Overview of Agency

Course Goal

To effectively practice real estate, licensees must fully understand their relationships with buyers and sellers.

The goal of the presentation is to provide a simple, yet comprehensive workshop on real estate relationships.

The basis of this course is Virginia’s agency law (Effective October 1st 1995, revised July 1, 1997.)

Course Objectives

After completion of this course, students will be able to:

Identify areas where the Code of Ethics supplements the law. Demonstrate successful agency disclosure techniques. Explain agency terminology. Identify how agency relationships are established. List the duties of STANDARD AGENT. Explain the importance of confidentiality. Demonstrate how to practice dual and designated

representation. Explain property disclosure procedures. Recognize liability issues.

Terminology

Customer – Does not have a brokerage relationship with you.

Client – Does have a brokerage relationship with you.

Terminology

Brokerage Relationships – Contractual relationships between a client and a licensee to sell, lease, etc.

Agency – Every relationship where a real estate licensee represents a person in a real estate transaction. The Client must expressly authorize the relationship.

Terminology

Standard Agent – A Standard Agent has the specific duties and obligations stated in the new law. Licensees are presumed to be standard agents unless they expressly declare otherwise.

Ministerial Acts – Routine acts that a licensee can perform that do not involve discretion or the exercise of the licensees own judgment.

How Are Brokerage Relationships Established?

Preconditions of Relationships

Advise Potential Clients About Types of Relationships Proposed Terms of Compensation How Compensation will be shared

Brokerage Relationships ARE Created By… Written agreements between you and your client Actions you take on behalf of someone Oral agreements

Brokerage Relationships Are NOT Created By… Participate in a MLS Service or other common

source information service Compensation Performing “Ministerial Acts”

Ministerial Acts

Routine in nature

Do not involve exercise of your judgment

Duties of a Standard Agent

Fiduciary

Duties Of A Standard Agent… To Clients: Perform to contract Promote their interests by

seeking acceptable transaction

Maintain confidentiality Exercise ordinary care Comply with laws

Duties Of A Standard Agent… To Customers: Be Honest Do not knowingly give false information Make certain disclosures

Agency Known material adverse facts about the physical

condition of the property

Confidentiality

During… Keep confidential all personal and financial

information from your client Keep confidential other information at client

request Release such information only if required by law or

with client’s written consent

Confidentiality

After…DITTO!

Maintain all previous confidential information forever

Dual Representation

BROKER BIG TIME REALTY

LISTING AGENTBIG TIME REALTY

BUYER AGENT BIG TIME REALTY

BUYERSELLER

Designated Representation

BROKERBIG TIME REALTY

LISTING AGENTBIG TIME REALTY

BUYER AGENTBIG TIME REALTY

BUYERSELLER

Disclosure Rules

Whom do you represent?

Material adverse facts

“Agency” Disclosure

To whom? Non-client who is not

represented

When? At time of substantive

discussion about specific properties

Material Facts

Disclose adverse material facts about physical condition

Disclose if actually known

Stigmatizing Events

Virginia’s Seller Disclosure Law defines stigmatizing events that had no material effect on the property as “non-material” - ghosts, murders, suicides, etc.

Virginia licensees have no obligation to disclose such non-material events

Standard of Practice 2-5 releases Virginia REALTORS® from the obligation of disclosing stigmatizing events

Safe Harbor Forms

Not Mandatory Forms

Sample Language

Limitation of Liability

Duties are clarified No “vicarious liability” for the actions of others No “imputed” knowledge or presumption of

information “Safe harbor forms” provide good risk

management