Understanding Agency

It’s important to understand what legal responsibilities your Realtor has to you and to other parties in the transactions. Ask your Realtor to explain what type of agency relationship you have with him or her and with the brokerage company.  In Ohio, this discussion of agency is required by law.  The document you will review is called The Consumer Guide to Agency Relationship.

1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.

2. Subagent. A subagent owes the same fiduciary duties to the agent's principal (client) as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer’s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.  (In all likelyhood you will not be represented by a sub-agent.  This arrangement is not used much anymore.)

3. Buyer's representative (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker. (In almost all cases, the buyers agent will be paid from the seller's funds at closing.)

4. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. All parties must give their informed consent in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in Ohio and is practiced often in our market.