In real estate, agency is used to determine the legal responsibilities your real estate professional owes to each and every one who is part of the transaction.
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It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. Ask what type of agency relationship your agent has with you:
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.
Buyer's representative (also known as a buyer’s agent)
A buyer’s agent 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 through a commission split with the seller’s agent.
Subagent
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, 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.
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 clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be 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 most states.
Designated agent (also called appointed agent)
This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
Nonagency relationship (called, among other things, a transaction broker or facilitator)
Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Ron Ginyard has the experience you need to successfully realize your real estate goals.
Short sales abound, but many real estate sales associates do not possess the time, training, or temperament to process this type of transaction. In particular, many sales associates would rather use the time that would be lost processing paperwork to instead pursue marketing, lead generation, and other more productive activities.
Rather than distract themselves from their core tasks, sales associates handling a short-sale listing can benefit from the involvement of a short-sale negotiator, but they must be careful to adhere to rules on agency relationships, insurance, and compensation.
Home owners may choose their own negotiator, although they often do not have the expertise to select the best professional; selling sales associates may retain a negotiator as part of their team, or this individual may be an independent contractor that they hire; or the buyer's sales associate may bring in the negotiator, although this may lead to agency issues since the buyer's sales associate then begins to represent the seller.
In any case, it is critical for listing and selling sales associates to be certain of their Errors & Omissions policies, which may or may not cover these activities. They also must take care to address how the negotiator will be paid — out of commissions that have been earned or as a separate or negotiated fee.
Second Liens Roadblock for Short Sales
Second mortgages have become one of the biggest roadblocks to closing short sales. There are about 450,000 properties in some stage of the foreclosure process with at least one junior lien, according to real estate research firm CoreLogic. These second liens are a primary challenge for Freddie Mac, said Mark Johnson, who oversees short sales…
The foreclosure mess is making it harder for banks to sell properties. ForeclosureRadar, which tracks foreclosures in five Western states, says the number of properties coming to auction in Arizona, California, and Nevada has declined by more than 30 percent. Investors are backing away from sales because they fear that the properties they buy will…
This real estate scheme usually happens when the borrower owes more on the property than the current value. The borrower then pretends they have a financial hardship and can not make any more payments. Someone, an accomplice, who is working with the borrower submits a low offer to buy the property. The lender agrees with the…
Nesbitt Realty is licensed in Virginia.
Virginia replaced the common law of agency with legislation that governs agency relationships in Virginia. The principal broker is responsible to ensure compliance with Virginia agency obligations, including keeping records of specified agency disclosures and following various duties owed to clients and customers. However, both the principal broker and any salesperson or associate broker may be disciplined for violating Virginia Agency Law. A Virginia agency relationship begins when a client engages a licensee. An agency terminates when the parties complete the objectives of the representation, or mutually agree to terminate the relationship. The relationship may also terminate where a party defaults or the client refuses to consent to a disclosed dual representation. Virginia licensees may provide brokerage services as a Standard Agent, an Independent Contractor, or a Limited Service Representative.
Brokers may establish a limited service agency with clients only by so stating in the brokerage agreement, and obtaining the client's written consent. If the brokerage agreement does not explicitly identify the licensee as a limited service representative, the limited service representative will be presumed to be acting as an independent contractor of the client. The limited service representative must disclose the following in the brokerage agreement:
Will Nesbitt
That the licensee is acting as a limited service representative.
A list of the specific services that the licensee will provide to the client.
A list of the specific duties required of a standard agent that the limited service representative will NOT provide to the client.
Nesbitt Realty is generally a full-service brokerage but we can act in a limited-service capacity by request.
These initial disclosures must be conspicuous and printed either in bold lettering or all capitals, and must be underlined or in a separate box. The Virginia Legistlature suggests the following language to include with these initial disclosures:
BY ENTERING INTO THIS BROKERAGE AGREEMENT, THE UNDERSIGNED DO HEREBY ACKNOWLEDGE THEIR INFORMED CONSENT TO THE LIMITED SERVICE REPRESENTATION BY THE LICENSEE AND DO FURTHER ACKNOWLEDGE THAT NEITHER THE OTHER PARTY TO THE TRANSACTION NOR ANY REAL ESTATE LICENSEE REPRESENTING THE OTHER PARTY IS UNDER ANY LEGAL OBLIGATION TO ASSIST THE UNDERSIGNED WITH THE PERFORMANCE OF ANY DUTIES AND RESPONSIBILITIES OF THE UNDERSIGNED NOT PERFORMED BY THE LIMITED SERVICE REPRESENTATIVE.
Virginia Law imposes specific obligations and duties on all standard agents with regard to: sellers, landlords, and tenants that standard agents represent in the sale or rental of property (seller clients and landlord/tenant clients); prospective buyers of property listed with a standard agent that the standard agent does not represent (buyer customer); and buyers that standard agents do represent in the location and purchase of property (buyer clients).
Read more about Nesbitt Realty's services and commitments to
Nesbitt Realty lists and sells property in Northern Virginia.
Take the example of an imaginary agent name Charles Valiant of Imaginary Realty. Charles' client Dana Tennett wants to sell her house. So Dana approaches Charles. Dana signs a 90 day exclusive listing to sell her home. A week later, Charles decides to "chuck" it all. He moves to Japan and puts his license on inactive status.
What happens to Dana's listing? Does it just become an open listing because the agent is gone? Is the listing voidable on the grounds of abandonment? Does the listing remain in effect? Or, is the listing automatically terminated because Charles quit?
A listing agreement is between a broker and a seller, not between an agent and seller. Therefore, Dana listed her property with Imaginary Realty and not with Charles. The listing remains in effect and unchanged. The broker at Imaginary Realty should assign an agent or meet with Dana to select the best agent for the job.
For more information or to set up an appointment call Nesbitt Realty at (703)765-0300.
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Do you know the difference between equitable title and legal title? Equitable title is conveyed to the buyer when the seller signs the offer to purchase. A ratified sales contract creates equitable title. After closing and accepting the deed, the buyer receives legal title. Equitable title does not carry all the rights, privileges and duties…
If you own a condo in Virginia, or if you're thinking of buying a condominium in the Commonwealth of Virginia, it might be a good idea to glance at the Virginia Condominium Act. This act describes the terms of ownership and limitations and requirements of condo associations. It also describes the unique attributes of condominium…
Everything built by man requires some maintenance at some point. Even so-called maintenance-free homes require some attention. So when making the transition from renting to buying, one aspect of home ownership that must be considered carefully is maintenance. Renters enjoy few advantages over buyers, but one benefit of renting is that in most cases renters…
Real estate contracts sometimes come with contingencies. This is a part of the contract that states certain conditions or timelines are met or the seller or buyer can void the contract. The conditions or timelines can be any that both parties agree on and are put within the contract. Contingencies usually last for a specified period.…
Update: Lepelletier case against Judge Tran Dismissed
As you may already know, Robert Lepelletier, Jr. sued Nesbitt Realty and as a result he was ordered to pay sanctions to Nesbitt Realty by Fairfax County Judge John Tran. Lepelletier sued the Honorable Judge John Tran in Federal court. Lepelletier's case against Judge Tran was dismissed and his motions were denied. Despite being ordered…
In real estate, agency is used to determine the legal responsibilities your real estate professional owes to each and every one who is part of the transaction.
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