Who Represents Whom in a Real Estate Transaction

If you are endeavoring to purchase or sell a house, you will probably need the assistance of a professional real estate agent. But it is not uncommon for buyers and sometimes sellers to work with a real estate agent without asking the crucial question: who does the real estate agent represent?

Sometimes the real estate agent only works for the seller, at times just for the buyer, and other times both clients.

Buyers and sellers can be misled into thinking that an agent is working exclusively for them when that is not the case. Quite often, this happens when a real estate agent practices dual agency. Dual agency occurs when a real estate agent “represents” both a buyer and seller in one real estate transaction.

The problem with the dual agency relationship is it is impossible to truly represent both a buyer and seller when they have conflicting goals. Additionally, when you become a dual agent, you’re not allowed to provide advice like you would in a traditional buyer’s agent or seller’s agent relationship. In other words, the very reason why a consumer hires an agent – to get the best advice possible.

Most states have disclosure laws where real estate agents must explain agency law to a prospective client. Even so, sometimes, either the real estate agent doesn’t explain agency well, or the consumer doesn’t understand it.

Even worse, many real estate agents don’t understand it either. Do you know how many real estate agents think they can give a consumer advice in a dual agency relationship? TONS! It is frightening how many agents don’t understand agency law in their own state. This is more commonplace than it should be.

Smart consumers secure exclusive interests of a respective buyer’s agent or seller’s agent, depending on what side of the fence they are on. They know that by doing so, their interests are protected throughout the transaction.

The best real estate agents understand that the goal isn’t to make a sale at all costs but to protect the best interests of the client they serve. For example, most homeowners would like to sell their property for the most money possible. On the flip side, most buyers want to make a purchase knowing they didn’t overpay.

Functions of Real Estate Agents

A real estate agent should have expertise in all aspects of buying or selling a home, no matter which side of the fence they sit on. Of course, this means passing a state-required test and getting licensed. While the end goal of a real estate agent is to help buyers purchase a home and help homeowners sell a home, not at the expense of violating their fiduciary responsibilities.

Consumers should also understand that the words Realtor, Real Estate agent, and broker all have different meanings! Read the detailed resource at Maximum Real Estate Exposure to know how they differ.

Below is a brief clarification of the kinds of real estate agents and their functions.

An Agent of The Buyer : Known as a Buyer’s Agent

The buyer’s agent works only with the buyer and guides them in every step with their best interests at heart, from finding a home to completing the transaction. It’s crucial to understand why you should have a buyer’s agent when purchasing a house. In particular, the buyer’s agent will do the following :

1. Assists in finding a property that matches the buyer’s search criteria.
2. Consults with the seller’s agent on all aspects of the transaction.
3. Directs buyers to professionals such as home inspectors, mortgage brokers, and attorneys.
4. Assists the buyer with all paperwork in purchasing a home.
5. Provides the buyer with advice and expertise from start to finish.

Real Estate Agent For The Seller : Known as a Seller’s Agent

The agent of the seller works only with and to the highest interest of the homeowner, advising them on everything from home staging, to proper pricing, and everything in between to completion.

The following are some of the primary roles of a seller’s real estate agent :

1. Guides you to prepare to sell your house
2. Lists your house in MLS
3. Provides online and offline marketing
4. Communicates with the seller throughout the transaction
5. Displays your home to buyers by providing photography and marketing expertise
6. Consults with the buyer’s agent before and during the sale

You can see an excellent summary of all of the things a real estate agent does for both buyers and sellers here. What’s written above only scratches the surface on what a buyer’s and seller’s agent does for their clients on a daily basis.

A Dual Real Estate Agent

As previously mentioned, he or she represents both the purchaser and the seller in a single transaction. This is lawfully allowed in some states but not in others with the assent of the buyer and the seller. Note that hiring a dual real estate agent can bring a conflict of interest since the real estate agent cannot advise the buyer or seller. Giving advice in dual agency is ILLEGAL. An agent doing so would be practicing illegal dual agency.

Designated Agency

Designated agency is when a real estate transaction is conducted in-house by the same real estate company with one agent serving the seller as a seller’s agent and another agent serving the buyer as a buyer’s agent. In this circumstance, the broker of record becomes a dual agent.

Designated agency differs from dual agency in the fact that each party has a real estate agent who is representing their best interests. Designated agency relieves the conflict of interest that is inherent with dual agency. Both buyer and seller have an agent they can lean on for advice.

Cooperating Real Estate Agents or Sub-Agents

Cooperating real estate agents or sub-agents is just another name for an agent who is working for a buyer.

They are real estate agents who, in concurrence with the listing agent organization, go into a “sub-agency” relationship in which they show the house to the buyers on behalf of the listing agent of the seller. Another term that is often used is what’s called a “co-broke.”

The company working for the seller almost always pays the real estate commission.

Real Estate Broker

A real estate broker is typically the owner of a real estate firm, but not always. They generally oversee the day to day operation of the business to make sure everything goes smoothly. A real estate broker also is responsible for the agents they employ. One vital role that a real estate broker takes on is holding a buyer’s earnest money funds in escrow until a transaction is completed.

The earnest money deposit is duly accounted for at the time of closing.

Transaction Coordinator

A transaction coordinator is another name for someone who works for a real estate agent doing tasks for them. It is possible that a transaction coordinator could be a licensed agent or not.

They typically help a real estate agent or intermediary in taking care of the administrative components of a real estate transaction, including the collection of all documents, the opening of the escrow account, the verification of the signature, and the completion of the time management information provided.

The Right Real Estate Agent

Different types of real estate agents may be required for various transactions. For those who buy or sell a property, it is imperative to find the right agent for every situation. Some agents work exceptionally well with buyers, while others are better suited to work with sellers. It is essential for consumers to distinguish this difference.

For those new to the business who become real estate agents, it is crucial to determine the career path you want to go through. You know exactly what steps you need to take to achieve your goals.

Final Thoughts on Agency
Whether you are buying or selling a home, it is essential to understand how agency law works in your state. The real estate agents you meet with should be explaining exactly how it works. You should always know if the real estate agent you hired plans on representing your throughout the entire transaction. It would be highly advisable to avoid agents who practice dual agency as it is not in your best interests.

Who Does The Real Estate Agent Represent? by Bill Gassett | Realty Biz News