If you’re planning to buy or sell a property, you may have come across the term “agency” in your research. But what does agency mean, and how does it relate to real estate? In this blog post, we’ll explain everything you need to know about agency in real estate.

What Is Agency?

In general terms, agency refers to a relationship in which one person (the agent) acts on behalf of another person (the principal). The agent is authorized to act on the principal’s behalf, making decisions and taking actions that affect the principal’s interests.

In the context of real estate, agency refers to the relationship between a real estate agent or broker (the agent) and their client (the principal). The agent is hired by the client to act on their behalf in buying or selling a property. The agent’s duties include representing the client’s interests, providing advice and guidance, and negotiating on their behalf.

Types of Agency in Real Estate

There are several types of agency relationships that can exist in real estate transactions:

1. Seller’s Agent: A seller’s agent, also known as a listing agent, represents the seller in a transaction. Their duty is to get the best possible price and terms for the seller.
2. Buyer’s Agent: A buyer’s agent represents the buyer in a transaction. Their duty is to get the best possible price and terms for the buyer.
3. Dual Agent: A dual agent represents both the buyer and the seller in a transaction. This is only allowed in some states, and it requires the agent to be impartial and not favor one party over the other

Agency and Fiduciary Duty

When an agent represents a client, they have a fiduciary duty to act in the client’s best interests. This means that the agent must put the client’s interests ahead of their own and disclose any information that could affect the client’s decision-making.

For example, if a seller’s agent knows that the property has a significant defect, they have a duty to disclose this information to potential buyers. Similarly, if a buyer’s agent knows that a property is overpriced, they have a duty to advise their client accordingly.

Conclusion

In summary, agency is a relationship in which one person acts on behalf of another person. In the context of real estate, agency refers to the relationship between a real estate agent or broker and their client. Understanding agency and the different types of agency relationships can help you navigate the real estate transaction process with confidence.

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