"With hundreds of thousands of dollars at stake, and real
Before you disclose confidential information to a real estate licensee regarding a real estate transaction you should understand what type of relationship you have with that licensee.
Note: While every reasonable attempt has been made here to be accurate in quoting Michigan law regarding "agency relationships," computers and web browsers are subject to error. The law may also change from time to time. Obtain a copy (from your real estate broker) of the latest interpretation of the law in the state where you are buying or selling property.
Michigan Law -- As of Jan 1, 1994 Michigan law requires real estate licensees who are acting as agents of sellers or buyers of real property to advise potential sellers or buyers with whom they work of the nature of their agency relationship.
A Michigan broker or salesperson may function in any of the following capacities:
A firm may also practice Designated Agency:
Designated Agency is the homebuyers' &
sellers' answer to a confusing question: Who does my Real Estate licensee
really work for?
Finally, just the home you’ve been looking for is now on the market and, as luck would have it, the same real estate firm your Real Estate licensee works for has the listing. You’re thrilled since you are already comfortable with the company and know your Real Estate licensee is working hard for you. But wait, if that firm is the agent for the seller, does that mean your Real Estate licensee is also an agent for the seller? This development creates a confusing and awkward situation for the buyers and Real Estate licensee.
By practicing the new designated agency model all parties agree up front who is representing whom. Under this plan, the buyer or seller signs a buyer agency agreement at their first meeting. This means the Real Estate licensee working with the buyers agrees to work in their best interest while the Real Estate licensee listing the property is working for the seller. The agents agree not to share any confidential information about their clients and customers, and for all practical purposes, could be working for different firms rather than in the same office. This removes the confusions and questions about agency even before they can crop up.
Michigan firms are already using designated agency successfully. Proposed legislation would simply provide a standard for Real Estate licensees throughout the state specifying how this relationship may be created including a required disclosure and a written contract. Many states already have designated agency statutes in place.
Designated Agency is a written listing agreement or buyer’s broker agreement between a broker and a client may designate an individual salesperson or associate broker working through that broker as the client’s designated agent. The client benefits from clarity in the agent/client relationship and stability in service. Different agents in the same firm will be able to represent buyer and seller in the same transaction without being deemed a dual agency relationship.
With Designated Agency both buyers and sellers are assured that their agent is working for them.
With Designated Agency, supervising brokers and the real estate firm act as dual agents when the firm represents both buyer and seller just as they do now. Please know that there are two distinct advantages of this model. 1) The relationship between agent and client is clear, consistent and consumer friendly. 2) The position of the broker/owner/manager remains unchanged.
Even a two-person firm may benefit from Designated Agency provided the firm is incorporated and both licensees are brokers. Designated Agency will have no effect on one-person offices.
Under the proposed model a firm would have to specifically choose to adopt designated agency through the Listing Agreement, Buyer Agency Contracts and the Agency Disclosure Form. If the firm chooses designated agency, they must always practice designated agency. The client MUST be notified in writing of the broker's choice to practice Designated Agency.
Please Note: Agency law in Michigan is essentially unchanged from principles established over hundreds of years through common law; that is, the accumulation of hundreds of court rulings and interpretations. In its simplest form agency law determines the rights and responsibilities between parties when one party conducts business on behalf of another. Fiduciary duties such as loyalty, obedience, confidentiality, full disclosure and reasonable care are similar for many forms of industry. We cannot simply abolish agency.
The Designated Agency Law came into effect because the current agency model, while generally working, continued to cause confusion for agents and the public particularly in dual agency situations. Individual agents cannot negotiate on behalf of their clients, when the firm represents both parties in the transaction.
A seller's agent under a listing agreement with the seller acts solely on behalf of the seller. A seller can authorize a seller's agent to work with subagents, buyer's agents and/or transaction coordinators. A subagent of the seller is one who has agreed to work with the listing agent, and who, like the listing agent, acts solely on behalf of the seller. Seller's agents and their subagents will disclose to the seller known information about the buyer which may be used to the benefit of the seller.
The duties that a seller's agent and subagent owes to the seller include:
Agent || Top
The obligations of a dual agent are subject
to any specific provisions set forth in any agreement between the dual
agent, the seller and the buyer.
The transaction coordinator is not an agent for either party and therefore owes no fiduciary duty to either party. The transactional coordinator is not the advocate of either party and therefore has no obligation to negotiate for either party. The responsibilities of the transaction coordinator typically include: