Kim Climer, Realtor: Who Represents Me? Understanding Brokerage Services.

by Kim Climer

In yesterday's blog, I wrote about the Buyer Representation Agreement and why it's important to sign one. You can read more about it here. Today I'm going to try and explain what the different brokerage services are and who they benefit. Licensed Texas agents are required by law to give all customers a copy of "Information About Brokerage Services" at the first face to face meeting. The customer gets a copy and the agent keeps a signed copy. This does not put anyone under any obligation, it merely explains the three different agencies and by signing it, the customer acknowledges he or she received it and read it.

It bears repeating that before the early 90's, all agents represented the seller. If a buyer went into a brokerage and asked to see a particular house, it didn't matter if the house was listed with that particular broker or one down the street, the agent would have been a subagent to that listing agent and could not divulge any information that he/she may have known about the seller. Beginning in the early 1990's, states began passing laws creating the Buyer's Agent. And now buyers can have the same representation that sellers have had for years. Let me try and break it down for you.

Broker. The Broker is actually representing the client and the agent is working on their behalf. If you decided to use Agent A with Acme Brokerage, then Acme Brokerage is representing you and Agent A is working on their behalf.

Client. A client is the one who is under some agreement (listing or buyer representation) and their agent has a duty to them.

Customer. A customer is anyone who is not under some agreement with the broker. Example: Agent A is working with Seller A under a listing agreement. Seller A is his client. Buyer B calls him about Seller A's house. Buyer B is the customer.

The Listing Agent. The listing agent represents the owner. This agent has a fiduciary duty to the seller only. If a potential buyer calls him or her, the agent can assist the buyer but they do not represent the buyer and must tell the seller anything that was told to him/her by the potential buyer. And furthermore, any agent who shows property without a signed Buyer's Representation Agreement, is a subagent to the listing agent and does not hold any fiduciary duties to the buyer. Example: Buyer B finds a house on the internet and calls the listing agent, Agent A. Agent A shows the house to Buyer B and Buyer B tells the agent pertinent information about his situation. Agent A is now obligated to divulge that information to Seller A. Now if Buyer B decides to make an offer, Seller A has an advantage over Buyer B. The same is true if Buyer B is using Agent B without an agreement. Agent B is a subagent to Agent A and essentially required to seek the best interest of the seller.

Buyer's Agent. Until the buyer and agent enter into an agreement, the agent represents the seller as a subagent. And the buyer will always be considered a customer. Once an agreement has been reached, the buyer then becomes a client and the buyer's agent now represents the buyer and the seller should not tell the agent anything he doesn't want the buyer to know. The buyer's agent now must tell his client anything that has been disclosed to him.

Intermediary Agency. This one is a little tricky. In an intermediary, you have signed an agreement giving the Broker permission to represent both the buyer and seller. And the agent then has to treat both parties honestly. He/she is not to disclose to the buyer that the seller may or may not take a lower offer as well as he/she cannot disclose that the buyer will or will not pay a greater price than was offered. And the agent may not disclose any confidential information that was told to them by either party . Generally the best way to handle an intermediary is for the broker to assign two different licensed agents to the transaction. Most of the time this is the way it is handled. Agent A with Acme Brokerage is listing a home for Seller A and Agent B with Acme Brokerage comes in with Buyer B. The broker, Acme Brokerage, represents both parties as an intermediary, but each are represented by different licensed agents within the brokerage.

Many times buyers are unaware that their best interests are not even considered. Especially if they are calling the listing agent directly from a sign. This is why it's very important for agents to provide every customer a copy of the "Information About Brokerage Services".

Again...just a little caveat. I am not an attorney, nor do I play one on Television. So I strongly encourage everyone who has questions about any contract or agreement, to seek the advise of an attorney.

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