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Understanding Agency


An agent is legally obligated to look after the best interests of the person she is working for, and must be loyal to that person. However, it is all too easy to assume a realtor is your agent when in fact no such obligation exists. I want you to clearly understand when an agency relationship exists and when it does not, and to appreciate the implications.

Please read the following explanation carefully and be sure you understand it. If you have any questions, feel free to discuss them with me. I will be glad to help.

Here are some of the different possible forms of agency relationship:

  1. Vendor's Agent

    A vendor's agent must do what's best for the vendor of the property. A vendor's agent must tell the vendor anything known about the purchaser. For example, if a vendor's agent knows a purchaser is willing to offer more for a property, that information must be shared with the vendor. Confidences a vendor shares with a vendor's agent must be kept confidential. A purchaser can expect the vendor's agent to provide proper information about the vendor's property. The vendor's agent should answer all your questions honestly with nothing misrepresented.

  2. Purchaser's Agent

    A purchaser's agent must do what is best for the purchaser. A purchaser's agent will keep information about the purchaser confidential from the vendor. A written contract (Buyers' Agency Agreement) is used to establish purchaser agency. The contract will explain what services your realtor will provide. It will also state who will pay and what your obligations as purchaser are. Typically, purchasers will be obliged to work exclusively with that one realtor. Despite the legalese expressed in Buyers' Agency Agreements, the realtor is normally paid from the proceeds of the sale according to the commission split stated in the listing agreement.

  3. Dual Agent

    Sometimes an agent represents both the purchaser and vendor. A realtor can be a dual agent only if the purchaser and vendor both agree in writing. Under a dual agency agreement the realtor must do what is best for both the vendor and the purchaser. A dual agent must fully disclose information to both the purchaser and the vendor, so no information other than that detailed in the written agreement will be confidential.

Often a purchaser will work with one agent and a vendor will work with another. It may seem that the agent working with the purchaser is in an agency relationship, but that is not necessarily so. The agent working with a purchaser could be a sub-agent of the vendor (both agents work for the same brokerage) which means that "your" agent could actually be a vendor's agent. A Buyers' Agency Agreement with your realtor will supercede any obligation she may otherwise potentially have as a sub-agent of the vendor. Purchasers and vendors must always be told in writing who their realtor is really working for before the negotiations over a property commence.

As a buyer, be smart - ask for a Buyers' Agency Agreement with your realtor.


Site owner: Dot Turner, Sales Representative, Team Realty K W Inc, Brokerage 519-741-1400

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