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Who Represents Whom in a Real Estate Sale? : Sole agent can be a dual agent, representing both seller and buyer, or a single agent.

July 16, 1989|ROBERT J. BRUSS | Bruss is a San Francisco-area lawyer, author and real estate broker.

When you list your home for sale with a real estate agent, the listing agent obviously represents you--the seller. But when a buyer for your home enters the picture, confusion can result as to who represents whom. There are several possibilities:

1. The agent who obtains the purchase offer can be a subagent of the seller's listing agent. This has been the traditional status of an agent who finds a buyer for the property, especially if the local multiple listing service was used.

But the legal result is that nobody represents the buyer, even though the buyer often erroneously thinks the second agent is working for the buyer.

2. If the listing agent also finds a buyer for the house, then the sole agent can be either a dual agent, representing both seller and buyer, or a single agent representing only the seller.

When a dual agency exists, there is an inherent conflict of interest because the agent cannot objectively represent the best interests of both seller and buyer. For this reason, some real estate brokers make it a policy not to have a dual agency and will represent only the seller who signed their listing.

Policy Causes Problems

However, this policy can cause problems, for example, when a second salesperson in the same brokerage office as the listing agent obtains a purchase offer from a buyer. In such a situation, the selling agent can either be a subagent of the seller, or a buyer's agent.

But it is especially important in such circumstances for the buyer to understand whether the second agent is working for the seller or for the buyer.

3. When the selling agent represents only the buyer, then the second agent is called a buyer's agent. The possibility for this arrangement exists even when the buyer's agent receives part of the sales commission from the seller. However, many knowledgeable real estate agents feel it is hard for a buyer's agent to truly represent just the buyer since the seller pays the selling agent's commission and the buyer's agent knows that no fee will be paid unless a sale results.

Some state laws now require real estate agents to discuss with home buyers who the selling agent represents. The idea is that buyers should understand whether or not the agent is looking out for the buyer's best interests.

Buyer's Agent Contract

If the buyer elects to have his own agent represent the seller, a written contract should be signed between the buyer and agent. A typical buyer's agent contract specifies the buyer's agent is not obligated to reveal confidential information, such as when the buyer tells the selling agent that the first offer might not be the buyer's top offer.

Real estate buyers and sellers are entitled to know who each realty agent involved in the transaction represents. Buyers should be especially careful to discuss the issue with the agents. If the buyer wants an agent to work solely for the buyer, a written buyer's agent contract should be signed with the agent to make it clear the agent will not disclose the buyer's confidential information to the seller. For further details, please consult a real estate attorney.

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