It’s important to understand what legal responsibilities your real estate has to you and to other parties in the transactions. During a transaction, realtors may represent a buyer or seller or both parties. At B.I.C. Realty we are happy to answer any questions or concerns you may have regarding who represents who and what happens when a realtor represents both the buyer and seller.
Minnesota Law requires that early in any relationship realtors discuss with a buyer or seller what type of representation they would like. If a buyer or seller desires to be treated as a client of the realtor and have the client representation, they must enter into a written contract with the realtor according to State Law. Following are descriptions of the different roles a realtor can play in a transaction:
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 established when both the seller and their realtor sign a listing agreement.
Buyer’s representative (also known as a buyer’s agent). A real estate licensee who represents and acts on behalf of a buyer. The realtor must disclose to the buyer material facts the realtor is aware of and the could adversley and significantly affect the buyer’s enjoyment of the property. The realtor must also act in the buyer’s best interest. The buyer can pay the realtor directly through a negotiated fee, or the realtor may be paid by the seller or by a commission split with the listing broker.
Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. In dual agency, the realtor owes fiduciary duties to both the buyer and seller. This prohibits the realtor from acting exclusively for either party. In dual agency, confidential information about price, terms and motivation for a buyer or seller must be kept confidential by the broker unless that party instructs the realtor to disclose specific information. Because of the potential for conflicts of interest in a dual-agency relationship, it’s required that all parties give their informed consent in writing to dual agency. In Minnesota, this consent must be in writing and both buyer and seller must agree to dual agency.
Your realtor is legally mandated to give you the following fiduciary duties:
- Loyalty – act only in your best interest
- Obedience – carry out all of your lawful instructions
- Disclosure – tell you about all material facts of which s/he has knowledge and which might impact your use and enjoyment of the property
- Confidentiality – keep all of your confidential information private unless it is a material fact that must legally be disclosed
- Reasonable care – use all of his/her skills, knowledge, training, and experience to carefully perform duties on your behalf
- Accounting – account for any property or money received as an agent
Until a contract for representation is signed, you are only a customer and will only receive confidentiality from the realtor. To receive full representation with all the fiduciary duties listed above, you and your realtor must sign a contract for representation.
Click here to view the Agency Relationship in Real Estate Transactions Disclosures prepared by the Minnesota Association of Realtors.