Agency Relationships in North Carolina

Agency Relationships in North CarolinaIn North Carolina, should you decide to have a real estate agent assist in buying or selling a home, there are several types of representation (or agency types) available. It is important as a buyer or seller to understand these different roles that an agent and their firm can assume. The first thing to keep in mind is that buyers and sellers are represented by the Firm, not an individual agent. So, if you decide to list your home with Kay Fisher & Associates, you are technically represented by the firm we work with, Keller Williams. This is not unique to our company, it is the law. So, if you decide to list your home with Suzie Agent from XYZ Realty, your agreement isn’t with Suzy Agent, it’s with XYZ Realty. That’s not to say that you would work with anyone except for Suzy, but technically the firm represents you, so if something happens with Suzy you are still represented by the firm.

Seller Agency:

As a seller, once you sign the listing agreement, the firm that you are listing with becomes a Seller’s agent. Along with marketing your property for sale, agents and firms have certain duties in association with the sale of your home. Their duties are to:

  • Promote your best interests
  • Be loyal to you
  • Follow your lawful instructions
  • Provide you with all material facts that could influence your decisions
  • Use reasonable skill, care & diligence
  • Account for all monies they handle for you

Once you sign a listing agreement with a firm, the firm or their agents cannot give out confidential information about you or your property without your permission. But, until you sign a listing agreement, you should avoid sharing any information with them that you would not want a buyer to know.

Buyer Agency:

Conversely, as a buyer, you have several options for representation by agents and their firms. By law in North Carolina, all agents and firms must represent the seller until you sign a Buyer’s Agency Agreement with them. Until this happens, the agent and firm are technically subagents of the seller. This can be confusing when you first think about it because in most cases, the agent or firm you are working with doesn’t know the seller at all. But, this is how the laws are written. Buyers do have an option for representation, though, known as Buyers Agency. A buyer’s agent can be compensated in several ways, but the most common thing we see is that the seller’s agent or firm will offer compensation to the buyer’s agent from their commission earned on the sale. This is typically done through the local MLS agreement and the firms that participate in the MLS. If a seller or their agent does not offer compensation, a buyer’s agent could also be compensated by the buyer directly. I’ve never been involved in a transaction like this, but it’s possible.

As with seller representation, Buyer’s Agency Agreements are also between the client and the Firm. As your buyer’s agent, the agent and firm have certain duties to you as a buyer. They include:

  • Promote your best interests
  • Be loyal to you
  • Follow your lawful instructions
  • Provide you with all material facts that could influence your decisions
  • Use reasonable skill, care & diligence
  • Account for all monies they handle for you

Until you have agreed that an agent or firm will represent you as a buyer’s agent (orally or in writing), you should avoid telling them anything that you would not want the Seller to know. Verbal agreements for this are allowed, but once you submit an offer to purchase a property, the agreement must be in writing.

Seller Subagency:

Should you decide not to sign a Buyer’s Agency Agreement with an agent who is assisting you when purchasing a property, you will be in a seller subagency relationship. In this case, the agent must still be fair to you and provide you with material facts about the property, such as a leaky roof. But, in this case, the agent represents the seller, not you, in the purchase of the property. So, they are required to get the best possible price and terms for the seller. They are also required to provide the seller with any information about you that could assist them in the sale of his or her property. You should avoid sharing anything with a seller’s subagent that you would not want the seller to know.

Dual Agency:

From time to time, the firm representing the seller may have a buyer for the property that is listed with the firm. In this case, whether it is the individual agent or another agent in the firm, if the firm is representing the buyer, this will be Dual Agency. It doesn’t necessarily have to be the individual agent who is helping you sell or buy a property, it could be anyone from the firm and still be considered dual agency. The reason is, as mentioned above, agency agreements are always between the Seller and the Firm, not an individual agent.

Designated Agency:

If this occurs, many firms will designate an agent from the firm to work with the buyer and another agent from the firm to work with the seller. This allows for more full representation of each party involved.

Hopefully, this brief overview can help you understand the basics of Dual Agency in North Carolina. However, you should contact a REALTOR® for more information on agency relationships. Agents in NC are required to share with you the disclosure “Working With Real Estate Agents” upon first substantial contact with a buyer or seller. You can review the required disclosure Working With Real Estate Agents here.

 

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