Understanding Real Estate Brokerage Relationships.
It's important that you understand the legal and ethical considerations inherent in real estate transactions and your relationship with a REALTOR®.
The following information is taken from the brochure, "A REALTORS® ROLE: Understanding the Options - What you should know about Brokerage Relationships, " provided by The Virginia Association of REALTORS®, 10231 Telegraph Road, Glen Allen, VA 23060-4578, and available from any Virginia REALTOR®.
Licensed REALTORS® in Virginia are subject to Virginia laws defining brokerage relationships and real estate transactions. All members of The Virginia Association of REALTORS® are also governed by a strict Code of Ethics.
As a member of The Virginia Association of REALTORS®, I will abide by the laws of Virginia and the Association's Code of Ethics. I will be happy to provide a brochure for you and clarify any questions you may have about real estate brokerage relationships.
You can contact me by:
Phone: 540.397.3324
Fax: 540.774.6396
E-mail: melissa@melissafrost.com
or by using the form on the Contact Me page.
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Best regards,
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This is an overview. Please consult your REALTOR® for a complete discussion of the contractual nature and implications of brokerage relationships.
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Client or Customer?
When dealing with a REALTOR® in a real estate transaction, you are usually either a client or a customer of that REALTOR®.
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A client is someone who has formed a brokerage relationship with a REALTOR®, usually by signing a contract, and the REALTOR® is their agent. If you are selling a property or offering it for lease and sign a listing agreement with a REALTOR®, then the REALTOR® and his or her brokerage firm become your agent and you are their client. |
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Parties who do not have a brokerage relationship with the REALTOR® are customers. If you are a prospective buyer or tenant who is dealing with a REALTOR® who represents the seller or landlord, remember that you may not be a client of that REALTOR®, but may be the REALTORS® customer. |
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A REALTOR® you choose as your agent will fully represent your best interests; however, an agent owes first allegiance to his or her client. |
A REALTORS® Standard Duties to a Client
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Perform the terms of the brokerage agreement. |
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Promote the client's best interest by seeking a transaction acceptable to the client. |
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Provide financial accounting. |
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Disclose known material facts about the property or the transaction. |
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Exercise ordinary care. |
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Maintain client confidentiality, unless the information is required by law to be disclosed. |
A REALTORS® Standard Duties to a Customer
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Treat all parties honestly and not knowingly give false information. |
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Inform all customers and potential customers of the nature of their brokerage relationships, if any. |
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Disclose material adverse facts pertaining to the physical condition of the property of which the REALTOR® is actually aware. |
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Comply with the law, including the Fair Housing Act. |
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Standard Seller Representation.
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If you have become the client of a REALTOR® and his or her brokerage firm, salespersons for other companies who are cooperating with the listing company and showing your property to prospective buyers or tenants may also be your agents. |
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While a seller's representative can provide valuable services to customers, such as showing the property, preparing and presenting any offers and counteroffers, comparing financing alternatives, and disclosing known adverse material facts about the condition of the property, the seller representative's highest duty is to his or her client. |
Standard Buyer Representation.
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A prospective buyer or tenant may wish to have a REALTOR® of their own representing them in a transaction. A prospective buyer or tenant may form their own brokerage agreement with a REALTOR®, usually by written agreement. The REALTOR® then owes them the duties of a standard agent and can freely advise the buyer-client about all aspects of the property. |
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A seller dealing with a buyer's agent should remember that in this relationship, the REALTOR® is working for the buyer. In many cases, the listing agent will share the commission with the buyer's representative, but this does not diminish the buyer representative's obligation to the buyer. |
Overlapping Brokerage Relationships.
An overlapping brokerage relationship occurs when a buyer or tenant client of a real estate company wants to buy or rent one of that company's listings. Even if different REALTORS® are working with different clients, dual loyalties are created through their company, which has legal and contractual obligations to both clients.
Overlapping brokerage relationships can be handled in one of two ways.
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Overlapping Brokerage Relationships:
Option 1:Standard Dual Representation
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Virginia law allows a real estate firm or salesperson to represent both sides of a real estate transaction as long as all the parties give consent; however, there are limits on what the company or salesperson may do in dual representation cases. |
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The company or salesperson must not disclose information that is confidential or would create a negotiating advantage for either client, such as whether the seller will take a lower price or the buyer pay a higher price. In effect, dual representation limits the REALTOR® to a neutral role. |
Option 2: Designated/Dual Representation
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If both parties agree, a real estate company can designate one of its REALTORS® to represent the seller or landlord and a second REALTOR® to represent the buyer or tenant in the same transaction. |
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The two designated representatives must not share confidential information with each other, but when working with their individual clients, they are free to gather important information from outside sources, free to help with negotiations, and will be acting in their client's own best interest. |
You are not required to agree to either of these dual representation situations. If you refuse the dual agency relationship or designated representative relationship, the real estate licensee must choose which party to represent, and the other party is free to arrange other representation for that transaction.
This is an overview. Please consult your REALTOR® for a complete discussion of the contractual nature and implications of brokerage relationships.
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