4 Main Types of Agency Agreements Real Estate
As a real estate agent or broker, it is crucial to understand the different types of agency agreements that can be formed between you and your client. These agreements determine the level of representation you provide and the responsibilities you have towards your client. In this article, we will discuss the four main types of agency agreements in real estate.
1. Seller`s Agency Agreement
A seller`s agency agreement is a contract between a real estate agent and a seller. This agreement authorizes the agent to represent the seller in the sale of their property. Under this agreement, the agent must act in the best interests of the seller and provide them with services such as pricing the property, advertising, showing the property to potential buyers, and negotiating the sale. The agent earns a commission on the sale of the property, which is usually a percentage of the sale price.
2. Buyer`s Agency Agreement
A buyer`s agency agreement is a contract between a real estate agent and a buyer. This agreement authorizes the agent to represent the buyer in their search for a property. Under this agreement, the agent must act in the best interests of the buyer and provide them with services such as searching for suitable properties, providing market data, viewing properties, and negotiating the purchase. The agent earns a commission on the sale of the property, which is usually paid by the seller.
3. Dual Agency Agreement
A dual agency agreement is a contract between a real estate agent and both the buyer and seller of a property. This agreement authorizes the agent to represent both parties in the sale of a property. Under this agreement, the agent must act impartially and in the best interests of both parties. The agent must disclose any conflicts of interest and cannot disclose confidential information without the consent of both parties. The agent earns a commission on the sale of the property, which is usually shared between both parties.
4. Transactional Agency Agreement
A transactional agency agreement is a contract between a real estate agent and a client for a specific transaction. This agreement authorizes the agent to facilitate the transaction, but not to represent either party. The agent must act in a neutral and impartial manner and cannot provide advice to either party. The agent earns a commission on the transaction, which is usually a flat fee or a percentage of the transaction value.
In conclusion, the type of agency agreement you enter into with your client has a significant impact on your representation and responsibilities. As a real estate agent or broker, it is important to understand the different types of agreements and to choose the one that best suits your client`s needs. It is also important to disclose any conflicts of interest and to act in an ethical and professional manner at all times. Happy selling!
