Agency Relationships……Do You Understand Them?

Secret Agent copyIt’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. It is equally as important for you to know what agency relationship it is that you have with your salesperson or agent. If it has not been explained to you in a way that you fully understand, or you just simply do not know what type of agency relationship it is that you have, or if any, then you need to stop and ask before moving forward with your agent.

I suppose that every agent has their own way of working with customers.

 I myself like to build a good rapport with my customers, and build a relationship in which I have instilled enough trust in both my knowledge and my abilities to perform the fiduciary duties that are expected of me.

 Once I have built that relationship, I then explain the types of agency relationships and make sure that they fully understand all of them. At this point, I am comfortable enough to ask for the customer to now become my client. Once a customer agrees to become a client, the proper paper work is filled and signed, and an agency is then created between the principal (client) and the brokerage. Below are great explanations of the types of relationships you can expect to exist in a real estate transaction and the expectations of those agency relationships.

Seller’s Representative (Seller’s Agent)

A seller’s agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract. In the state of Georgia, ALL agents represent the Seller as either the Agent or Sub-Agent unless they have a Buyer’s Agency with a client.

We as Agents are still obligated to be Honest and Truthful to all parties involved in a transaction.

Agents do however act faithfully and efficiently to their clients. Agents must put the principals best interests above all others including the agent’s own; and agents must NOT reveal confidential information to anyone. Confidential information could be a divorce situation, financial constraints, and other information that is confidential to the client and would NOT be to be disclosed. We do however have a duty to disclose to the principal (client) ALL relevant and material information, unless obtained through a previous fiduciary relationship, that the agent knows and that pertains to the scope of the agency. Duties of disclosure include: true property value, all offers to purchase, identity of the prospective buyer, buyer’s financial condition, and any relationship between the buyer and the broker, and any commission splitting arrangements with other brokers. An agent’s fiduciary duties can be remembered by the acronym ACCOLD. Accountability – Care – Confidentiality – Obedience – Loyalty – Disclosure.

Buyer’s Representative (Buyer’s Agent)

A buyer’s agent is hired by prospective buyers to represent them in a real estate transaction. The buyer’s representative works in the buyer’s best interest throughout the transaction and owes fiduciary duties to the buyer. In this case, the same fiduciary duties of the ACCOLDagent would be applied as in the case of the sellers representative relationship above using ACCOLDThere is however a situation where fiduciary duties would be required of an agent to both parties involved in a real estate transaction, and that is a dual agency. However these duties would be limited. You will find an explanation of this relationship a little later in this article.The buyer can pay the licensee directly through a negotiated fee, or the buyer’s representative may be paid by the seller or through a commission split with the sellers agent.

I ALWAYS make every attempt to my compensation of commissions through the seller, and avoid at all costs being compensated through my buyers.



A subagent owes the same fiduciary duties to the agent’s customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.

Disclosed Dual Agent

Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties.

Because of the potential for conflicts of interest in a dual-agency relationship, it’s vital that all parties give their informed consent.

Signing Agreement In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states. Dual agency is legal in the state of Georgia. There are however many brokerage firms that have a policy stating that agents cannot enter into a dual agency relationship. I myself have never entered into a dual agency relationship. I cannot say if I would or not, it would be solely dependent upon to the parties involved and the relationship with them. I would almost assuredly not enter into such a relationship, especially working with such a great team of agents within Keller Williams Realty Mountain Properties that I could designate to represent one of the parties involved in the transaction. This would be a designated agency and I will explain this relationship next.

Designated agent (also called Appointed Agent)

This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.

Nonagency Relationship (also called Transactional Broker or Facilitator)

Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

I hope that this will help you as you enter into the right relationships with agents in your future real estate purchases. If I have not answered the questions or concerns that you may have about agency relationships, please feel free to contact me. You can call me at 706.633.8186 or send me an email at [email protected]. If you are looking to purchase property in the North Georgia Mountains in the near or even distant future, I would be grateful for the opportunity to be your Real Estate Agent. If you yourself are not in the market for mountain property, maybe you know someone who is. If so, please forward this web site to them if you feel that it will be of a good service to them. I appreciate so much you reading my posts, and as always….Make it a GREAT day!

Here are a couple other articles that you might be interested in:

10 Reasons To Skin A Realtor While Buying!

Personal Touches To Better Customer Service

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