Agency Explained for Buyers
Agency is the term used to describe the relationship between the buyer or seller and an agent. Various forms of agency relationships are permitted under Massachusetts real estate law. State law provides that every agent must present a form, which explains agency, to each consumer at their first meeting. This form is called the Massachusetts Mandatory License Consumer Relationship Disclosure and it outlines the choice a buyer may consider in an agency relationship.
1) A Buyer may choose to hire an agent as a Buyer’s Agent. As a Buyer’s Agent, the agent owes all fiduciary responsibilities of agency, including “full disclosure, reasonable care and diligence, lawful obedience, confidentiality, accounting for funds and undivided loyalty.” A Designated Agent is an Agent who will be your specific Buyer’s Agent within a firm. No other agent in that firm will represent you as a Buyer’s Agent unless disclosed and agreed to through a “Consent to Designated Agency” form. A Buyer Representation Agreement may be used to increase the binding nature of the Buyer agency relationship. This contract grants the “sole and exclusive right to represent a buyer in the purchase of a property” within the guidelines set forth in the agreement. Details such as the buying time frame, services and agency fee are stipulated.
2) A Buyer may choose to work with an agent as a Facilitator. In the role of Facilitator the agent will assist the buyer in the process but does not represent the buyer’s interest and cannot advocate for the buyer or offer advice. The Facilitator has no obligation to keep confidential any information received from the buyer.
3) A Buyer may choose to work with an agent as a Seller’s Agent. This situation would occur if a buyer wanted to purchase a specific property and the Seller’s Agent representing this seller has no previous agency relationship with the buyer. The Seller’s Agent in this case would not represent the buyer and is obligated to promote the interest of the seller above any other party. The agent is, however, obligated to deal with the buyer fairly and honestly and to disclose any known material defects.
4) A Dual Agent situation arises when the Buyer’s Agent is already working as the Seller’s agent on a property that the buyer wishes to purchase. In this case, the agent is a Dual Agent. Both buyer and seller must consent to dual agency through the “Consent to Dual Agency” form. In this circumstance, the agent becomes a neutral party unable to represent the interests of one party over the other. The agent can only facilitate negotiations without full disclosure of motivation or personal information of either party. If either the buyer or the seller does not agree to Dual Agent status, another agent can be designated to represent the interests of one party.