Clayton Neighborhood Highlights:
A Clayton NC real estate agency relationship exists when two parties agree that one (the real estate firm/agent) will act on behalf of the other (the principal/client).
Furthermore, the Clayton NC real estate agent must act for the client with a level of care, skill and diligence expected of a real estate professional. This creates a "fiduciary" realtionship of trust and confidence by the real estate agent toward the client. The real estate agent must commit a high level of loyalty to the client.
When buying and selling residential property the creation of real estate agency relationships are by the following methods of agency contract -
With a listing contract, the home owner agrees to assign a Clayton NC real estate firm to find a ready, willing and able buyer who will purchase the home at the price and terms acceptable to the owner. In this case, the home owner is the client and the real estate firm is the home owner's (seller's) agent.
On the other hand, with a buyer agency agreement, the Clayton NC real estate firm is assigned to locate a home for the buyer client at the price and terms acceptable to the buyer. In this situation, the home buyer is the client and real estate firm is the buyer's agent.
A dual agency agreement establishes a situation in which the real estate firm represents both the buyer and the seller simultaneously. Full disclosure to both the buyer and seller is required and permission to do so must be obtained. The buyer and seller are both principals of the real estate firm.
The buyer or seller is actually employing a Clayton NC real estate firm, not necessarily the individual real estate agent.
It is the real estate firm that is the agent of the buyer or seller. In turn, it is the real estate agent of the real estate firm who is considered the agent of the firm - under agency law.
As agents of the real estate firm, all of the indivivual real estate agents within the firm become "subagents" of any principal/client which the firm has an agency agreement with. These real estate agents owe each client duties expected in the fiducairy relationship (one of trust and confidence).
Most states, including North Carolina, adopted agency disclosure requirements as a result of widespread misunderstanding of the role of the typical real estate agent. There was often confusion as to who the real estate agent represented.
Clayton NC Real estate firms have different ways of working with home buyers and sellers. This choice determines the level and type of service they will provide their clients. It also dictates the duties the real estate agent owes to the buyer and seller.
Three choices exist -
In more depth regarding dual agency for "in-house" sales -
Some Clayton NC real estate firms elect to serve both sellers and buyers and have a policy of working with buyers as a buyer's agent, as well as, work with sellers as a seller's/listing agent.
In this situation, provided the buyer's agent is showing the client only listings which are not those of the Clayton NC real estate agent's firm, that buyer's agent continues to represent only that buyer client.
Likewise, provided the seller's home is only being shown by real estate agents from outside the firm, that seller/listing agent continues to represent only that seller.
Dual agency arises when a buyer client of a firm becomes interested in a property listed by that same firm - thus the term "in-house" sale. The real estate firm now represents both the buyer and the seller and have equal fiduciary responsibility to both. This creates great potential conflict. It is this conflict of having to represent the best interests of both parties simultaneously which has given rise to the requirement of full disclosure and consent by both the buyer and seller.
Clayton NC real estate firms have the choice to not accept such a situation. Firms may choose to represent buyers and sellers with no threat of dual agency. Contact Duane Devalle at 919-201-1663 to learn how this type of agency agreement may not be in your best interest.
It is also possible that a Clayton NC real estate agent/firm has not formed an agreement with a buyer and that buyer becomes interested in a home. That real estate agent may instead work with the buyer as a seller's subagent. This subagent is responsible to the principal - in this situtaion, the principal would be the seller.
In the above example, the buyer in not being represented by a Clayton NC real estate agent.
Disclosure of this subagent relationship is required by the North Carolina Real Estate Commission. This disclosure should take place at "first substantial contact" with the buyer.
Some real estate firms refuse to cooperate with seller's subagents. The listing firm may be increasing its risk of wrongful acts. The listing firm becomes responsible and liable for the actions of that subagent. That is a position some firms simply don't wish to choose. Consent must be given by the seller if a real estate firm elects to refuse to cooperate with seller's subagents.
Switching From A Seller's Subagent To A Buyer's Agent Can Get Tricky.
A buyer may not wish to be represented, but later, decides differently. This is only appropriate if the real estate agent who was working with the buyer as a seller's subagent has not aqcuired any confidential information about the seller. Potential conflicts are very likely. Switching is strongly discouraged.
The Best Situation Is To Cooperate With A Buyer's Agent.
As a buyer's agent, the Clayton NC real estate firm works with the buyer - in the best interest of the buyer, and has no representation with the seller.
The buyer's agent is required to disclose their agency relationship upon intial contact with the seller or seller's agent. This typically takes place when requesting an appointment to show the buyer a home.
A buyer's agent may be compensated by the buyer, indirectly by the seller through the listing real estate firm, or a combination of the two. The standard forms used by Clayton NC real estate agents provide the those compensation choices. Most commonly the real estate agent will attempt to capture compensation from the listing firm. If that is unsuccessful (i.e. possibly involving a "for-sale-by-owner" situation - in which the owner refuses to pay any commission or fee) then the buyer would be asked to compensate the real estate agent.
All issues related to compensation should be clearly defined in the agency agreement.
