II.
Real Estate Brokerage Generally.
As
a general rule, only licensed real estate brokers can be
paid a fee to help consumers buy, sell, or lease property.
Many brokers have licensed real estate salespersons, commonly
known as real estate agents, who act on behalf of the broker
in helping consumers buy, sell, or lease property. While
real estate agents can be employees of the real estate broker,
most act as independent contractors. Real estate brokers
often incorporate or set themselves up as limited liability
companies or partnerships. All brokerage firms, however,
are required to have a responsible or a qualifying broker.
In the majority of real estate transactions, the consumer
interacts only with his or her real estate agent and not
the real estate broker. The real estate broker in those
instances works behind the scenes to solve problems and
support, supervise and assist his or her agents.
Ill.
Client vs. Customer in Brokerage Relationships:
All
brokerage relationships fall into one of two broad categories:
1) broker-client relationships and 2) broker-customer relationships.
In a broker-client relationship, the real estate broker
is representing the client and is acting as his or her legal
agent in buying, selling, or leasing property. In Georgia,
a broker-client relationship can only be formed by the parties
entering into a written agreement. The agreement must explain,
among other things, how the broker will be paid, the duty
of the broker to keep client confidences, and the types
of client or agency relationships offered by the broker.
The other type of brokerage relationship is known as a broker-customer
relationship. With this type of relationship, the broker
is not representing the customer in a legal or agency capacity.
However, the broker can still work with the customer and
help him or her by performing what are known as ministerial
acts. These include, for example, identifying property for
sale or lease, providing pre-printed real estate form contracts,
preparing real estate contracts at the direction of the
customer, and locating lenders, inspectors, and closing
attorneys on behalf of the customer. The different types
of brokerage relationships within each of these categories
are discussed below:
- IV.
Broker-Client Relationships:
-
Seller Agency/Landlord Agency - Seller agency
occurs when the real estate broker is representing the
seller in selling his or her property. This type of brokerage
relationship is created by the seller and the broker entering
into a written contract known as a listing agreement.
The listing agreement gives the broker, commonly referred
to as the listing broker, the right to market the property
for sale at a specific price and for a defined period
of time. If the broker is successful in finding a buyer
ready, willing, and able to purchase the property, the
broker would normally be paid a fee or commission upon
the closing of the transaction. This fee or commission
is often shared with other real estate brokers, under
what are known as cooperative brokerage agreements, if
they or their agents find the buyer. Seller agency is
also sometimes called listing agency. Landlord agency
is different from seller agency in that the listing broker
is assisting the property owner in leasing rather than
selling property.
Buyer Agency/Tenant Agency - Buyer agency occurs
when the real estate broker represents the buyer in locating
and assisting the buyer in negotiating for the purchase
of property suitable to the buyer. A buyer agency is created
when the buyer enters into an agreement commonly known
as a buyer brokerage agreement. A real estate broker can
be compensated by one party yet represent another party.
Therefore, in some buyer brokerage agreements, the fee
or commission received by the buyers broker is actually
a portion of the fee or commission paid by the seller
to the listing broker. In these situations, the seller
also agrees that the listing broker will share the commission
or fee with any buyer’s broker who finds a buyer
ready, willing and able to purchase the property. With
some buyer brokerage agreements, the buyer pays a fee
or commission directly to his or her broker. Buyer agency
is sometimes referred to as buyer brokerage. Tenant agency
is different from buyer agency in that the broker is representing
a consumer who is seeking to lease rather than purchase
property.
Designated Agency - In some real estate transactions,
the real estate agent representing the buyer and the real
estate agent representing the seller both work for the
same broker or brokerage firm. In such a transaction,
the broker may allow each agent to exclusively represent
their respective clients. This type of brokerage relationship
is known as designated agency.
In a designated agency transaction, the designated agent
for the buyer owes the same duties to the buyer as if
the agent was acting only as a buyer’s agent. Similarly,
the designated agent for the seller owes the same duties
to the seller as if the agent was acting only as the seller’s
agent. With designated agency, each designated agent is
prohibited from disclosing to anyone other than his or
her broker any information requested to be kept confidential
by the client unless the information is otherwise required
to be disclosed by law. Therefore, designated agents may
not disclose such confidential information to other agents
in the company. The broker is also prohibited from revealing
any confidential information he or she has received from
one designated agent to the other designated agent, unless
the information is otherwise required to be disclosed
by law. Confidential information is defined as any information
that could harm the client’s negotiating position
which information the client has not consented to be disclosed.
In Georgia, designated agency is defined by state statute
not to be dual agency.
Dual Agency - Georgia law allows both
parties to agree to have one agent or broker represent
them in a real estate transaction at the same time. In
other words, the agent or broker has a client relationship
with all parties to the transaction without acting in
a designated agency capacity. In these situations, neither
party is exclusively represented by a designated real
estate agent. This type of brokerage relationship is called
“dual agency”.
Georgia
law allows real estate brokers to act as dual agents if
they first get the written consent of both parties. The
written consent must contain the following:
- a
description of the types of transactions in which the
licensee will serve as a dual agent;
- a statement that as a dual agent, the licensee represents
two clients whose interests could be different or even
adverse;
- a
statement that the dual agent will disclose all adverse
material facts regarding the transaction known to the
dual agent to all parties to the transaction except for
information that is made confidential by request of another
client and that is not allowed or required by law to be
disclosed;
- a statement that the licensee will disclose to each client
in the transaction the nature of any material relationship
the licensee or his or her broker have with other clients
in the transaction other than incidental to the transaction;
- a
statement that the client does not have to consent to
the dual agency; and
- a statement that the client’s consent has been given
voluntarily and that the client has read and understood
the brokerage engagement agreement;
This
special consent is required because of the potential for
conflicts of interest in dual agency transactions.
Subagency
- Subagency
occurs when one real estate broker is appointed by another
real estate broker as a subagent to assist the broker
in performing its duties. In a typical subagency transaction,
a listing broker practicing subagency might appoint the
broker working with the buyer as his or her subagent.
The broker acting as the subagent would work with the
buyer but would represent the seller. The buyer then was
the customer of the broker acting as a subagent, but the
seller would be his or her client. Subagency relationships
between real estate brokers in Georgia, while once the
norm, are much less common today.
- V.
Broker-Customer Relationships:
Transaction
Brokerage - A
transaction brokerage relationship is one in which a real
estate broker or brokers assists both parties in a real
estate transaction but does not enter into a client relationship
with, nor represents, either party. In a transaction brokerage
relationship, the broker treats both parties as customers
and can only perform ministerial acts for either party,
including the following:
- identifying property;
- providing real estate statistics and information of
property;
- providing preprinted real estate form contracts;
- acting
as a scribe in the preparation of form contracts;
- locating
relevant professionals, such as architects, engineers,
surveyors, inspectors, lenders, insurance agents,
and attorneys; and
- identifying
facilities such as schools, shopping centers, and
places of worship.
Brokers May Help Parties Other Than Their Clients
- Brokers
who represent one party in a real estate transaction
as a client can still help the other party in the transaction
by performing ministerial duties for the other party
(of the type described under transaction brokerage section).
When a real estate broker works with a party as a customer
or client, the broker may not knowingly give the party
false information.
VI.
Always Choose a REALTOR®:
This
brochure has been prepared as a public service by the Georgia
Association of Realtors®. Realtor® is a registered
collective membership mark which may be used only by real
estate professionals who are members of the National Association
of Realtors® and subscribe to its strict Code of Ethics. |
