Real estate agency is a legally binding relationship between real estate agents and their clients during the buying and selling process. Each state has its own rules regarding the licensing and duties of real estate professionals, as well as how they’re allowed to work with consumers.
First, there are two levels of licensure—broker and agent. Brokers can own their own agencies and work independently, while agents must work under a broker’s supervision. When you hire an agent, you’re really hiring the broker.
Because brokers and agents can represent either or both parties to a real estate transaction, agency relationships must be disclosed to both the seller and the homebuyer. In most states, dual agency isn’t permitted, but a broker may assign another agent in the firm to represent one of the parties as a designated agent with limited fiduciary obligations.
New federal regulations require homebuyers to sign temporary or long-term representation contracts with their agents, agreeing to pay the agents’ fees or requesting that the seller cover them before they can begin touring homes.
