The consistent real estate business model yet nation wide consists of a brokerage headed by a designated Broker licensee. The brokerage "employs" independent contractors with either broker or salesperson real estate licenses as "agents" OF THE BROKERAGE. They are associate licensees owing fiduciary duties to the brokerage. They agree to represent the interests and duties of the brokerage in the pursuit of real estate transactions for which the brokerage earns compensation. They are paid by the brokerage. They always act as agents of the brokerage. They are not, or have not been agents of the consumer. This relationship has not been made clear to the consumer. Even many licensees don't seem to understand that. Associate licensees have the authority per their employment agreement to commit the brokerage to representation agreements with sellers and buyers within the office policy of the brokerage. Most states require minimal duties of honesty and fair dealing from the brokerage and it's associates to consumers but not agency. Fiduciary Agency representation is an option to be offered by the brokerage. Representation with those minimal duties is transactional representation. No fiduciary duties are included. The fiduciary duties of agency include responsibility for the best interests of the client, transactional representation does not as its objective is only to close the transaction and earn the compensation. Historically agency has been offered to sellers as an element of the listing agreement in exchange for the commitment for compensation. Actually NAR (the National Assn. of REALTORS(r)) introduced the concept of agency to brokerage in an attempt to elevate brokerage professionalism. As the compensation was secured in the listing agreement it was not deemed necessary to also have an agreement with the buyers. It is rather paradoxical now that organization is trying to revise it to something else yet retain the title "agency" since it has become apparent that the brokerage cannot offer agency to both sellers and buyers without conflict. Buyers were not offered agency because it was in conflict with the seller's agency. Even the cooperating brokerages were required to become sub-agents of the seller so they did not offer buyer agency either. It was not until some court cases in the '80s that "dual agency" was "discovered" and introduced as a partial remedy. And now "designated agency" is being "invented" to solve the problem that the associate licensee's have NEVER been the agent of the seller or buyer, the brokerage is. It is the brokerage who is the agent of the consumer IF an agency is created with them; the associate licensees are all agents of the brokerage with fiduciary duties to perform to the brokerage's best interest.

Back to Previous Post Printer Friendly Version | E-mail This Article to a Friend