Working With Real Estate Brokers

When buying or selling real estate, you may find it helpful to have a real estate broker assist you.  Real estate brokers can provide many useful services and work with you in different ways.  In some real estate transactions, the brokers work for the seller.  In others, the seller and buyer may each have brokers. And sometimes the same brokers work for both the buyer and the seller. It is important for you to know whether an broker is working for you as your broker or simply working with you while acting as an broker of the other party.

This article addresses the various types of working relationships that may be available to you.  It should help you decide which relationship you want to have with a real estate broker.  It will also give you useful information about the various services real estate brokers can provide buyers and sellers, and it will help explain how real estate brokers are paid.

Sellers

Seller's Broker:  If you are selling real estate, you may want to "list" your property for sale with a real estate firm.  If so, you will sign a "listing agreement" authorizing the firm and its brokers to represent you in your dealings with buyers as your seller's broker. You may also be asked to allow brokers from other firms to help find a buyer for your property.

Be sure to read and understand the listing agreement before you sign it.

Duties to Seller:  The listing firm and its brokers must;

• promote your best interests

• be loyal to you

• follow your lawful instructions

• provide you with all material facts that could influence your decisions

• use reasonable skill, care and diligence, and

• account for all monies they handle for you.

Once you have signed the listing agreement, the firm and its brokers may not give any confidential information about you to prospective buyers or their brokers without your permission so long as they represent you.  But until you sign the listing agreement, you should avoid telling the listing broker anything you would not want a buyer to know.

Services and Compensation:  To help you sell your property, the listing firm and its brokers will offer to perform a number of services for you.  These may include;

• helping you price your property

• advertising and marketing your property

• giving you all required property disclosure forms for you to complete

• negotiating for you the best possible price and terms

• reviewing all written offers with you and

• otherwise promoting your interests.

For representing you and helping you sell your property, you will pay the listing firm a sales commission or fee. The listing agreement must state the amount or method for determining the commission or fee and whether you will allow the firm to share its commission with brokers representing the buyer.

Dual Agency:  You may even permit the listing firm and its brokers to represent you and a buyer at the same time. This "dual agency relationship" is most likely to happen if an broker with your listing firm is working as a buyer's broker with someone who wants to purchase your property. If this occurs and you have not already agreed to a dual agency relationship in your listing agreement, your listing broker will ask you to sign a separate agreement or document permitting the broker to act as broker for both you and the buyer.

It may be difficult for a dual broker to advance the interests of both the buyer and seller. Nevertheless, a dual broker must treat buyers and sellers fairly and equally. Although the dual broker owes them the same duties, buyers and sellers can prohibit dual brokers from divulging certain confidential information about them to the other party.

Some firms also offer a form of dual agency called "designated agency" where one broker in the firm represents the seller and another broker represents the buyer. This option (when available) may allow each "designated broker" to more fully represent each party.

If you choose the "dual agency" option, remember that since a dual broker's loyalty is divided between parties with competing interests, it is especially important that you have a clear understanding of;

• what your relationship is with the dual agent and

• what the broker will be doing for you in the transaction.

Buyers

When buying real estate, you may have several choices as to how you want a real estate firm and its brokers to work with you.  For example, you may want them to represent only you (as a buyer's broker).  You may be willing for them to represent both you and the seller at the same time (as a dual agent).  Or you may agree to let them represent only the seller (seller's broker or subagent).  Some brokers will offer you a choice of these services.  Others may not.

Buyer's Broker & Duties to Buyer:  If the real estate firm and its brokers represent you, they must;

• promote your best interests

• be loyal to you

• follow your lawful instructions

• provide you with all material facts that could influence your decisions

• use reasonable skill, care and diligence, and

• account for all monies they handle for you.

Once you have agreed (either orally or in writing) for the firm and its brokers to be your buyer's broker, they may not give any confidential information about you to sellers or their brokers without your permission so long as they represent you.  But until you make this agreement with your buyer's broker, you should avoid telling the broker anything you would not want a seller to know.