When it comes to the real estate industry, it`s common for agents to enter into agreements with sellers or buyers, creating an agency relationship. However, not all agreements are created equal. In order to ensure a smooth transaction and a positive experience for both parties involved, it`s important to understand what kind of agreement enables an agency relationship between the agent and a seller or buyer.
The most common agreement used in real estate transactions is the listing agreement. This type of agreement is used when a seller wishes to list their property for sale with an agent. The listing agreement outlines the terms of the relationship between the seller and the agent, including the commission rate, the length of the agreement, and any marketing or advertising strategies that will be used to sell the property.
The listing agreement also establishes the agency relationship between the seller and the agent. In most cases, the agent will act as the seller`s representative, working on their behalf to secure a sale at the best possible price. This means that the agent owes the seller a fiduciary duty, which includes a duty of loyalty, confidentiality, disclosure, and care.
Another type of agreement commonly used in real estate transactions is the buyer agency agreement. This agreement establishes an agency relationship between the buyer and the agent, allowing the agent to work on the buyer`s behalf to find properties that meet their needs. The buyer agency agreement outlines the terms of the relationship, including the commission rate, the length of the agreement, and any specific requirements or preferences the buyer has for their property search.
Like the listing agreement, the buyer agency agreement also establishes the agent`s fiduciary duty to the buyer. This means that the agent owes the buyer the same duty of loyalty, confidentiality, disclosure, and care that they owe to a seller.
It`s important to note that in some cases, an agent may enter into a dual agency agreement, which allows them to represent both the buyer and seller in a transaction. However, this type of agreement can be complex and may require additional disclosures and consent from both parties involved.
In conclusion, the type of agreement used in a real estate transaction is an important factor in establishing an agency relationship between the agent and a seller or buyer. Whether it`s a listing agreement or a buyer agency agreement, it`s essential to understand the terms of the agreement and the agent`s fiduciary duty to ensure a successful and positive transaction.