a. agency relationships

8/6/2019 A. Agency Relationships

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Agency Relationships 1

Agency Relationships

1. Agency and Fiduciary Relationship

2. Timely Disclosure o Agency

3. Agency Duties

4. Agency Agreements

5. Buyer Agency

6. Dual Agency

7. Buyers and Sellers Responsibility

8. Duty o Disclosure and Confdentiality

9. Determining Agency Status

10. Procedures:

a. Showing Propertyb. Listing Appointments

c. Opportunity Timed. Documenting

11. Designated Agency


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AGENCY POLICY AND PROCEDURES

A. Agency and Fiduciary Relationship

The agency relationship is based on one person representing the interest

o another person. We are licensed by the state to represent a person or

the sale or leasing o a property. The responsibility o the real estate agentis dened by state laws relating to agents, the Realtor Code o Ethics and

general principles o agency laws.

The type o relationship ormed between the agent and the client is called

a Fiduciary Relationship. A duciary relationship is one based on trust

because the agent owes the ollowing duties to the client:

Loyalty

Diligence Obedience

Disclosure

Accounting

Condentiality

Reasonable Care

The courts strictly enorce agency duties so that the client can rely on the

agent putting the clients interest beore that o anyone else. The courts

also require that the real estate agent be air and honest in all aspects othe transaction. The source o compensation does not, in itsel, determine

agency. It can be paid by the Seller, Buyer, both, or neither. However,

there must be inormed consent as to who is paying, in writing, in advance.

B. Timely Disclosure o Agency

North Carolina Real Estate Commission Rulesand Standards of Practice

of the National Association of Realtorsrequire that real estate agents

make a timely disclosure o agency relationships.

1. North Carolina Real Estate Commission Rule requires that agents

review careully the Working with Real Estate Agents brochure at

rst substantial contact with Buyers and Sellers.2. Standard o Practice 21-12 states: The Realtor, acting as the agent

o the Buyer, shall disclose that relationship to the Sellers agent at

rst contact.


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3. Standard o Practice 21-13 states: On unlisted property, the Realtor,acting as the agent o a buyer, shall disclose that relationship to the

Seller at rst contact.

4. Standard o Practice 21-14 states: The Realtor, acting as the agent

o the Seller or as subagent o the listing broker, shall disclose that

relationship to buyers as soon as practicable.

C. Duties o Agencies

In addition to the duties outlined above, or enumerated in a listing contract

or other contract o employment, Beverly-Hanks & Associates andassociated Brokers owe other specic duties to their principals. More

specic examples o these duties include a duty to reveal to his principal

all relevant inormation pertaining to the scope o the agency.

Our company and associated Brokers are obligated to condentiallymaintain any inormation that might injure the principal i it were revealed.

Examples o this include disclosures that the Seller:

a) can, or must, sell his property below the listed price,

b) or correspondingly, i representing the Buyer, that said Buyer can, or will

pay more or a property that his oered price.

c) But this duty plainly does not include ailure to disclose known material

deects in the Sellers property, or to misrepresent the condition o theproperty in response to the Buyers inquires.

One o the most undamental duties o an Agent is the duty o loyalty.

This duty requires that an Agent act at all times, in accordance with real

estate license law, solely or the interest o his Principal with the scope obusiness or which the Agent has been hired.

A corollary to this duty is that an agent should avoid any conficts o

interest that may compromise the Agents undivided loyalty to his

principals interest. However, as a company which represents both

Buyers and Sellers as clients, a confict o interest arises when a Buyer/Client becomes interested in a Seller/Clients property. Our company and

our salespersons can legally represent both the Buyer and the Seller in

a transaction, but only ater ull disclosure and with the knowledge and

written consent o both parties.


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D. Agency Agreements

Prior to beginning work with each Buyer and Seller, Beverly-Hanks &

Associates Brokers will review the Working with Real Estate Agents

brochure and discuss our representation alternatives. The types o agency

representation are summarized as ollows:

1. Seller Agency (Seller as Client). Under a listing agreement that

our rm has with the Seller (or as subagents o the listing agents

in the multiple listing service), our sales agents act as the Agent

or the Seller only and consequently have the ollowing armativeobligations:

a. to act at all times solely in the Sellers best interests;

b. to obey the Sellers instructions and to disclose all relevant

inormation to the Seller;

c. to saeguard the Sellers condences and to act with reasonable

care and skill in representing the Seller;

d. to deal airly and honestly with the Buyer; and

e. to disclose to the Buyer all material deects which the associate

knows concerning the Sellers property.

As an example, under Seller agency, the agent could not, without the

express permission o the Seller, disclose to the Buyer that the Seller willaccept a price less than the listed price. Specically, as an agent or the

Seller, we are obligated to disclose to the Seller:

1) all oers to purchase the Sellers property;

2) the identity o all potential purchasers;

3) any acts aecting the value o the property;

4) inormation concerning the ability or willingness o the Buyer to

complete the sale or to oer a higher price;

5) a buyers intention to subdivide the property or resale or a prot;and

6) any other inormation that might aect the Sellers ability to obtain


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the highest price and best terms in the sale o his property.

