Dr. Thomas A. Musil is a real estate Professor and works as an expert in real estate and damages litigation.
John I. Halloran is a retired Attorney who has worked as an Arbitrator for the last 40 years.
The authors would like to acknowledge the substantial research contributions to this article by Devin L. Freeman, a University of St. Thomas Law Student and Alexandra L. Zabinski a University of St. Thomas Undergraduate.
The concept of agency is an integral part of the real estate brokerage industry. Today, several different kinds of real estate agents are recognized and most work on commission. The traditional agents recognized in the real estate area are: a seller’s agent and subagent, a buyer’s agent, and a dual agent. A seller’s (listing) agent is a licensed real estate broker or salesperson who enters into an agreement with a seller to list and market the seller’s property to buyers. Another broker or salesperson who works for the listing agent may act as the seller’s subagent by showing the property to potential buyers and working with them until the closing. A buyer’s broker represents only the buyer and looks for a suitable property to buy. The buyer’s agent’s commission may be paid by the seller. A dual agency relationship could arise if the buyer’s agent works for the same brokerage as the seller’s agent, or the buyer agrees to have the seller’s agent work as a dual agent, and both buyer and seller give their informed consent.
States differ in the kinds of real estate agency relationships they recognize and each type carries with it specific duties owed by the agent to the principal. In residential real estate transactions, these include detailed disclosure of the agency relationship in writing to principal(s) in the transaction, and often the nature of the fiduciary duties owed to the principal(s). In general the fiduciary duties owed by an agent to a principal in a real estate transaction include the following:
A duty of loyalty. This duty requires the agent to act only in the principal’s best interest and not in the agent’s own interest.