Information About Agency Relationships
Before you disclose confidential information to a real estate licensee regarding a real estate transaction you should understand what type of agency relationship you have with that licensee.
As of Jan 1, 1994 Michigan law requires real estate licensees who are acting as agents of sellers or buyers of real property to advise potential sellers or buyers with whom they work of the nature of their agency relationship.
A broker or salesperson may function in any of the following capacities:
- Represent seller as an authorized seller's agent or subagent.
- Represent buyer as an authorized buyer's agent or subagent.
- Represent both seller and buyer as a disclosed dual agent authorized by both the seller and buyer.
- Act as a transaction coordinator - a licensee who is not acting as an agent of either the seller or the buyer, yet is providing services to complete a real estate transaction.
A seller's agent under a listing agreement with the seller acts solely on behalf of the seller. A seller can authorize a seller's agent to work with subagents, buyer's agents and/or transaction coordinators. A subagent of the seller is one who has agreed to work with the listing agent, and who, like the listing agent, acts solely on behalf of the seller. Seller's agents and their subagents will disclose to the seller known information about the buyer which may be used to the benefit of the seller.
The duties that a seller's agent and subagent owes to the seller include:
- Promoting the best interest of the seller.
- Fully disclosing to the seller all facts that might affect or influence the seller's decision to accept an offer to purchase.
- Keeping confidential the seller's motivations for selling.
- Presenting all offers to the seller.
- Disclosing the identities of all buyers and all information about the willingness of those buyers to complete the sale or to offer a higher price.
A buyer's agent, under a buyer's agency agreement with the buyer, acts solely on behalf of the buyer. A subagent of the buyer is one who has agreed to work with the buyer's agent and who, like the buyer's agent, acts solely on behalf of the buyer. Buyer's agents and their subagents will disclose to the buyer known information about the seller which may be used to benefit the buyer.
The duties a buyer's agent and subagent owe to the buyer include:
- Promoting the best interest of the buyers.
- Fully disclosing to the buyer all facts that might affect or influence the buyer's decision to tender an offer to purchase.
- Keeping confidential the buyer's motivations for buying.
- Presenting all offers on behalf of the buyer.
- Disclosing to the buyer all information about the willingness of the seller to complete the sale or to accept a lower price.
A real estate licensee can be the agent of both the seller and the buyer in a transaction but only with the knowledge and informed consent, in writing, of both the seller and the buyer.
In such a dual agency situation the licensee will not be able to disclose all known information to either the seller or the buyer. As a dual agent, the licensee will not be able to provide the full range of fiduciary duties to the seller or the buyer.
The obligations of a dual agent are subject to any specific provisions set forth in any agreement between the dual agent, the seller and the buyer.
A transaction coordinator is a licensee who is not acting as an agent of either the seller or the buyer, yet is providing services to complete a real estate transaction.
The transaction coordinator is not an agent for either party and therefore owes no fiduciary duty to either party. The transactional coordinator is not the advocate of either party and therefore has no obligation to negotiate for either party. The responsibilities of the transaction coordinator typically include:
- Providing access to and the showing of the property.
- Providing access to market information.
- Providing assistance in the preparation of a buy and sell agreement which reflects the terms of the parties' agreement.
- Presenting a buy and sell agreement and any subsequent counter-offers.
- Assisting all parties in undertaking all steps necessary to carry out the agreement, such as the execution of documents, the obtaining of financing, the obtaining of inspections, etc.