
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Agent:
While the term "Agent" is not specific to the Real Estate industry,
most Real Estate Salespeople and Brokers act as Agents when
conducting business. An Agent is commonly defined as any person
who represents another person in a business transaction.
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Fiduciary:
A person in a position of trust and confidence who must put
the interests of another person (their client) above all others.
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Client:
Often referred to as a Principal, a Client is a person who asks
an Agent to act on his or her behalf during the purchase, sale,
exchange or rental of a property or business. An Agent owes
their clients full fiduciary duties, such as loyalty, confidentiality,
accountability, duty of care, obedience to all lawful instructions,
and full disclosure of all pertinent facts.
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Customer:
A customer is a person who has not retained an Agent to work
on his or her behalf. While a customer does not enjoy the fiduciary
duties and benefits of the Client-Agent Relationship, they are
nevertheless entitled to be treated fairly, honestly and with
due care at all times. |
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Types of Agency Relationships:
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An agency relationship is created when a person, known as the client,
asks another person, known as an Agent, to act for and on their
behalf in a business transaction. In a typical Real Estate transaction,
an Agency Relationship is created when a Seller or Buyer asks a
Real Estate Agent to be their Agent.
There are two basic types of
agency relationships:
- Single Agency:
When an Agent exclusively represents a single client's interests
in a transaction, it is known as Single Agency.
- Dual Agency:
In certain circumstances an agent may represent both the Seller
and the Buyer in a Real Estate transaction. Because a Dual Agent
owes the same fiduciary duties to both clients, it is often
difficult to ensure that everyone's best interests are being
protected. Because of this, the written informed consent of
both the Seller and the Buyer is usually required before an
Agent may represent both.
While a complete discussion of agency extends well beyond this
short summary, your real estate agent would be happy to answer any
questions and provide further details
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