There are different types of relationships, or agencies, created between customers, clients, and RealtorsⓇ. Typically a buyer's agent represents the buyer and the seller's agent represents the seller. What happens when a dual agency situation occurs and both the seller and the buyer receive limited representation since both agents work for the same broker?
When you list a property with an agent you are listing your home with the broker and all of the brokerage's agents are working on your behalf and are bound to act in your best interest. Dual representation takes place when another agent from the same brokerage brings a buyer to purchase a home. Dual representation has to be disclosed to all parties.
Real estate agents that are members of the National Association of RealtorsⓇ (NAR) are called RealtorsⓇ and are held to a higher standard called the NAR Realtor Code of Ethics. The NAR specifically states a Realtor's duties to customers vs clients. There are certain things we must adhere to, but RealtorsⓇ do not owe customers the same duties as they do to their clients. Most active agents are Realtors and adhere to these practices.
Limited dual representation forces both agents to fulfill all of the fiduciary duties an agent normally has to a client, loyalty, obedience, disclosure, confidentiality, and accounting, to both the seller and the buyer. There may be conflicts that arise in this situation since both agents in a limited dual representation scenario have to fulfill the fiduciary duties to the buyer and the seller.
The Arizona Association of Realtor'sⓇ Consent to Limited Representation disclosure limits the duties the Broker (whom the listing and buyer's agent work for) owes the buyer and the seller as follows:
- The Broker will not, without written authorization, disclose to the buyer that the seller will accept the price and terms other than stated in the listing.
- The Broker will not, without written authorization, disclose to the seller that the buyer will accept a price or terms other than offered.
- The Broker will not disclose confidential information of either party without written authorization.
The AAR Consent to Limited Representation disclosure also obligates the broker and the broker's agents to exercise reasonable skill and care in the performance of their duties. In addition, the broker and the agents must deal honestly and fairly with all parties. Each agent should be looking out for their client's best interest as well as provide their fiduciary duty to the other parties.
Here are some situations that might occur:
- the listing agent may be obligated to provide comparable sales to the buyer and the buyer's agent. This is the same information that any buyer's agent has access to
- both agents cannot discuss motives of buyer or seller to the other parties or the other agent
- they cannot disclose confidential information about either the buyer or seller without written permission unless it affects the ability of one party to close
- they cannot recommend or suggest a price
- they cannot recommend which repairs should be completed
- they cannot disclose the lowest price the seller will accept, or the highest price the buyer will pay
- they cannot disclose the financial position of either party without written permission
Here's a sample of the disclosure:
AAR Consent to Limited Representation
If you have any questions please contact me.
