Chapter 2 - Types of Agents and Agency Relationships

OBJECTIVES: The objective of this chapter is to help you to understand the different types of real estate agents. You will also learn the ins and outs of agency relationships and disclosure requirements.

DEFINITION OF KEY TERMS:

Agency: the relationship and accountability that is formed when an agent is working on behalf of that client in all matters pertaining to a specific real estate transaction.

Agent: a real estate licensee (including brokers and sales associates) acting in an agency relationship as defined by state law or regulation.

Client: the persons or entities with whom a real estate agent and their firm have an agency or legally recognized non-agency relationship.

Common Law: a law that has been developed based on preceding rulings by judges.

Customer: a party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with an agent or the agent’s firm.

Designated Agent or Designated Sales Agent: an agent designated by the managing broker to be the agent for the buyer or the seller to the exclusion of all other agents in the brokerage, real estate office, or firm.

Dual Agent: a broker who represents both the prospective buyer and the prospective seller as a fiduciary in a real estate transaction. (Not allowed in some states.)

Fiduciary Duties: the duties and responsibilities of a real estate agent or broker to a buyer or seller while acting in a single agency relationship during a transaction.

General Agent: an agent who is authorized by the principal to perform any and all acts associated with the on-going operation of a job or business.

Limited Representation: when a buyer or seller gives up their rights to the undivided loyalty of the agent.

Non-representation or No Brokerage Relationship: a real estate agent relationship in which an agent does not represent either the buyers or the sellers in the transaction.

Prospect: a purchaser, seller, tenant, or landlord who has not entered into a representation relationship with an agent or the agent’s firm.

Principal: the persons or entities with whom a real estate licensee has entered into a Single Agent Relationship.

Single Agent: an agent who provides a buyer or seller with exclusive representation which establishes fiduciary duties.

Special Agent: an agent who has limited and/or temporary authority granted to them by a principal.

Statutory Laws: written laws passed by legislature and governments of a country and those laws which have been accepted by society.

Sub Agency: a client representation relationship between a listing agent and another real estate agent whereby a licensed salesperson is the agent of the agent.

Transaction Broker: an agent who provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent.

Universal Agent: an agent who is authorized by the principal to perform all acts which are not limited to real estate transactions.