client or customer
When dealing with a REALTOR® in a real estate transaction, you are usually either a client or a customer of that REALTOR®. A client is someone who has formed a brokerage relationship with a REALTOR®, usually by signing a contract, and the REALTOR® is their agent. Parties who do not have a brokerage relationship with the REALTOR® are customers.
When acting as a standard agent, a REALTOR® has certain duties and obligations. The basic duties are defined in
Virginia law (see especially Title 54.1, Chapter 21, Article 3), and
additional duties can be created by a brokerage agreement with a
client, usually in writing. REALTORS® are also governed by a strict Code of Ethics, which applies only to members of our association.
A REALTOR® you choose as your agent will fully represent your best interests.
An agent owes first allegiance to his or her client. There are some
limits when an agent has two clients in the same transaction (see overlapping brokerage relationships). Brokerage relationships with an individual REALTOR® generally bind the other employees of the same real estate company. Among the standard duties a REALTOR® owes a client are:
An agent does have duties to a customer, as well. Standard agents must:
- Perform the terms of the brokerage agreement.
- Promote the client's best interest by seeking a transaction acceptable to the client.
- Provide financial accounting.
- Disclose known material facts about the property or the transaction.
- Exercise ordinary care.
- Maintain client confidentiality, unless the information is required by law to be disclosed.
There are limits on what an agent must tell
a customer. Customers may wish to look to other sources for information
important to their decisions.
- Treat all parties honestly and not knowingly give false information.
- Inform all customers and potential customers of the nature of their brokerage relationships, if any.
- Disclose material adverse facts pertaining to the physical condition of the property of which the REALTOR® is actually aware.
- Comply with the law, including the Fair Housing Act.
standard seller representation
If you are selling property or offering it for lease, and sign a listing agreement with a REALTOR®, then the REALTOR® and his or her brokerage firm become your agent and you are their
client. Salespersons for other companies who are cooperating with the
listing company and showing it to prospective buyers or tenants may
also be your agents. Their goal is to seek a transaction on terms
acceptable to you, and they owe you the standard agent duties outlined
If you are a prospective buyer or tenant who is dealing with a REALTOR® who represents the seller or landlord, remember that you may not be a client of that REALTOR®, but may be the REALTORS®customer.
A seller's representative can still provide
valuable services to customers - showing the property, preparing and
presenting any offers and counter-offers, comparing financing
alternatives, and disclosing known adverse material facts about the
condition of the property. All agents in a transaction must be truthful
with all parties, but the seller representative's highest duty is to
standard buyer representation
Prospective buyers and tenants have realized in recent years that they may want to have a REALTOR® of their own representing them in a transaction. They do this by
forming their own brokerage relationship, usually by written agreement,
with a REALTOR® who becomes their agent and owes them the
duties of a standard agent. A representative for the prospective buyer
or tenant can freely advise the buyer-client about all aspects of the
A seller dealing with a buyer's agent should remember that in this relationship, the REALTOR® is working for the buyer. In many cases, the listing agent will share
the commission with the buyer's representative, but that doesn't
diminish the buyer representative's obligation to the buyer.
overlapping brokerage relationships
The increasing popularity of buyer representation has increased the number of transactions where a REALTOR® might have overlapping brokerage relationships.
This happens when a buyer or tenant client
of a real estate company wants to buy or rent one of that company's
listings. Even if different REALTORS® are working with the
different clients, their dual loyalties are created through their
company, which has legal and contractual obligations to both clients.
n dealing with these situations, there are two ways for the transaction to proceed:
standard dual representation
Virginia law allows a real estate firm or salesperson to represent
both sides of a real estate transaction as long as all the parties give
consent. Because the company has a legal obligation to represent both
parties, and may know confidential information about one party of value
to the other party, there are limits on what the company or salesperson
may do in dual representation cases.
The company or salesperson must not
disclose information that is confidential or would create a negotiating
advantage for either client, such as whether the seller will take a
lower price, or the buyer will pay a higher price. Generally,
information about the motivations of the parties must also be kept
confidential. In effect, dual representation limits the REALTOR® to a neutral role.
If all the parties agree, a real estate company can designate one of its REALTORS® to represent the seller or landlord and a second REALTOR® to represent the buyer or tenant in the same transaction. A supervising
broker in the company will oversee the transaction, and that person
will still be the representative of each party. However, each of the
designated representatives will be able to offer full service to his or
her assigned client.
The supervising broker will need to
maintain the confidentiality of any client information which could be
of value in negotiations. The two designated representatives must not
share confidential information with each other. But when working with
their individual clients, they are free to gather important information
from outside sources, free to help with negotiations, and will be
thinking first of their client's needs and wishes.
You are not required to agree to either of
these dual representation situations. If you refuse the dual agency
relationship or designated representative relationship, the real estate
licensee must choose which party to represent, and the other party is
free to arrange other representation for that transaction.
One of these standard brokerage
relationships - seller representation, buyer representation or some
form of dual representation - should be right for you. No matter which
you choose, thank you for working with a REALTOR®. That is always a right decision.
Provided by: The Virginia Association of REALTORS® 10231 Telegraph Road, Glen Allen, VA 23060-4578