Agency Relationships

One of the most common mistakes made by a large number of home buyers is that they believe that working with a Real Estate Agent means that he or she will be "automatically" representing you as a buyer. Unless this is specifically disclosed in writing, chances are that the Agent will be representing the seller.

The traditional relationship has been that a Real Estate Agent's primary loyalty was to the seller of the property. This relationship was in effect whether the Agent was the listing agent or a sub-agent working with a buyer. This has caused many home buyers to be confused about the situation. They assumed that the Agent who had been driving them around showing them houses for the last 3 weeks was representing them. In reality, the Agent was representing the owners of the houses they saw, and was bound by their fiduciary duties to reveal to those owners any information he or she knew about the buyers.

Buyer Agency, which came about in the early nineties, and is available just about everywhere now, changed all that. The buyer now has a choice, they can "work with" an Agent who will continue to represent the seller in the transaction, or they can hire an Agent that will represent them as buyers. The buyer can now compete on a more level playing field.

The laws of agency vary from state to state. Be sure to check with the proper authorities to learn what the laws of agency are for your state. The following is a basic summary of the types of agency in Georgia which can be viewed in detail at www.grec.state.ga.us.grec/greclegal/revised_brreta.html.

Non-Agency or Transactional Agency:

This would be the default type of agency in Georgia. Although you would seldom find this, if you are a buyer and you do not specifically get a buyer agency agreement, then you are at best in a transactional agency relationship. However, more than likely you are a customer of a Seller's Agent and have no representation of your own.

SELLER AGENCY:

Also known as Listing Agency, this is where the Agent represents the seller. This Agent must disclose to the seller all material facts which the Agent has actual knowledge concerning the transaction, including any privileged information (e.g. the highest price that will be paid) which they have obtained about the buyer. If you contact an Agent who has a property listed, that Agent is most likely representing the seller.

BUYER AGENCY:

This is where the Agent represents the buyer. This Agent must disclose to the buyer all material facts which the Agent has actual knowledge concerning the transaction, including any privileged information (e.g. the lowest price that will be accepted) which they have obtained about the seller. An Exclusive Buyer Agent is one that "rejects" seller/listing agency and only represents the buyer. Visit our Buyer Agency page for reasons you may want to consider this option.

DUAL AGENCY:

This occurs when one or two Agents working for the same broker who simultaneously has a client relationship with both seller and buyer in the same real estate transaction. This situation must be disclosed to both the buyer and the seller. This Agent must disclose to the seller and the buyer all material facts which the Agent has actual knowledge concerning the transaction. Privileged information (e.g. the price that a buyer will pay or a seller will sell at) cannot be disclosed to anyone without the express permission of the party this information is about. CAUTION: See discussion on the pitfalls of Dual Agency for the buyer!

DESIGNATED AGENCY:

This occurs when one or more Agents affiliated with a Broker are assigned by the Broker to represent solely one client to the exclusion of all other clients in the same transaction and to the exclusion of all other Agents affiliated with the Broker. Under designated agency, neither the Broker, the Broker's Agents, nor the real estate brokerage firm shall be deemed to be dual agents. Privileged information (e.g. the price that a buyer will pay or a seller will sell at) cannot be disclosed to anyone without the express permission of the party this information is about.

What it means to you

Due to the fiduciary duties of real estate agents, unless you specifically choose "Exclusive Buyer Agency" you may end up in a situation where you are not getting full representation. Even if you think you are getting Buyer Agency, if it is with a company that accepts listings, then there is the possibility that you may find yourself interested in one of the houses they list.

At that point, you are either in a Dual Agency situation where neither side is supposed to have the benefit of representation, or in a Designated Agency situation where only your Agent can be of assistance to you, the Broker and other Agents are precluded from disclosing any information that has been deemed confidential. However, you should also consider the nature of office life and the "water cooler" conversations that happen and are subject to being overheard. This puts both sellers and buyers at a potential disadvantage, or advantage depending on your point of view. However, in reading the Georgia code, we are not even sure that your "designated" Agent can disclose any information they may have discovered about the seller. In Dual or Designated Agency, at best you are getting a limited and greatly restricted form of agency. At least with Dual Agency, by law both the seller and buyer will be notified when this happens. With Designated Agency however, you may not know that the seller/buyer you are negotiating with is also a client of another Agent in the same office unless your Agent tells you. There does not seem to be a similar legal requirement to notify you of this as with Dual Agency.

Also, as a buyer, you are at a further disadvantage in a Dual Agency or Designated Agency due to the nature of real estate agency services. A buyer has no need for specific information about a particular house until that house is actually located. Contrast this with a seller who has already benefited with strategizing on all things specific to their house prior to any buyer being located.

With an Exclusive Buyer Agency, all Agents and the Broker can be utilized for the protection of your interests, and can freely disclose any information they have about the property or the seller.