2. Buyer Agency (Buyers as Client). Under the Buyer Agency

Agreement our rm and our sales agents act as Agent or the Buyer

Only and consequently have the ollowing armative obligations:

a. to act at all times solely in the Buyers interest;

b. to obey the Buyers instructions and to disclose all relevantinormation to the Buyer;

c. to saeguard the Buyers condences and to act with reasonable

care and skill in representing the Buyer;

d. to deal airly and honestly with the Seller; and

e. to disclose to the Seller any adverse nancial inormation actually

known by the agent.

As an example, under Buyer Agency, the Agent could not, without the

express permission o the Buyer, disclose to the Seller that the Buyerwould pay a price greater than the initial oer. Specically, as an agent

or the Buyer, we are obligated to disclose to the Buyer the ollowing

inormation i we know it:

1) the willingness o the Seller to accept a lower price;

2) any acts relating to the urgency o the Sellers need to dispose othe Property;

3) the Brokers/Agents relationship to or interest in the Seller or theProperty or sale;

4) any acts aecting the value o the property;

5) the length o time the Property has been on the market; and

6) any other inormation that would aect the Buyers ability to obtain

the property at the lowest price and on the most avorable terms.


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3. Dual Agency (Buyer and Seller as clients).As a company who represents both Buyers and Sellers, it is not

unusual that a Buyer client may become interested in one o our

Seller clients properties. Our company and our Brokers can legally

be the agent o both the Seller and the Buyer in a transaction, but

only with the knowledge and written consent o both the Seller

and the Buyer. Dual agency situations arise only when a Buyerclient (one who has signed a Buyer Agency Agreement) wishes

to purchase one o our in-house listings (note that we also have

a duciary responsibility to the Seller who has signed a listing

agreement); in these situations, our company and our Brokers havethe ollowing armative obligations to both the Seller and the Buyer:

a. To act with reasonable care and skill in handling the transaction;

b. To deal airly and honestly with the Seller and Buyer; and

c. To disclose to the Buyer all material deects which the associateknows concerning the Sellers property.

In representing both the Seller and the Buyer, our company and brokers

may not disclose the ollowing:

a. condential inormation that we know about the Seller and/or Buyer (e.g. motivation to sell/buy; price/terms/negotiating

strategy), without the written permission o the Seller and/or

Buyer;b. the price the Seller will take other than the listing price without the

written permission o the Seller;

c. the price that the Buyer is willing to pay without the written

permission o Buyer;

d. recommend or suggest a price that the Buyer should oer to payor the property; and

e. recommend or suggest a price that the Seller should accept or

counter.


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E. Sellers and Buyers Responsibility

The above duties o our company and our brokers in any real estatetransaction do not relieve a Seller or Buyer rom the responsibility to

protect their own interests. Both Seller and Buyer will be asked to read

careully all agreements to assure that they adequately express both

Seller and Buyers understanding o the transaction. Our company andour brokers are not qualied in legal or tax matters. A Seller or Buyer areencouraged to consult a competent attorney or tax accountant when he/

she has concerns in these specialized areas.

F. Duty o Disclosure

It is crucial that our associates understand that an agents duty o

disclosure to the Principal should not be conused with a real estate

agents responsibility to disclose to the Buyer all material deects whichthe associate knows concerning the Sellers property. Furthermore,each associate has a duty to treat all persons honestly and airly; this

responsibility does not depend on the existence o an Agency relationship.

G. Duty o Confdentiality

An agent is obligated to saeguard their Principals condence and secrets.

A real estate broker, thereore, must keep condential any inormation that

might weaken his Principals bargaining position i it were revealed. Thisduty o condentiality plainly does not include any obligation on a Broker/

Agent representing a Seller to withhold rom a Buyer known deects

concerning the Sellers property or to misrepresent the condition o the

property.


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H. Agency Status DeterminedBeverly-Hanks & Associates brokers shall represent the Buyer in the

ollowing instances:

1. Our associate is buying property or their account. It is deemed

impossible or our associate to place the Sellers interest above their

own.

2. Assisting riends, close business associates, and/or relatives in

buying property.

3. Representing a Beverly-Hanks & Associates Seller in the purchase

o a replacement home. Since your Sellers have trusted you in

completing the sale and closing o their home, it is only logical that

you represent them in a Buyer/Client relationship in the purchase o

their new home. It would be virtually impossible to shit rom client(in the listing and sale o their present home) to customer (in the

purchase o a replacement home).

4. In most instances, Beverly-Hanks & Associates Brokers should also

consider representing out o town buyers and/or rst time buyers as

clients, as these buyers usually require a higher level o assistanceand advice than the buyer/customer.

Note: Beverly-Hanks & Associates Brokers may also represent any Buyeras a client who wishes to have representation.

