Who Does "Your" Agent Work For?

A real estate agent works for:

1. the Seller
2. the Buyer 
3. Both the Seller and the Buyer
4. Neither the Seller or the Buyer

Which is the right answer? Well, it depends! Not so long ago, in a neighborhood near you,

This was the way it was:

The listing agent obtained the listing from the seller and represented that seller. A second agent, the "selling agent," brought the buyer to the table, but was acting as a subagent (an agent of the listing agent) often unbeknownst to the buyer .

In this situation, even though the selling agent may have never met the seller, he or she still had a legal obligation to report to the seller any information the buyer revealed, or any information the agent found out about the buyer's situation that would help the seller's negotiating position. That makes the agents sound evil, but in fact, if they had not communicated the information to the seller, they would have been breaking the law. Both agents had a fiduciary obligation -- a legal and moral obligation to work toward the best interests of the beneficiary. The seller was the client for whom agents were working. The buyer was merely the customer. This was and still is commonly known as SELLER AGENCY .

In 1983, a study conducted by the Federal Trade Commission found that:

• 80% of buyers stated that the agent played a major role in negotiations with the seller
• 71% of buyers working with selling subagents felt that the agent represented them
• 73% of the buyers claimed they told "their" agent the maximum price they could afford
• 82% of buyers thought whatever they told "their" agent was confidential and
• 74% of sellers thought that the selling subagent was representing the buyer.

That meant that the vast majority of buyers were "spilling their guts" to agents who were representing someone else, i.e., the seller. And the seller, for the most part, didn't realize that the agent who brought the buyer was actually working for them. In short, it was quite confusing for everyone involved.

The report fueled a nationwide legislative agenda that, in the end, required the real estate industry to disclose who the broker or licensee represents in every situation. By 1988, most states had disclosure laws in place. By the end of 2003, some form of required agency disclosure law or regulation had been adopted in all 50 states.

This is the way it is:

AGENCY DISCLOSURE

The requirement placed on the agent to inform you who he/she is working for. If you are not represented by a real estate agent (selling or buying), expect to be asked to sign an Agency Disclosure Form by the agent on the other side of the transaction. Expect to hear the agent make this disclosure upon having a substantive discussion about a specific property.

SELLER AGENCY

The traditional form of seller agency still exists. Today, the seller's agent, also known as the listing agent, represents the seller. Subagency also still exists, but is now optional - sellers can now chose is they wish to offer subagency or not.

BUYER AGENCY

Once it became clear how confused everyone was about the agent/client/customer relationship, many in the real estate industry experienced a Wow-Why-Didn't-We-Think-Of-This-Before moment. And so, the practice of buyer agency was born - now buyers can employ a real estate agent to represent them exclusively.

So now we have seller's agents (listing agents) and buyer's agents (selling agents) who act exclusively on behalf of their respective clients:

• performing in accordance with the agreement with their clients
• acting in their best interests
• maintaining confidentiality
• exercising a level of care and service in line with industry standards and
• obeying the law and regulations.....

And Everyone Lived Happily Ever After!

Hold on.....

                   Wait just one second.....

                                                           Is that a......wrinkle?

See the wrinkle explained in my reports on Dual and Designated Agency.

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Seller
Agency
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