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2. Creating an Agency Relationship2. Creating an Agency Relationship

In this chapter– How relationships are formed – Agency disclosure – How we work with buyers– Advantages of buyer representation– Buyer representation agreement issues

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2-2

Express AgreementsExpress Agreements

Written agreements– Listing agreement– Buyer representation agreement– Tenant representation agreement– Property management agreement– Right-to-lease agreement

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Oral AgreementsOral Agreements

Verbal agreement to represent a buyer

Accepting a listing broker’s offer of subagency

Open listing

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2-4

Implied AgreementsImplied Agreements

AccidentalOccurs when a licensee talked

and/or acted like an agent and the consumer relied on the action

Usually results in a conflict

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2-5

NAR's Policy on Agency NAR's Policy on Agency DisclosureDisclosureTimelyMeaningfulWritten

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TimelyTimely

Before any contract or agreement is signed

Before substantive discussion

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MeaningfulMeaningful

Disclose all legal forms of relationships

Consumer can make informed consent

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2-8

WrittenWritten

Put it in writing!

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2-9

How We Work With BuyersHow We Work With Buyers

Who Is Your Client? Who Is Your Customer?

If you: Your customer is: You provide:

Represent the seller The buyer Customer service to the buyerClient service to the seller

Represent the buyer The seller Customer service to the sellerClient service to the buyer

Act as a facilitator or transaction broker

Both buyer and

seller

Services for both according to your state law

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Advantages for the BuyerAdvantages for the Buyer

Assertive advocate More information about the property Can work with a FSBO Access to market experts Savvy negotiator

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Advantages for the SellerAdvantages for the Seller

No liability for deeds of buyer’s rep

Reduced chance seller’s agent will

divulge confidential information

Motivated, qualified buyers

Extended market reach for faster sale

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Advantages for the Buyer’s Advantages for the Buyer’s RepRep

Can share information freely

Greater buyer loyalty

Better relationship with buyer-client

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Advantages for a FSBOAdvantages for a FSBO

Buyer’s rep can handle the details

No cost if buyer compensates agent, or

Likely less than full commission to a

listing broker (resolve compensation issues

before property showing)

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Buyer Representation IssuesBuyer Representation Issues

ExclusivityPurposeDurationCompensationServices

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2-15

When Relationships ChangeWhen Relationships Change

Client and customer must both provide informed consent

Both must agree how you will handle the confidential information

Interpersonal dimension

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CompensationCompensation

Compensation does not determine an agency relationship

All parties must understand who represents whom and how fees will be paid

All representatives’ statements and actions must be consistent with their agency relationships

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2-17

Building BlocksBuilding Blocks

How would you explain the advantages of exclusive buyer agency?

How would you explain the importance of defining purpose, duration, and scope of work?

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