TOM & CYNDEE BROWNER QUAD CITIES REAL ESTATE WITH RE/MAX
SERVING THE ENTIRE IOWA AND ILLINOIS QUAD CITIES ............................................................
DAVENPORT - BETTENDORF - ROCK ISLAND - MOLINE AND SURROUNDING COMMUNITIES
TOM & CYNDEE BROWNER
CRS, ABR, GRI, e-PRO, CRB, MRA.
BROKER OWNERS - RE/MAX BI-STATE
SERVING IOWA & ILLINOIS
DAVENPORT - BETTENDORF - MOLINE - ROCK ISLAND & SURROUNDING COMMUNITIES
563-388-0008 Office - 563-570-7629 Cyndee's Cell - 563-343-1092 Tom's Cell
Contact us at tom&cyndee@quadcitiesrealestate.com Have a real estate question? The answer is just a phone call or E-mail away. Buying or Selling a home is an important financial decision. WHEN YOUR MONEY MATTERS, be careful and check out who you are dealing with. You deserve the best information and service available. If you would like to know what you should expect, check out our Buyer Representation or Seller Representation pages.
AGENCY DEFINED FOR HOME SELLERS
Agency has been around for thousands of years in common law. Simply the "Principal" (person being represented) gives authority to an "Agent" or "Fiduciaries" (person performing the task) to perform a specific task or group of task. Usually there is "Consideration" (money or value) that is given to the agent by the principal for completing the task. Money is not absolutely necessary for a contract for agency to exist. A relative may receive love or good will as consideration and still be obligated under an agency agreement. Others may also be involved in the agency agreement called "Third Parties" ("Customers" are a very important type of third party).
Through an agency agreement, both the principal and the agent have liability and responsibility to each other and third parties. "Universal Agency" is complete responsibility for everything for an agent for his principal. Slightly less authority is called "General Agency" which gives the agent authority to do most things for the principal. "Special or Limited Agency" is the authority allowing an agent to perform a very limited or specific purpose. An attorney's power of attorney to close a real estate transaction or a Real Estate agent's listing agreement are examples of special or limited agency.
Since agency creates responsibility and liability for both the agent and principal, it requires some form of agreement which stipulates the task, authority and compensation. In real estate, these agreements are written. Written agreements creating agency are called "Expressed". Agency agreements can also be "Implied" when by words or actions of the principal or agent, a third party would logically assume that an agency agreement exist.
Agency states that a person will set aside his best interest and act instead in the best interest of his principal. Agency is based on common law and years of court decisions. These decisions are based on what are called the "Fiduciary Responsibilities" of the agent. These responsibilities are Loyalty, Obedience, Care and Diligence, Accounting, and Disclosure or Confidentiality. Ultimately, the principal is responsible for the actions of his agent. The agent agrees to be loyal to the principal and work only in his best interest. To be obedient and obey the lawful instructions of his principal. To use care, refers to the fact that the agent must use diligence to do everything lawful the principal instructs and to make sure that their actions are beyond reproach. Accounting requires that the agent can account for all monies accepted on the behalf of the principal. Such things as escrows, deposits, fee's, royalties, etc... Disclosure and confidentiality are more difficult to explain. An agent normally has the requirement to disclose material defects. Not to do so, would put him and his principal at risk to a law suite on the basis of fraud. However, the agent also may have knowledge of personal problems, goals, current plans of his principal. This information under loyalty may not be divulged unless the principal has given permission for the information to be broadcast. So confidential information must be kept secret to protect the negotiation interest of the principal.
Agency is usually created by written contract. A contract is simply a promise or set of promises to perform a task or set of task. For a contract to be valid it should be in writing. It must be between competent parties, (over 18, mentally balanced, with the right or ability to contract. Another element is valuable consideration or an agreed upon payment for the service rendered. The task or agency must be legal. Finally there must be agreement, a meeting of the minds. This means there can not be any misrepresentation by either party or to a third party by principal or agent.
