Working with a REALTOR®
Working with a REALTOR® and Representation
What is Agency?
It is a legal concept designed to protect the consumer. It defines the different relationships the consumer can have with the Brokerage and the duties and obligations of the relationship. Buyer and Seller relationships are established formally by contract. Once a contractual relationship has been established, the consumer becomes a client.
Often, the same Real Estate Brokerage (i.e. Re/Max) will represent both the buyer and the seller, or two or more buyers. This relationship is defined as Multiple Representation. In order to avoid any conflict of interest with regards to full disclosure and confidentiality, your right to maintaining your confidentiality is kept intact, however, your right to full disclosure of financing and motivation of the seller or other parties is waived in these circumstances.
How does a Buyer Representative get paid?
As a general rule, the buyer’s representative is financially compensated through the real estate transaction. The Listing Broker agrees to pay the Buyer Broker an agreed upon amount as stated in the property MLS listing. If the property listing is a For Sale by Owner, or the property listing is offering less than the contracted fee, then the Broker/Sales Person will inform the buyer in advance. In most cases, the fee can usually be captured in a negotiation as buyer credit on closing for their commitment under a Buyer Representation agreement. This way the Realtor® is directly compensated for any deficiencies, by the buyer, on closing through the buyer’s lawyer’s office, in accordance with the credit negotiated in the agreement.
Representation and Commitment
In order to establish a Realtor®-client relationship, both parties must enter into a legal written agreement called a LISTING Agreement.
This mutual agreement outlines:
- Who the parties are
- Asking price of property
- Time frame of the commitment
- Duties and obligations of both parties
- Data sheet on the property
- Service guarantee
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