RE 170 Chapter 8.8- Types of Real Estate Agency Relationships

RE 170 Chapter 8.8- Types of Real Estate Agency Relationships Flashcards Agency disclosure requirementsCalifornia's Agency Relationships in Residential Real Property Transactions Act went into effect in 1988. It applies to any transaction in which the property has one to four dwelling units.This law requires all of the real estate agents involved in a transaction to disclose to the buyer and the seller which party (or parties) they're representing.NegotiationNegotiation is often a complicated and subtle process; strategy and psychology may play as much of a role as facts. Many buyers are intimidated by the negotiation process, especially since they're usually negotiating with an expert, the seller's agent. And the more the buyers want the property, the more intimidating the negotiations are.Role of the Seller's Agent working with buyers A seller's agent may perform certain services for prospective buyers who don't have their own agent. For example, a seller's agent may fill out the purchase agreement form for an unrepresented buyer who wants to make an offer. Because these services promote the seller's goal of selling the property, they don't violate the duty of loyalty the seller's agent owes to the seller. But the seller's agent must make sure that the buyer understands the agent is representing only the seller. And the seller's agent should never give advice to the buyer, such as suggesting how much to offer for the listed property.DisclosureA dual agent must inform both parties that she is acting as a dual agent, and must obtain each party's written consent.If a real estate agent acts as a dual agent without full disclosure, it is a violation of the Real Estate Law. The agent will face disciplinary action. In addition, neither party may have to pay the agent's commission. And either of them could resend the transaction.Buyer's agentFrom the buyer's point of view, there are a number of advantages to working with a buyer's agent instead of relying on the seller's agent.The central advantage is that the buyer's agent owes the same duties to the buyer that a seller's agent owes to the seller, including loyalty and confidentiality.Buyer's agent advantages to negotiations: A buyer's agent brings two important advantages to

negotiations: prior negotiating experience and greater

knowledge of the real estate market. The buyer's agent may negotiate with a seller's agent or directly with a seller

who has no agent. Either way, there's a good chance the buyers will get the property on better terms than they could have negotiated on their own.Seller agency relationshipA seller agency relationship is typically created with a written listing agreement. In this contract, the seller hires the broker to find a buyer for her property.In exchange for

the broker's efforts, the seller agrees to pay the broker a commission under specified conditions.Buyer's agent compensationA buyer's agent may arrange to be compensated if the buyer purchases any property, even a home that isn't listed

with a broker. So a buyer's agent is likely to show the buyer properties she otherwise might not show.For example, this includes FSBO properties (homes that are 'for sale by owner') and homes with open listings. It could also include homes listed with brokers who don't belong to an MLS, and homes involved in foreclosure or probate.