Representation

What is a real estate "agency"?
Understanding agency relationships is an important part of buying or selling a home. By definition, an "agent" is someone who represents the interests of another person or entity. Real estate agents (and the brokers who hold their licenses) may represent a home seller or buyer — or both, or neither. As confusing as that may seem, it is your right to understand who is representing you in a real estate transaction.

Laws governing agency relationships differ from state to state; agency policies differ among real estate companies. Here are some basics:

• When a real estate agent/broker represents a buyer or seller, that consumer is considered a client to whom "fiduciary duties" are owed. These duties can include confidentiality, obedience, fidelity, loyalty, accounting and reasonable skill and care.
• When a real estate agent/broker does not represent a buyer or seller, that consumer is considered a customer. Though customers and real estate agents do not have a fiduciary relationship, the real estate professional has an obligation of honesty to all parties with whom s/he comes in contact.

In many states, real estate brokers may choose what types of agency they will practice. The options include:

Single agency — representing either the buyer or the seller. Single agents must:

• Be loyal and act in your best interest
• Obey your lawful instructions
• Protect your confidences
• Exercise reasonable skill and diligence when answering your questions
• Be accountable for handling funds and paperwork
• Present all offers in a timely fashion
• Execute other duties as outlined in your listing agreement or buyer's agency contract

Dual agency — representing both buyer and seller, with disclosure to both parties. Among other tasks, dual agents must:

• Treat all parties to the transaction fairly
• Disclose any material defects in the property
• Facilitate the sale of the property following contract acceptance

In Michigan, a real estate agent is required by law to disclose the party (seller or buyer) in whose interest s/he is working. Such disclosure is made in writing, via an "Agency Disclosure Form". The agency relationship is established and controlled by a "Buyer Agency Agreement."

We encourage you to discuss this topic with the real estate professionals you elect to interview, to better understand your rights and the real estate professional's responsibilities.

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