In a traditional real estate setting here in Michigan, Sellers are represented by the company their property under contract with. The listing agent and the listing company, with all of it’s agents, have a fiduciary responsibility to represent the interest of their contacted sellers. Seller hire a real estate firm to help with the process of selling their home. In the same turn, they also sign a contract agreeing to have that firm represent their best interests in the selling process.
The advantages of hiring a real estate firm to help sell are:
Pays attentions to Sellers needs. Listings are posted in the MLS where other agents have access to the property information. Many agencies will do virtual tours or photo showcases of the property. Online advertising: Web Sites, Virtual Tours, Classifieds, Etc. Advertise in printed mediums. Gives valuable information on Market Values of similar properties and suggest list price. Negotiate on behalf of the Seller. Strengthen the seller-client's negotiating position. Negotiate approved purchase agreement to safeguard seller-clients. Attempt to solve problems to the seller-client's satisfaction.
There are also Buyer Agents, who have contracts with their buyer clients. In that type of relationship, the agent has the fiduciary responsibility to represent the interest of their contracted buyers. This has become a very popular practice in recent years. It is almost expected now, for an agent to represent the buyer they are working with.
The advantages of using a buyers agent are great. Services that are provided to a Buyer-Client are as follows:
Pays full attention to the Buyer's Needs. Share information the agent knows about a seller, (if the seller is not also represented by the firm). Focuses on expanding the range of choices to satisfy the buyer's needs. Find the best property for the client. Promote the buyer's search. First opportunity to view new listings. All properties are available and viewable, and the sales price is negotiable. Give advice with FACTS. Educate the buyer. Compare competing properties. Negotiate on behalf of the buyer. Strengthen the buyer-client's negotiating position. Share all known information about the seller. Provide price counseling for the buyer-client. Negotiate approved purchase agreement to safeguard buyer-clients. Suggest financing alternatives that may be to the buyer's best interest. Continue services to the buyer-client during negotiations. Attempt to solve problems to the buyer-client's satisfaction.
Then there are Dual Agency relationships, which can be more complicated, but have their purpose. A dual agency relationship arises when the represented buyer decides to look at and/or write a purchase agreement on a property that is listed with the buyers agent’s firm. Since the agent/firm has a contract with both the buyer client and the seller client, the agent has a fiduciary responsibility to represent the interest of both parties. This is very difficult to do. However, there is an advantage for utilizing a dual agency relationship.
Advantages of Dual Agency are:
1. The agent is obligated to both parties to keep their personal information confidential. That means that the agent can’t share any information about either party without consent of the affected party. This includes private conversations about what the clients have discussed regarding the transaction and price, private financial matters, health issues and other things that the agent’s clients would like to keep confidential.
2. Both clients are treated in a equal and fair fashion.
3. With multiple offers under the same buyers agent, the agent is not allowed to share the offers with the competing represented buyers, even under the explicit request of the Seller. (However, if another offer is brought in by another buyers agent who is not part of the representing firm, the seller can request the offer to be shared with other buyers. This is not the case with buyers who are represented under the same firm as the seller. In this instance, the offer can only by shared with other buyers with the written consent of the affected firm represented buyer).
Disadvantages of Dual Agency:
1. The agent cannot council either party on price.
2. The agent cannot share personal information regarding either party without consent of the affected party.
3. The agent cannot council the buyer on what they feel the property is worth, because it would be violating the fiduciary contract with the seller.
4. The agent cannot council the seller on what they should offer the buyer, because it would be violating the fiduciary contract with the buyer.
What can a Dual Agent do?
1. The agent can provide sold information regarding similar properties to either represented client, upon request of the client.
2. The agent can help facilitate the contract between parties while treating each side fairly.
3. The agent protects the confidentiality of both the Buyer and the Seller.