Who Represents You in Real Estate?

The disclosure of agency relationships in real estate is a legal requirement. When you enter into a discussion with a real estate agent to buy, sell, lease, rent or exchange real estate, California civil code requires real estate agents to disclosure to you the types of agency relationships available, as soon as is practicable, and prior to executing any other documents.  Don't hesitate to ask, and understand from the onset, what type of agency relationship or representation is being offered.

The following are common agency relationships in real estate interactions: 

SINGLE AGENCY - Representation by an agent of one principal only in a specific real estate transaction.

DUAL AGENCY - Representation by an agent of more than one principal;  representation of both buyer and seller, or  representation of two, or more, separate buyers for a single real estate transaction either directly, or indirectly through another agent at the same real estate company.

BUYER'S AGENT - (also referred to as the "Selling agent") refers to the agent who is writing an offer on the property and the agent who acts for the buyer.  The agent may be a Single Agent, or a Dual Agent, acting for more than one principal, depending upon the choices made.

SELLER'S AGENT - (also referred to as the "Listing agent") refers to an agent who is under contract with the Seller to sell the property and who acts for the seller. The agent may be a Single Agent, or a Dual Agent, acting for more than one principal, depending upon the choices made.

If all this is not confusing enough - Since each real estate company must have a "designated broker-agent" under which all real estate licenses for the agent's affiliated with the company fall, ANY agent operating within the same company on a specific transaction is considered a dual agent. If agent Sally is working with the buyer and agent Phil working with the seller, and both have their licenses at the same ABC real estate company, then buyer and seller are legally considered to be represented by the same agent and this is Dual Agency.

Further, If Sally and Phil each write an offer with different buyers on the same property at 1234 Main Street, USA (whose owner is represented by listing agent at XYZ Real Estate Company), they must disclose this dual agency to their respective buyers. ABC Real Estate Company is now an agent for both buyers and representing more than one principal in a prospective transaction.

Most often this problem occurs when a specific agent who has been working with a Seller finds that an agent in his/her own company has written an offer for a buyer.  It also frequently occurs when an agent has been working in a single agency relationship with a buyer and finds the perfect property to be one listed by an agent in his/her office. None of these transactions can proceed until an agency relationship is agreed upon.

A few things to remember about agency:

  • Know if you contact the listing agent advertising a property, they already have an agency relationship with the seller.
  • By representing only one principal in any transaction, single agency can eliminate an Agent’s potential conflicts of interest. 
  • Payment of a commission is, in itself, not enough to determine who is being represented. 
  • Whatever agency choice you make, all agents are bound to use diligence, honesty and make full disclosure of any material fact to all parties.
  • The choice of how you wish to be represented is up to you, the principal in the transaction.