The phrase – real estate agency, has immense significance, and does far more than just designating a firm or a company, holding a real estate license.
A body of law called ‘the law of agency’ governs the real estate brokerage business. Real estate agency refers to the correlation that exists when one individual is employed, to represent another.
In property dealings, the most familiar form of real estate agency is when property owners employ an agent to represent them to secure a buyer. In true sense, the real estate agency acts on the behalf of its employers, and bears the responsibility to look after their best interests.
A bond of mutual trust and good faith should exist between the property buyers or sellers, and the real estate agency they have hired to represent their interests, if the transaction is to be successfully completed.
Real estate agency relationship is a voluntary legal association, in which a real estate agent agrees to represent the buyer or seller, in a property transaction. The law states three types of real estate agency associations between the agents and their customers:
Seller’s Agent – This agent represents the seller only
Buyer’s Agent – This agent acts on behalf of the buyer only
Disclosed Limited Agent – Agent from this category, act on behalf of both the buyer and seller, or several buyers who want to acquire the same property. This arrangement can be done only with the written consent of both customers. The actual real estate agency relationships between the property buyer, seller and the agents must be recognized at the time a proposal is made.
When the real estate agency represents the property seller, they should make continuous, good faith attempts to find a suitable buyer for the property.
When the agent acts on behalf of the property buyer, they should make incessant, good faith attempts to find the best possible property at the most economical price.
The agency should also be loyal to their customers by not taking steps that may prove adverse or harm the customer’s interest in a transaction. They should also maintain confidential information from or about the customer, except under subpoena or as required by law, even after termination of the association.
The agency should also counsel the customer to seek professional advice on matters related to the dealings that are beyond the agency’s capability. The agency should reveal material facts known by the agent and not obvious or readily ascertainable to either party.
To conclude, the agency should take due care, and deal sincerely and in good faith when closing the transaction.
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