Working With Professional Real Estate Agents (Part 1 of 2)

Buyers and sellers typically work with a licensed real estate salesperson or broker. It is important to ascertain if that person is working "for" you (you are the client) or "with" you (you are the customer). Most states will require that the licensee make early written disclosure concerning the agency relationship.

License Required

State licensing law requires anyone acting as a broker or salesperson to first obtain a real estate license this involves taking real estate classes, passing an examination and paying fees. The state has the power to revoke or suspend a licensee for violating any of the licensing laws.

Common examples of violations would be a misrepresentation, false advertising, undisclosed dual agency, secret profits, and commingling of client monies.

An agent is one who represents another, called the principal, in dealings with third persons. The best way to create an agency is using an express written contract, although agency can also be created after the fact through "ratification" by the principal of the agent's acts.

The agent owes the principal fiduciary duties of good faith, full disclosure, confidentiality, obedience, accounting, and the exercise of reasonable skill and care.

An agency relationship can be terminated by expiration of the term, the death of either party, mutual rescission or revocation by the principal i.e., the principal has the power to revoke the agency at any time but may be liable for breach of the agency contract if the agent has done nothing wrong.

A listing is a written employment contract in which the owner authorizes a broker to deal with prospective buyers on behalf of the owner. The listing is a personal service contract that can neither be recorded nor assigned. The amount of commission is negotiable between owner and agent.

The main types of listings are the exclusive listings, open listings, and net listings. The Multiple Listing Service (MLS) is an organized "pooling" of listings by broker members.

The listing agent represents the seller; in some cases, the listing agent may offer to represent the buyer as well in what is called a dual agency. In other cases, the buyer may decide to retain the services of a buyer's broker to represent the buyer exclusively in most cases, the buyer's broker will be paid from an authorized commission split with the listing broker.