A real estate agent shakes hands with a couple in front of a house.
The phrase "single agency" is used in the real estate industry to refer to the situation in which a broker or agent will represent the interests of either the buyer or the seller. They are only permitted to act in the capacity of the listing agent or the buyer's agent, and never both. The agent will only represent one of the parties involved in the transaction.
One of the most prevalent types of real estate representation is the use of a single agency. This agent works exclusively for you and looks out for your best interests.
When a broker or agent represents both the buyer and the seller of a piece of real estate, this situation is known as "dual agency." In certain parts of the world, dual agency is illegal.
Many industry professionals are of the opinion that neither the buyer nor the seller is adequately represented in this transaction. When brokers or agents represent their own clients through the use of dual agency, it gives the appearance of being a conflict of interest.
Key Takeaways
In the real estate business, the term "single agency" means that a broker or agent will only represent the interests of either the buyer or the seller, not both.
It is against the rules for a broker to show buyer properties listed by the broker's agency if the buyer is being represented by the broker. The buyer must give the broker permission to do so.
If you want to be absolutely certain that your real estate agent is looking out for your best interests, it is in your best interest to work with an agency that only represents one client.
Aspects of Acting on One's Own Behalf
It is against the law for a broker who is representing a buyer to show the buyer any properties listed by the broker's agency, which is known as a single agency. These are what are known as "in-house listings" in the industry.
They are unable to display them without the express authorization of the customer. If a buyer wishes to acquire a property that is listed by an agency that is already representing a seller, and if the seller is willing to do so, then this situation constitutes a dual agency. This shows that the broker's agency is working for both the buyer and the seller during the transaction.
In regions of the country where dual agency representation is not legal, there are real estate brokerages that focus exclusively on a single agency and serve as sole buyer's agents. They have no dealings whatsoever with the sellers. On the other hand, there are various types of specialty brokerages that only deal with clients who are selling their homes.
The duties of a fiduciary
In the vast majority of other kinds of agency relationships, the agent owes their client the fiduciary obligations of loyalty and obedience. It is reasonable to anticipate that the agent will put your needs above their own. You can count on them to perform services in an honest and good-faith manner, and they will steer clear of any conflicts of interest.
There are certain circumstances in which real estate brokers are under no legal obligation to look out for their client's best interests. Twenty-five states have enacted laws that make it legal for brokers to serve as "transaction brokers" or "facilitators" when providing services to buyers and sellers. Because of this, they are able to continue working without being required to uphold the customary fiduciary duties of loyalty and obedience.
In the remaining 25 states, the legislation makes it obligatory for the agent to:
- Be truthful and equitable in your dealings.
- Show loyalty
- Maintain strict adherence to privacy.
- They conform their behavior to whatever is in the client's best interests.
- Always provide all the available information.
- Give an account of every penny.
- Display a high level of skill, care, and perseverance throughout the transaction.
They are required to present all offers and counteroffers in a timely manner unless a party has specifically authorized the agent in writing to do something else. They are obligated to reveal any and all known facts that have a significant impact on the value of a residential real property but are not easily discernible to the average person.
The statutes governing the licensing of real estate agents include provisions requiring fiduciary duties. Real estate agents are obligated to disclose any and all dual agency relationships to their clients. In order to stay on the right side of the law, everyone involved must give their full and clear consent to the terms.
A Relationship Between a Transaction Broker and an Agency
The most common function of a broker or agent is that of a transaction broker. They are not acting on behalf of either the buyer or the vendor. They instead take the role of an impartial third party who helps both parties negotiate the terms of a house transaction.
In this instance, the broker is acting as the transaction's representative. They take the role of an impartial third party.
The broker of the transaction owes a certain degree of secrecy to both parties. Because of this, the transaction broker can't tell either the buyer or the seller that the other party is willing to lower the price or raise the price without first getting the express permission of the party in question.
Is Choosing a Single Agency the Best Option?
You may reside in a portion of the country that does not permit dual agencies, but you may also live in a section of the country where you have the option of choosing between a single agency and a dual agency. Is working with a single agency the path you should take?
A single agency typically provides superior service to both the buyer and the vendor. If you want to be absolutely certain that the real estate agent you hire is looking out for your best interests, it is in your best interest to work with a single agency. In the case of dual agency, the agent is tasked with looking out for both the interests of the buyer and the seller, which is something that is not always easy to accomplish at the same time.
