Agency has become the issue that won’t go away.  We can wonder why, but a quick look around says it all.  Despite years of education on the law as well as ethics, agency continues to cause the greatest number of complaints at the Ohio Division of Real Estate.

     In the last couple of years, each of the 51 jurisdictions surveyed by NAR has extensive legislative and regulatory system addressing real estate agency matters.  Additionally, 30% made changes to buyer’s agency laws, 10% changed designated agency provisions, 20% amended transactional broker laws and 45% changed laws on dual agency.  Ohio saw a substantive change to its agency disclosure law in 2004 (implemented beginning on January 1, 2005).

     Agency is more than a word...it is the essence of real estate relationships, whether through exclusive representation or non-exclusive representation.  Under Ohio’s agency law the accepted types of agency are: seller agency; buyer agency; subagency; and dual agency (with consent). 

     Disclosure is more than presenting required State forms.  The explanation that goes along with these forms identifying the rights of the consumer is the key.  Legally created agency relationships are based upon the concept of “informed consent”. 

     It is our obligation as REALTORS® and licensees to educate the consumer.  The obligation to educate is called for in both license law (vs. advising, which would be giving legal advice; identified as beyond the scope of real estate licensees) as well as in the Code of Ethics of the National Association of REALTORS®.

     “Consent” is the consumers right under law to choose to be represented, either exclusively or non-exclusively, or not to be represented at all.  That they have this choice is something that should always be presented in the WIIFM method (what’s in it for me) as a benefit to discussing not only the forms but in offering representation. 

     Agency is at the core of every aspect of the relationship between the REALTOR® and the consumer.  In representing a consumer as a client, the consumer is owed fiduciary duties that include:

·        Exercising reasonable skill and care in representing the client;

·        Performing the terms of any written agency agreement;

·        Following any lawful instructions of the client;

·        Performing all duties specified in the license law, in a manner that is loyal to the interest of the client;

·        Complying with all requirements of the license law, along with other applicable statutes, rules and regulations;

·        Disclosing to the client any material facts of the transaction of which the licensee is aware or should be aware and that are not confidential information under a current or prior agency or dual agency relationship;

·        Advising the client to obtain expert advice related to material matters when necessary or appropriate;

·        Accounting in a timely manner for all money and property received in which the client has or may have an interest;

·        Keeping confidential all confidential information, unless permitted to disclose by the client.  This requirement includes not disclosing confidential information to other licensees in the brokerage who area not agents of the client.

     As the process begins, the Consumer Guide to Agency Relationships (CGAR) is presented to the consumer.  The CGAR is presented to ensure that the consumer is made aware of his/her options under law.  The other component is the disclosure of the brokerage policy on agency.  The consumer must be able to choose for themselves whether or not the applicable brokerage policy is what they wish to accept. 

     As already identified, the accepted types of agency include: buyer agency, seller agency, disclosed dual agency and subagency.  Additionally, a policy of “split agency” or “designated agency” may be established by company policy.  Under this provision of license law, one salesperson in a brokerage may represent the seller and another salesperson within the same brokerage is allowed to represent the buyer without either being considered a dual agent. 

Even though the agents in a “split agency” situation are not dual agents, the brokerage with which they are affiliated is.  This is because the brokerage is bound by the agency relationship created by each of its individual agents.  A careful and thorough explanation of the significance of the representation status of both the agents involved as well as the brokerage/management level licensees is critical.

Understanding what your role is as the “A” gent versus salesperson/”a” gent of the buyer/seller becomes the challenge.  Being an “A” gent equals becoming an advocate on their behalf in the transaction.  Practicing aggressive agency means never forgetting who you represent and always keeping their best interest at the center of any issue.  Behavior, attitude and language are part of being an advocate.

Keeping a level head when all around you is crumbling may be the difference between the deal coming together or falling apart.  If you are a contributor to the success of the transaction, everyone wins.  If your comments, attitude toward your “co-op” or behavior wavers, your client’s negotiating position could be jeopardized. 

Remember, making any comments about your client’s motivation, financial situation or other information considered confidential without expressed permission from your client is a breech of your fiduciary duties.  For example, don’t comment about a listing being “overpriced, but bring offers” unless directed to do so by your seller; don’t reveal that a buyer “has a full relocation package, so the price is not a big issue”, again, unless the buyer tells you to say so.  Likewise, discussions of the terms and conditions of contracts are confidential.  In fact, except for the price of a closed transaction, other terms and conditions of a contract should remain between the parties unless permission is given.

Written by:  Sheila Bell              02/06