Rick Corey
REALTOR®
Realty Executives Capital City
State law, and the agreement between you and your agent, will determine what duties you're owed as a buyer.
The term “agency” is used in real estate to help determine what legal responsibilities your real estate professional owes to you and other parties in the transaction. Real estate agency is governed by state law and varies from state to state, but here are some agency terms you're likely to hear.
The buyer's representative (also known as a buyer’s agent) is hired by prospective buyers and works in the buyer's best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split paid by the listing broker. The agency agreement usually is created by a signed buyer's rep agreement.
The seller's representative (also known as a listing agent or seller's agent) is hired by and represents the seller. The agent's fiduciary duties are to the seller, meaning it's the agent's job to get the best price and terms for the seller. The agency relationship usually is created by a signed listing agreement.
A subagent owes the same fiduciary duties to the agent's client as the agent does. Subagency arises when a cooperating sales associate works with the buyer but doesn't represent the buyer. Although a subagent cannot assist a buyer in any way that would be detrimental to the seller, a buyer customer can expect to be treated honestly by the subagent who is a REALTOR®, a member of the National Association of REALTORS®. That's because the REALTORS® Code of Ethics requires that all parties to a transaction be treated fairly and honestly.
A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.
Designated agents (also called appointed agents) are chosen by a managing broker to act as an exclusive agent of the seller or buyer. This allows the brokerage to avoid problems arising from dual-agency relationships in situations in which licensees affiliated with the brokerage represent different parties to the same transaction. The designated agents give their clients full representation, with all of the attendant fiduciary duties.
A transaction broker (sometimes referred to as a facilitator) is permitted in states where nonagency relationships are allowed. These relationships vary considerably from state to state. Generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Law by Nick Youngson CC BY-SA 3.0 Pix4free
Published in USA Today
In October, eight jurors in a Missouri court were led to believe that the way real estate agents have long been compensated amounts to a conspiracy to violate antitrust laws. The jury's verdict rests on the shakiest of legal grounds but has led to misrepresentations about the real estate industry and what its future holds.
Plaintiffs’ attorneys, who stand to profit richly should the verdict stand, have filed new lawsuits claiming that our profession involves a concerted effort to overcharge Americans looking to buy and sell their homes. This could not be further from the truth.
The compensation structure plaintiffs’ lawyers would like to dismantle – one in which listing brokers offer compensation to buyer brokers for finding a buyer – promotes consumer choice, encourages market competition and boosts access to homeownership. On a multiple listing service (MLS) platform, sellers can have their home seen by more buyers, ensure they receive the best offer and sell it for the best price.
Buyers, whether experienced purchasers or first-time owners, benefit from professional representation as well. For lower- and middle-income buyers in particular, saving for a down payment can be difficult, and the daunting prospect of buying a house will, for many, be the most significant and complex purchase of their lives.
For these buyers, adding broker compensation on top of closing costs would push the dream of homeownership even further out of reach. This especially would be true for veteran homebuyers because VA loans prohibit them from paying buyer broker fees.
It's important to understand that the National Association of REALTORS®' rules do not require any particular amount or type of compensation. Compensation is negotiable between agents and their clients – it can be a percentage, a fixed or hourly rate or any other arrangement.
NAR also does not set commission amounts, contrary to the false claims of those mischaracterizing our industry. It is up to the listing broker and their client how much compensation to offer a buyer broker, and they are free to offer any amount.
There’s another, deeper truth that plaintiffs’ attorneys and their proxies choose to ignore: Far from harming consumers, REALTORS® are foundational to our communities and deliver value across America. I know this not only as the proud president of NAR, but also from personal experience.
At a young age, I saw firsthand the difference that real estate agents can make in helping families reach financial stability. I was raised by a single mother who moved me and my three siblings 18 times before I was 10 years old. We were living in a small rental when my mom told us she had saved money and had been working with a real estate agent to find a house she could afford.
I remember the sense of security I felt the first time I walked into that home, and I know that our agent − who owned her own small business in Caldwell, Idaho, and who celebrated with my family when we crossed that threshold for the first time − made it possible. My story is far from the only one.
REALTORS® are hardworking business owners who on average make less than $60,000 a year and work every day to serve our clients. While plaintiffs’ attorneys argue our profession is obsolete, most Americans turn to real estate agents when buying or selling a home because we provide critical services, information and counsel.
We help buyers and sellers navigate a maze of forms and complex paperwork; coordinate with lenders, inspectors, other agents, escrow companies, title companies, appraisers and other professionals; and ensure that our clients’ interests are represented in pricing, negotiation and closing. We also help clients interpret the information they find online or elsewhere.
NAR always welcomes thoughtful debate about the future of real estate, but we will not remain silent in the face of an onslaught of disinformation designed to undermine the women and men in this profession.
REALTORS® across this country will continue to serve our clients every day and help make homeownership a reality for the next generation of Americans seeking the opportunity it provides.
WASHINGTON (July 31, 2024) – Pending home sales in June ascended 4.8%, according to the National Association of REALTORS®. All four U.S. regions posted monthly gains in transactions. Year-over-year, the Northeast, Midwest and South registered declines, while the West increased.
The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – grew to 74.3 in June. Year over year, pending transactions were down 2.6%. An index of 100 is equal to the level of contract activity in 2001.
"The rise in housing inventory is beginning to lead to more contract signings," said NAR Chief Economist Lawrence Yun. "Multiple offers are less intense, and buyers are in a more favorable position."
The Northeast PHSI ascended 3.0% from last month to 65.5, a decline of 0.3% from June 2023. The Midwest index rose 4.7% to 73.7 in June, down 4.2% from one year ago.
The South PHSI increased 6.3% to 89.3 in June, dropping 3.9% from the prior year. The West index climbed 3.4% in June to 58.4, up 1.0% from June 2023.
"Even more inventory is expected to come onto the housing market in the upcoming months ahead of the normal, seasonal declines in the winter," added Yun. "The Northeast's small gain in contract signings is due to the ongoing housing shortage situation in that region, leading to stronger home price gains. It is a good time to list."
The National Association of REALTORS® is America's largest trade association, representing 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues.
The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
National Association of REALTORS®
As a home seller, you have a wide range of choices when it comes to listing your home. Agents who are REALTORS® are a trusted source of advice and stand ready to help you navigate this complex process and make the choices that work best for you. NAR’s recent settlement has led to several changes related to broker commissions that benefit sellers, and we wanted to clearly lay them out for you.
Here is what the settlement means for home sellers:
These settlement practice changes will go into effect August 17 2024.
Here is what the settlement doesn’t change:
* National Association of REALTORS®
