So you are planning to buy a home soon. Maybe you have even stopped in at an open house or two. If you did, the hosting REALTOR® may have started talking about buyer's agents and seller's agents and possibly even a dual agent. But what does agency really mean? And why should you as a Minnesota homebuyer care?
In
Minnesota, real estate brokers and salespersons are required to disclose the type of working
relationship they have with the parties in a real estate transaction. As a homebuyer, there are different types of relationships available to you. It is important to
understand these before you sign a contract or purchase agreement for a home. These relationships are called “agency” relationships and carry with them legal, fiduciary duties and responsibilities for the broker as well as
for the buyer and seller.
The 3 most common agency agreements are the buyer's agent, seller's agent and dual agent.
Buyer’s
Agent
A
Buyer’s Agent acts solely on behalf of the buyer and owes duties to the buyer
including the utmost good faith, loyalty, and fidelity. The agent will negotiate on behalf of, and
act as an advocate for, the buyer. The
buyer is legally responsible for the actions of the agent when that agent is
acting within the scope of the agency.
The agent must disclose to sellers all adverse material facts concerning
the buyer’s financial ability to perform the terms of the transaction and
whether the buyer intends to occupy the property. A separate written buyers’ agreement or contract is
required which sets forth the duties and obligations of the parties.
Seller’s
Agent
A
Seller’s Agent acts solely on behalf of the seller and owes duties to the
seller which includes the utmost good faith, loyalty, and fidelity. The agent will negotiate on behalf of, and
act as an advocate for; the seller. The
seller is legally responsible for the actions of the agent when that agent is
acting within the scope of the agency.
The agent must disclose to buyers all adverse material facts
about the property that are known by the broker.
A separate written listing agreement or contract is required which sets forth the
duties and obligations of the parties.
In both buyer and seller agency, the following fiduciary duties are owed to the client:
FIDUCIARY
DUTIES
Loyalty
Obedience
Disclosure
Confidentiality
Reasonable
Care
Accounting
DUAL
Agent
A
dual agency is created when both the buyer and seller have signed
representation agreements with the same broker. The parties may have two different
salespersons or they may be the same person. All duties and obligations to the
buyers and sellers remain the same in a dual agency.
Because
it is impossible to disclose all information AND be confidential at the same
time, dual agency must be disclosed and agreed to in writing. All material facts regarding the property
must be disclosed regardless of agency.
Why is this so Important?
When you look for a home, every house listed on the MLS has some agreement between the seller and the listing broker. If a buyer does not sign a contract and attends an open house, the nice agent asking all the questions at the open house about your financial ability to purchase is under contract to share everything you say with their seller.
But if a homebuyer signs a contract with a REALTOR® before viewing any homes, their private information stays private. AND the best part for MY buyers is that signing a contract does not cost anything. All fees are paid at the closing and the commission is paid for from the seller so there is NO OUT of POCKET cost to have a REALTOR® in your corner.
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