What is Agency in Real Estate?

Understanding Agency Relationships in Real Estate
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By: Joe Stephenson


  1. What is Agency is Real Estate?
  2. Types of Agency
  3. Differences
  4. Common Types
  5. NAR Designations
  6. Dual Agency
  7. Duties
  8. Contact


Agency in real estate refers to the relationship between a real estate professional and their client.

This relationship authorizes the agent to act on behalf of the client during a real estate transaction.

Key aspects of this relationship include the following.

  • The agent owes fiduciary duties to the client, such as loyalty and confidentiality.
  • This relationship can be established through an agreement, which could be written or implied.
  • Agency relationships can vary, with different agency relationships offering distinct levels of responsibility and authority.
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Types of Agency in Real Estate

  • Single Agency: Within this arrangement, a real estate professional, either an agent or broker, exclusively represents one party in the transaction - it could be the buyer or the seller. This person could serve as an agent for the buyer or the seller.
  • Dual Agency: Unlike single agency, in a dual agency relationship, a licensed real estate agent or broker represents both the buyer and the seller in the same transaction. This requires written consent from both parties and can lead to conflicts of interest.
  • Designated Agency: In a designated agency, two agents from the same brokerage firm represent the buyer and the seller separately. Each designated agent provides guidance and representation to their respective client throughout the selling process.
  • Sub Agency: A sub agency occurs when a real estate agent isn't the listing broker but still brings a buyer to the table. The sub agent generally works with the buyer but owes fiduciary duties to the seller.
  • Universal Agency: A universal agent has broad authority to act on behalf of their client, given through a power of attorney. This type of agency is not common in real estate business.
  • General Agency: A general agency relationship often exists between brokers and their agents. The licensed agents are authorized to represent their broker in real estate transactions.
  • Special Agency: A special agent is authorized to perform a specific duty for their client. In real estate, this usually involves a broker helping a client to buy or sell property.
  • Seller (Listing) Agents: Seller agents, also known as listing brokers, represent the seller in a real estate transaction. They help set the sales price, market the property, and negotiate deals.
  • Buyer's Agents: Buyer's agents represent the buyer in a real estate transaction. They help find properties, negotiate deals, and guide buyers through the purchasing process. The buyer's agent's commission is usually paid by the seller.

  • Exclusive Agent: An exclusive agent represents either the buyer or the seller exclusively in a real estate transaction. This agency relationship is established through a written agreement.
  • Non-Agency (Transaction Broker): Unlike real estate agents in agency relationships, non-agents do not represent either the buyer or the seller. They facilitate the transaction and help both parties with the necessary paperwork.

Please note that agency laws may vary by state, and an agency disclosure form is typically provided to clients to clarify the agency relationship.

All real estate agents and brokers involved should hold a valid professional license.

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The Difference Between a Broker vs. Real Estate Agent vs. Realtor

In the real estate industry, it's essential to understand the difference between a broker, agent, and Realtor.

  • A real estate agent is a certified professional who aids clients in the process of purchasing or selling real estate properties.
  • A real estate broker has completed additional training and can own or manage a real estate firm.
  • A Realtor is a real estate professional who is a member of the National Association of Realtors (NAR) and adheres to its strict code of ethics.
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Real Estate Broker

A real estate broker is a professional who has obtained a broker's license following extensive training and examination. Brokers can work independently or hire agents to work for them. Their responsibilities typically include:

  • Overseeing real estate transactions.
  • Negotiating sales prices.
  • Ensuring all parties involved in the transaction meet their obligations.

Special Agents

In real estate, special agents are authorized to perform specific tasks for their clients. They have limited authority and their agency relationship ends once the task is complete. Examples of special agents include:

  • Listing agents: These agents represent sellers and are responsible for marketing the property and negotiating the best price.
  • Buyer's agents: These agents represent buyers and are tasked with finding suitable properties and negotiating favorable purchase terms.
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Common Types of Real Estate Agents

There are various types of real estate agents, each specializing in different areas of the real estate market. These include:

  • Seller's agents: Also known as listing agents, they represent the seller in a real estate deal.
  • Buyer's agents: They represent the buyer and help them navigate the buying process.
  • Dual agents: These agents represent both the buyer and seller in the same transaction.

