July 17, 2018

Understanding Who Represents You in Real Estate Transactions

handshake_buyer_agreement_size_450x250iOn this blog, we’ve already addressed why we ask our clients to sign a buyer agency agreement: It enables us to provide buyers with the best service possible, and a written agreement is required in Virginia and D.C. Here, we take a look at the differences among buyer agency in Maryland, Virginia, and D.C., because sometimes we have clients looking in more than one of these jurisdictions, and the differences can be confusing.

First, buyers need to understand that REALTORS® work for brokers, who officially represent the buyer or seller. So for each transaction, there can be up to four different parties to provide client services: a buyer agent and his or her broker on one side and a seller/listing agent and his or her broker on the other side. In some cases, brokers work with buyers and sellers directly as well. As such, there are basically three main types of agency representation: buyer/seller agency, designated agency, and dual agency.

BASIC BUYER AND SELLER AGENCY: This is rather simple. In this case, the buyer and seller are each represented by their own agent and those agents work for different brokers.types of agency

DESIGNATED AGENCY: In this case, one agent represents the buyer and a separate agent represents the seller, but both agents work for the same broker/real estate firm. Although the broker represents both sides of the transaction, the broker does not share any confidential information about clients with parties on the other side of the transaction. That way, both buyer and seller interests are exclusive to the REALTOR® with whom they work, and there are no conflicts of interest. Accordingly, we always advise our clients to accept designated agency because otherwise, we could not show our buyers listings from other agents in our office, nor could we market our listings to buyers represented by agents from our office.

DUAL AGENCY: In dual agency, one REALTOR® and one broker represents both the seller and buyer. In this situation, they must maintain confidentiality of information from both clients yet still advise them and conduct negotiations. We do not offer this type of agency representation because we don’t believe we can best serve the interests of our clients. If our buyer wanted to purchase one of our listings, we would help them find another agent, or they could pursue the listing as an unrepresented party.

In addition, we can help unrepresented parties by simply doing paperwork without providing advice, recommending strategy, or sharing any confidential information with them about the party we represent. For example, if one of our buyers wanted to purchase a “for-sale-by-owner” property, we would represent the buyer only and do paperwork for the seller, who chooses to remain unrepresented. In that case the unpresented party is referred to as a “customer” rather than a client.

Even with these general parameters, each jurisdiction in the D.C. region addresses them differently. Virginia and D.C. basically allow all aforementioned types of representation.

In Maryland, however, the “dual agency” as previously described is illegal. Yet, the state of Maryland uses the terms “dual agency” to describe “designated agency,” through which a broker designates two separate agents to work on a transaction: one for the buyer and one for the seller; the broker is the only dual agent. Maryland does allow two “team members”—agents who work together in a single business—to each represent the buyer and seller in a transaction. However, as a husband and wife team, we never represent both sides, as there are too many opportunities for conflicts of interest.

Maryland also has something called “presumed buyer” agency, which means if an agent’s actions (such as showing homes to a buyer) indicate that the agent serves the buyer, then that agent is presumed to be the buyer’s agent. However, before helping a buyer make an offer, Maryland REALTORS® must, by law, have their buyer agency agreement in writing. In D.C. and Virginia, buyer agency must be in writing before showing properties and providing real estate assistance.

To learn more about buyer agent agreements and some history see this post.

© 2014 DCRegionRealEstate.com

Copy Protected by Chetan's WP-Copyprotect.