There are alternatives to agency where a principal and third party may agree to use another person as a counselor, facilitator, negotiator or arbitrator. In these situations, the middleman has no allegiance or loyalty to either party. There is no fiduciary responsibility to either the principal or third party. The middleman is just a broker (someone who puts buyer and seller together and tries to suggest solutions to any problems they may have in resolving their transaction). In Real Estate, these middlemen may be called "Duel Agents".
Agency normally continues until a set date as expressed in the contract terminates the relationship, a party to the contract dies, the task is completed, by announcement or mutually withdrawn, or abandonment of one party to the relationship of their responsibilities under the arrangement.
In Real Estate, listing agreements are a common form of agency. However, there are several types of listing agreements which all have a variety of responsibilities due to the type of relationship. The most common is the "Exclusive Right to Sell" listing contract. This kind of listing allows all agents, brokers and brokerages to participate in selling a home. Commissions are split according to contract between the agencies and agents. The Seller agrees to pay a commission to the listing company, no matter who sells the property. In Iowa and Illinois there is no subagency allowed (a system where all agents from all companies represent the seller and no one represents the buyer). The evolution of the business has dictated that the Listing agent and company and their agents represent the Seller and all other Companies and agents represent the buyer. An agent from the listing company who comes in with an offer from a client or buyer, must have the client and seller agree to duel agency and sign an agreement to allow duel agency. Some companies have gone further and appointed the listing agent as the "Designated Agent" and that agent only represents the Seller; and all other agents within the listing company and other companies represent possible buyers. In this system, the confidential information is only known to the listing agent and all records are kept private and away from all other agents within the company and other companies. Anyone given access to the files, must then act as a designated agent also or if agreed to by the seller, as a duel agent.
The basic definition of duel agency is a negotiator or facilitator. It means the agent must be honest with both parties, bring the wants of both to the table and attempt to help them find common ground for an agreement. In my opinion, duel agency is more liability for the agent, but probably never affects either the buyer or seller much in the negotiation process. The offer is the offer is the offer. No matter who represents whom, the price paid will normally reflect the value for that home in that market that day. No one can steal a home through representation. Sellers only want green money and will not give away their property to anyone, even if they have Billy Graham or the Pope representing them. In the real world, the only bargains are when a buyer buy's a home from their mother or grandmother.
Exclusive agency listings are a lot like Exclusive right to sell. There is one important difference. No commission will be paid to anyone if the seller can find a buyer on his or her own. That means the buyer can not have been introduced to the listing through the efforts of any agent or company. Most companies do not like this arrangement as some sellers may attempt to contact buyers brought to them by agents and attempt to sell the home under the table to avoid commissions earned by the broker. Most brokers will under an Exclusive right to sell, "Protect" the names of potential buyers submitted by the seller, allowing the seller to sell to those names within a specific period of time without commission. Another type of agency is the open listing. Here the seller says he will pay a commission to any company that brings in a buyer that closes on the property. In this type of listing, none of the Broker companies will spend any money on advertising. All companies interested in participating may place a sign in the yard, so the owner could have twenty or more signs. If a broker or agent brings in a buyer, the seller pays the agreed upon commission to the selling company and no one else gets paid anything. "Net Listings" are another form of listing. Net listings are illegal in Iowa, but legal and discouraged in Illinois. Under this arrangement, a seller sets a price for the property and agrees that the listing company can keep the balance above this price. The problem comes with the elderly and others who may not have an informed handle on values in the market. Perhaps they bought their home fifty years ago for $5000 and think that if they could get $20,000 they would be stealing from the buyer. In reality, their home might be worth $50,000 or more. A net listing with an unscrupulous agent would rob them of their equity. Iowa has taken the stance that Net Listings are never good. Illinois still allows Net Listings, but most agents and brokers discourage their use, as there is too much risk for potential law suites.
All agents and brokers should disclose themselves as seller agents when the seller is the agent or a close associate, or if the seller is a recent or current friend or past client. An agent may also wish to be a seller agent if the buyer is highly knowledgeable like a lawyer or another broker, if the agent is not competent in Buyer Agency, when the buyer has an agent or if the seller has requested representation.