What is a Seller's Agent?

A seller's agent, or listing agent, represents the seller in a real estate transaction. Their main role is to market the property and negotiate the best possible price for the seller. Their responsibilities include:

  • Listing the property on multiple listing services.
  • Marketing the property to prospective buyers.
  • Negotiating the terms of sale with the buyer's agent.

What is a Buyer's Agent

A buyer's agent represents the buyer in a real estate transaction. They are tasked with finding suitable properties that meet the buyer's needs and budget. Their duties include:

  • Searching for properties that match the buyer's criteria.
  • Arranging property viewings.
  • Negotiating the purchase price with the seller's agent.
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General Agents

General agents have broad authority to act on behalf of their clients over an extended period. This could include managing a client's property or entire real estate portfolio. Responsibilities of a general agent often include:

  • Making financial decisions related to the property.
  • Hiring property managers or other necessary personnel.
  • Overseeing property maintenance and repairs.

Universal Agents

Universal agents have the most comprehensive level of authority in agency relationships. They can make all decisions and take all actions that the principal could take themselves.

  • Making all real estate decisions on behalf of the client.
  • Managing all aspects of the client's real estate portfolio.
  • Making financial decisions on behalf of the client.

NAR Designations

NAR designations are professional certifications awarded by the National Association of Realtors. These designations acknowledge agents who have completed additional training in specific areas of real estate. Some NAR designations include the following.

  • Accredited Buyer's Representative (ABR)
  • Certified Residential Specialist (CRS)
  • Seller Representative Specialist (SRS)

Dual Agent vs. Designated Agent

Dual agency occurs when a real estate agent represents both the buyer and seller in the same transaction. A designated agent, on the other hand, represents only one party in a transaction. Key differences include:

Dual agents must balance the interests of both parties, which can lead to conflicts of interest.

Designated agents owe their fiduciary duties to one party, ensuring more focused representation.

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Why You Should Avoid Dual Agency as a Buyer or Seller

Dual agency can bear inherent risks due to the possible conflicts of interest, as the agent is obliged to act in the best interests of both the seller and purchaser.

Here are some reasons why dual agency might be best avoided.

  • Lack of advocacy: A dual agent cannot advocate fully for either party.
  • Limited negotiation: Dual agents cannot negotiate price or terms aggressively on behalf of either party.

Specialized Real Estate Professionals

The real estate industry includes professionals who specialize in different areas. These can include:

  • Property managers: They manage rental properties on behalf of landlords.
  • Commercial real estate agents: They specialize in commercial properties.
  • Real estate appraisers: They determine the market value of properties.

What is a Facilitator, Non-agency or Transaction Brokerage

A facilitator, also known as a non-agent or transaction broker, assists both the buyer and seller in a real estate transaction without representing either party. Their role involves:

  • Assisting with paperwork and administrative tasks.
  • Ensuring the transaction process runs smoothly.
  • Providing objective advice and information to both parties.

Principal's Duties to the Agent

In a real estate agency relationship, the principal also has duties to the agent. These include:

  • Cooperation: The principal should work with the agent to achieve their mutual goal.
  • Compensation: The principal agrees to pay the agent for their services.
  • Indemnification: The principal should protect the agent from financial loss due to the principal's actions.

Protecting Your Best Interests With Representation

Having representation in a real estate transaction can protect your best interests. Here's why:

  • Expertise: Real estate professionals have the knowledge and experience to navigate the complex real estate market.
  • Negotiation: Agents can negotiate on your behalf to secure the best terms and price.
  • Peace of mind: Knowing you have a professional looking out for your interests can make the process less stressful.

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Contact Joe. Join Our Newsletter.

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For more information about agency relationships in real estate or any other real estate queries, feel free to contact Joe Stephenson.

As an experienced real estate professional, Joe is committed to providing clients with reliable and efficient service.

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