What is Agency?
By law, agency is a specific relationship between two or more
people. One person must authorize the other person to act on his/her behalf, and the other
person must consent to do so. In other words, when you authorize a REALTORŪ to work for
you in buying or selling a property and the REALTORŪ agrees, you and the REALTORŪ are in
an agency relationship. As a member of the public, you are probably familiar with working
with individual REALTOR'SŪ. However, the agency relationship is actually between you and
the REALTOR'SŪ brokerage. The brokerage is the real estate company. Therefore, when you
hire your agent, the law of agency says that you hire the entire brokerage. In Michigan,
REALTORSŪ practice four different forms of agency. A brief description of each follows.
- Seller Agency in this relationship, the licensee works only for the seller,
owing the seller client loyalty, confidentiality and a good faith effort to find a buyer
for the property.
- Buyer Agency in this relationship, the licensee works only for the buyer,
owing the buyer client loyalty, confidentiality and a good faith effort to find a property
for the buyer.
- Dual Agency in this relationship, the licensee acts as the agent for both the
seller and the buyer in the same transaction, with the consent of all parties. Real estate
companies have buyer and seller clients; it is not always possible to predict when a buyer
client will choose to buy a property from a seller client. While this may put the agent in
the middle, it does assure that sellers have the greatest exposure for their properties
and that buyers can make selections from the entire market. A dual agent must provide
services fairly without promoting either party's interests over the other.
- Transaction Coordinator in this relationship, the licensee provides
communication or document preparation services, or similar real estate related services
without being an agent or advocate for either the seller or the buyer. A transaction
coordinator could not disclose the fact that the seller will accept a price less than the
asking price, or any other information deemed confidential