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Q. What is the difference between an office that offers "Designated Agency" and one that does not?
A. A company that adopts “designated agency” has a policy that specifies that the company will “appoint” or “designate” the individual agent to represent the client (buyer or seller) to the exclusion of all other licensees in the company. Otherwise, the agency relationship “flows through” the company, resulting in all licensees in the company being considered representatives of every client the company has. This creates a multiplicity of dual agency situations. Because of the way designated agency works, dual agency is usually limited to an individual agent who has both a represented buyer and represented seller in the same transaction. See the next question for more details about this.
Q. If I am working with both the buyer and the seller, am I a dual agent?
A. If your company has not adopted designated agency, dual agency occurs when any agent in your company has a buyer agency client that wants to view and/or make an offer on an agency listing of your company. If your company uses designated agency, dual agency occurs only when the individual agent has a buyer agency agreement with a buyer and that buyer wants to view and/or make an offer on an agency listing that the individual agent has. If your company does not practice dual agency and changes to a transaction brokerage relationship for an in-house sale, no dual agency occurs for an in-house sale, assuming that the licensee(s) correctly practice the transaction brokerage relationship.
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Q. If my office offers Designated Agency, should my broker use any additional forms?
A. Licensees can be “appointed” as designated agents in three ways: a listing agreement, a buyer agency agreement or “other specific notice.” Using Association forms will provide the appropriate options for making the designated agency appointments.
Q. When an agent finds out that a buyer has a signed Exclusive Buyer Agency Agreement with another agent, what is the protocol?
A. The Code of Ethics provides a couple Standards of Practice that REALTORS® must follow in these circumstances. Standard of Practice 16-9 requires that the agent must use “reasonable efforts” to determine whether the buyer is subject to an existing, exclusive agreement with another agent. Whenever a buyer enters into an agency agreement, the agent should ask that buyer whether they have an existing exclusive agreement with another agent. Standard of Practice 16-13 requires that, before providing a substantive service such as writing a purchase offer, an agent ask a prospect whether they have an exclusive agreement with another agent.
Q. If I show a home that I previously had listed to my current buyer clients, am I a dual agent for that property?
A. No. When the listing expires or is withdrawn, most of your agency obligations are over. The only two agency obligations that continue after the termination of an agency relationship are the duties of accounting and confidentiality. So, while you are not a dual agent, you do have the continuing obligation to keep information of the seller confidential. It’s probably best to tell your current buyer client that you previously had the property listed and that you have a duty of confidentiality to the seller.
Q. If your office is a designated agency office are you always a designated agent?
A. The only way designated agency accomplishes what it is intended to do is if the company adopts it as a policy across the board with every agency relationship. Once the company adopts the policy “across the board,” you will be a designated agent in every agency relationship that you enter into. Your company’s forms should reflect this and you should be completing the Association forms to reflect this.
Q. What kinds of things can you tell buyers and sellers in a dual agency transaction? What kinds of things must you not tell buyers and sellers in a dual agency transaction?
A. The key point to remember in a dual agency transaction is that an agent must remain neutral and not favor one side or the other. Thus, an agent should not do or say anything that would advocate for one client against the other.
Q. When your office is a designated agency office are ever just a buyer’s or seller’s agent?
A. Yes – all the time. The misunderstanding about designated agency and “non”-designated agency is that somehow designated agency is a separate or special type of agency relationship apart from “regular” agency. A designated agent for the buyer is still a buyer’s agent. A designated agent for the seller is still a seller’s agent. Each still owe complete agency duties to their respective clients. The only difference between a designated buyer’s agent and a buyer’s agent in a non-designated agency company is that the designated buyer’s agent represents the buyer to the exclusion of all other licensees in the company. That designated buyer’s agent IS the buyer’s agent.
Q. What is my relationship to a new customer who walks into the office?
A. It depends on whether your company uses designated agency. If your company does not use designated agency and the customer is interested in a company listing, you already represent the seller and so are a seller’s agent for that company listing. If your company uses designated agency, and the customer is not inquiring about one of your own listings, Missouri law presumes that you are a transaction broker until you establish a different relationship. Because your company uses designated agency, you have no agency relationship to any of the clients of the other licensees in your company and thus are presumed to be a transaction broker in the relationship with that customer.
Q. As a transaction broker must I reveal material defects in a property that I am showing?
A. All licensees, regardless of brokerage relationship, have an obligation to disclose “adverse material facts.” The definition of adverse material facts includes material defects in the condition of the property.
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