Call Duane Devalle at 919-201-1663 to discuss how, as a buyer, you will never be asked to compensate a real estate agent.
The listing firm addresses the issue of cooperation and compensation in the listing agreement. The seller must give authorization to cooperate and split the sales commission of the listing firm with the buyer's agent.
All issues related to compensation should be addressed prior to presenting any offers to purchase.
With the confusion of not understanding who the real estate agents represent, mandatory disclosure in every real estate sales transaction was enacted. The informed consent of the buyer and seller was mandatory when dual agency was involved, but not until the late 1980's and 1990's did mandatory disclosure become widespread for all real estate transactions.
In 1995, the North Carolina Real Estate Commission made disclosure in every real estate transaction mandatory.
With greater consumer awareness, and the desire for buyers to be represented in a real estate transaction, buyer agency is now commonplace. Most real estate firms today offer both seller and buyer agency. Those same firms also determine how they will handle "in-house" dual agency.
The North Carolina Real Estate Commission created provisions which address the disclosure issue. The following is a summary of those provisions.
North Carolina Real Estate Manual - Published by the North Carolina Real Estate Commission
Real estate agents are required, at the first substantial contact with a buyer or seller to discuss agency choices and determine which will be established. The client keeps the brochure and the real estate agent is required to retain the back panel containing the acknowledgement by the client that the brochure has been discussed. The box at the bottom of the panel should be checked if the real estate agent will work with the buyer as a seller's subagent.
Signatures are not required, but should be encouraged. If signatures are not obtained the agent may make notation of the refusal to sign.
Law of agency is the basic legal source of the duties owed by the real estate agent to the principal/client.
The general duties owed by real estate agents to their clients are the following -
*Loyalty and Obedience -
The client is entitled to receive complete loyalty and obedience from the Clayton NC real estate agent. This includes any lawful instruction. The real estate agent is not expected to to follow any unlawful act.
The real estate agent's duty is to represent the client's best interest and to make the best reasonable effort to obtain the greatest gain possible for their clients. This duty supersedes the interests of all others, including those of the real estate agent.
Situations which could create potential conflict of interest should be avoided by the real estate agent. After all, the basis of the agency agreement is good faith toward the client.
*Skill, Care and Diligence -
Your Clayton NC real estate agent is expected to provide reliable information. The type of information the real estate agent should be knowledgeable about includes: property valuation, brokerage law and practice, land use controls, real estate financing, current real estate market and trends, etc.
Your Clayton NC real estate agent should also have a "team" of professionals possessing related areas of experience - giving the real estate agent the ability to seek answers to a broad array of questions.
The client should expect the real estate to provide an accurate comparative market analysis (CMA). The valuation of property involves the analysis of recent sales of comparable properties in the immediate area. The evaluation becomes a tool for the real estate and client in determining the appropriate list price.
In order for a listing agent to properly market a property information about the home must be gathered by that real estate agent.
The Clayton NC real estate agent, when acting as a listing agent, is required to advertise and promote the sale of the property per the authorization of the home owner. Such promotion may involve local newspaper advertising, muliple listing service, promotional floers, website presence, etc. The real estate agent should consult the client to effectively promote the sale of the home.
A buyer's agent should assist their buyer client in presenting an offer to purchase. Such assistance would include determining an appropriate price and drafting the paperwork involved.
Reasonable steps to acquire essential "material facts" about the property is a basic responsibility of the real estate agent. A buyer's agent is expected to gather all facts about the property a client may have an interest. Any facts which may jeapardize the interest of the client should be revealed and disclosed.
Other duties of the Clayton NC real estate include assistance with negotiation, as well as, determine the desirability of offers delivered to a seller client. When the real estate agent is representing a buyer, the real estate should assist the buyer in locating a home which meets the price and needs of the client.
Summary of Real Estate Agent's Duties to Principal
Under Real Estate License Law & Commission Rules
North Carolina Real Estate Manual - Published by the North Carolina Real Estate Commission
Clayton NC real estate agents also have duties to third persons (non-clients). In any real estate transaction the real estate agent has the duty to apply "honesty and fairness". Under common law the real estate agent is required to refrain from unfair and deceptive trade practices and not misrepresent or fail to disclose a material fact as prohibited by the North Carolina Real Estate License Law.
Facts that a Clayton NC real estate agent must disclose to third parties are defined as follows -
Make sure your Clayton NC real estate agent is a licensed, active real estate agent.
For a Clayton NC real estate agent to be in active status the agent must pay the annual renewal fee on or before June 30 to avoid license expiration.
The Clayton NC real estate agent must also satisfy the continuing education requirement, which involves a four hour mandatory course and a four hour elective course. Course curriculum includes: fair and deceptive trade practices, proper conduct of advertising, agency disclosure, maintenance and preservation of records, trust accounts, etc.
The real estate agent must be on active status to practice brokerage activities.
The real estate agent, if not with the designation of "Broker in Charge", must also be assigned to a Broker in Charge. The primary responsibility of a B.I.C. is to directly supervise the licensee's activities.
For more information regarding licensee requirements contact the North Carolina Real Estate Commission.