Marjorie S. Harris Real Estate Broker Senior Real Estate Specialist

NEW DIRECTIONS IN AGENCY
Options in the Selling and Buying of Real Estate

Agency - This is a framework that has developed in the law to allow individuals to act through another person or representative. This particularly occurs in commercial transactions. Examples might include hiring an attorney to represent you in a business transaction, working with a stock broker to purchase stocks or other investments, or working with a real estate broker to buy or sell real estate. Your legal agent may have unlimited or limited powers on your behalf. Your legal agent owes you certain fiduciary-like statutory duties such as confidentiality, promoting your best interests, exercising reasonable skill and care.

Designated Agency - This arrangement with a real estate brokerage company results in one or more sales associates with that company being designated as your legal agent. The law presumes that the agent you work with, whether you are a buyer or seller, is your designated agent, unless you have an agreement otherwise. Other sales associates in the real estate brokerage firm may be the legal agents of other buyers and sellers and may be the legal agent of the party who buys your property or from whom you buy property. The only individuals owing you statutory duties are those designated as your legal agent and not any other sales associates with that company.

The purchase of a home is one of the largest and most important investments a person will make in his lifetime.

Buyer's Agent - Traditionally, buyers of residential real estate worked with real estate brokers or sales associates on a non-agency basis. In other words, the sales associate you worked with acted as the legal agent of the seller and not as the buyer's legal agent. In contrast, buyers in commercial transactions often work with a real estate sales associate as their agent. However, in January of 1995, a new Illinois law took effect changing the traditional consumer-broker relationship. Now, it is presumed that the agent you are working with is your designated agent. As a buyer, you have access to listings available to your designated agent through the multiple listing service. As a buyer, you will also receive other services from your designated agent such as financing information, assistance in determining your particular price range, and assistance in facilitating the closing. Typically, the buyer and the brokerage company will enter into a written brokerage agreement. This agreement will identify your designated agent, define the scope of your agent's authority, and will spell out contractual rights and duties between you and the designated agent.

In the purchase of real estate, you have several different options regarding agency representation.

Seller's (Listing) Agent - When you sign a listing or exclusive marketing contract with a real estate broker, the contract will designate the particular sales associate or associates that will act as your legal agent. Other sales associates who are not named as your designated agent do not represent you, even if they are in the same brokerage company as your designated agent. These other agents may potentially represent buyers interested in your property. The seller's agent is a limited as opposed to general agent. In other words, the listing contract with the broker gives the selling agent certain limited authority to act on your behalf in the marketing and sale of the property. The authority is limited because the selling agent does not have general powers such as the power to enter into a binding contract on your behalf for the sale of real estate. Only you as seller can enter into a binding sale contract. In the marketing of your real estate, the seller's agent acts in the seller's best interest.

Remember: in whatever manner you choose to be represented, the goal is generally the same, that the real estate broker is trying to assist you in the sale or purchase of real estate upon terms acceptable to all parties.

Dual Agency - In this type of situation, both the seller and buyer in a transaction are represented by the same legal agent. In this case, there are specific statutory duties that the dual agent owes to both buyer and seller. Most notably is the duty not to disclose confidential information of one party to the other. Dual Agency is allowed only with your consent. Upon entering into a brokerage agreement (whether as buyer or seller) you will be given a form explaining dual agency that seeks your consent to allow your agent to act as dual agent should the situation arise. If you consent at that time and a dual agency situation actually arises, you will be asked to confirm your prior consent before entering into a contract for the purchase or sale of property. Please note that in a Dual Agency situation, the role of the sales associate will be somewhat limited and you will, at times, have to act on your own behalf when negotiating terms of a sale or purchase.

Copyright © by Illinois Association of REALTORS ®
Form 334 12/94

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