Beverly-Hanks & Associates shall treat the ollowing prospects as

customers (acting as an agent o the Seller).

1. Open house attendees.

2. Ad call prospects, etc.

3. Any prospect that declines representation.

4. When a listing agent has a prospect or his or her listing, thatprospect should preerentially be treated as a customer. In the event

that the listing agent has already established a client relationship

with the prospective buyer, the agent should consult with their

broker-in-charge prior to any negotiation or ormal expression o

interest by the Buyer.


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I. Beverly-Hanks & Associates Procedure orShowing Property to Buyers

1. Review the Working with Real Estate Agents brochure with the

prospect at rst substantial contact. I the prospect alls into one o

the categories that should be treated as a client, or i the prospect

desires representation, execute the Beverly-Hanks Exclusive BuyerAgency Agreement. Discuss the act that our rm also carries alarge inventory o listings and obtain permission or our rm to act as

dual agents by executing the Dual Agency Addendum, and initialing

the Buyer Agency Agreement. I the prospect does not wish to give

us permission to act as dual agents, see your Broker-in-Charge.

Management approval is required prior to execution o any agencyagreement or exclusive representation. I the prospect alls into one

o the categories who should be treated as a customer or declines

representation, the prospect should initial the box on the tear o cardon the Working with Real Estate Agents brochure.

2. Conrm that the listing agency will compensate Beverly-Hanks &

Associates as per the commission split stated in the multiple listing

service.

3. When writing an Oer to Purchase on a Beverly-Hanks & Associateslisting or a Buyer/Client, be sure that both parties have initialled a

dual agency addendum at the time o employment o our rm.

J. Beverly-Hanks & Associates Agency Procedures at

Listing Appointment

During the listing presentation, review the Working with Real Estate

Agents brochure, and discuss with the Sellers that our rm represents

large numbers o Buyers as clients, and, thereore, it is our policy to advise

Seller/Landlord clients that it is in their best interest to cooperate ully

with subagents, Buyer/Tenant agents, and DISCLOSED DUAL AGENTSto maximize the exposure o their property. Obtain permission or our

rm to act as dual agents by executing the Dual Agency Addendum

and by initialing the Exclusive Right to Sell Listing Agreement, NCAR

Standard Form. I the client does not wish to give us permission to act

as dual agents, see your Broker-in-Charge. Management approval isrequired prior to execution o ANY agency agreement or EXCLUSIVE

REPRESENTATION.


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K. Beverly-Hanks & Associates Agency Procedures orOpportunity Time

1. When speaking with a prospect by phone, i the prospect should

begin to divulge inormation which may be condential in natureor harmul to his uture bargaining position, you should stop

the conversation and attempt to either discuss our agencyrepresentation alternatives or make an appointment to do so.

L. Beverly-Hanks & Associates Procedures or

Documenting Files o Agency Agreements

1. Buyer Agency Agreements and tear-o cards orm Working with

Real Estate Agents brochure shall be kept on le in each oce led

alphabetically by Agents last name. These documents should be

turned in to the MLS secretary at the time o execution and will bemerged into an under contract le when an Oer to Purchase isexecuted and accepted.

2. Each Exclusive Right to Sell Listing Contract shall be maintained

in the oce listing le as usual. Listing agents are reminded,

however, that any inormation which may be deemed condentialin nature or could harm the clients negotiating position should be

maintained in the Listing Agents personal le and not in the oce

listing le.

3. Not accepted, canceled, or voided contracts should not be placed inthe active listing le but turned in to the MLS secretary to be led in

a separate Canceled Contract le.


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The First Meeting with Buyer Prospects

Mr. and Mrs. Buyer, beore we discuss your wants and needs regarding a

home (or property, etc.), the Law says I must rst discuss something with

you called Disclosure. As you can see here (the plastic stand on each

conerence table), the Law says that every real estate licensee MUST

provide Agency Disclosure BEFORE providing property inormation.What I must discuss with you is called Working with Real Estate Agents

brochure. The Laws are in place to protect YOU, the consumer, so that

you are sure to be treated airly. Let me show you the agent duties and

relationships now and then you can tell me how you would like our working

relationship to proceed. I can work with you as either a Buyer Agent or aSeller Subagent. Let me show you what that means and then I will just

need your acknowledgement that shows I did discuss Agency Duties and

Relationships with you and which way you preer or us to work together.

Proceed with presenting agency in a clear and concise manner and gettheir acknowledgement either on the buyer agency orm or by initialing

the sub-agent box on the tear o card on the Working with Real Estate

Agents brochure.

When this is presented properly, involving them in the picture, you willautomatically command respect in such a way that they WANT to work

with you. Practicing this presentation is what makes it easy to do. The

higher your comort level with this inormation, the more they will respectyour knowledge and the more they will trust you.

Upon completion o this step, proceed to Setting the Stage or Your Real

Estate Purchase.

a. agency relationships

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