Overview of Agency

Course Goal To effectively practice real estate, licensees must fully understand their relationships with buyers and sellers. The goal of the presentation is to provide a simple, yet comprehensive workshop on real estate relationships. The basis of this course is Virginia’s agency law (Effective October 1 st 1995, revised July 1, 1997.)

Course Objectives After completion of this course, students will be able to: Identify areas where the Code of Ethics supplements the law. Demonstrate successful agency disclosure techniques. Explain agency terminology. Identify how agency relationships are established. List the duties of STANDARD AGENT. Explain the importance of confidentiality. Demonstrate how to practice dual and designated representation. Explain property disclosure procedures. Recognize liability issues.

Terminology Customer – Does not have a brokerage relationship with you. Client – Does have a brokerage relationship with you.

Terminology Brokerage Relationships – Contractual relationships between a client and a licensee to sell, lease, etc. Agency – Every relationship where a real estate licensee represents a person in a real estate transaction. The Client must expressly authorize the relationship.

Terminology Standard Agent – A Standard Agent has the specific duties and obligations stated in the new law. Licensees are presumed to be standard agents unless they expressly declare otherwise. Ministerial Acts – Routine acts that a licensee can perform that do not involve discretion or the exercise of the licensees own judgment.

How Are Brokerage Relationships Established?

Preconditions of Relationships Advise Potential Clients About Types of Relationships Proposed Terms of Compensation How Compensation will be shared

Brokerage Relationships ARE Created By… Written agreements between you and your client Actions you take on behalf of someone Oral agreements

Brokerage Relationships Are NOT Created By… Participate in a MLS Service or other common source information service Compensation Performing “Ministerial Acts”

Ministerial Acts Routine in nature Do not involve exercise of your judgment

Duties of a Standard Agent Fiduciary

Duties Of A Standard Agent… To Clients: Perform to contract Promote their interests by seeking acceptable transaction Maintain confidentiality Exercise ordinary care Comply with laws

Duties Of A Standard Agent… To Customers: Be Honest Do not knowingly give false information Make certain disclosures Agency Known material adverse facts about the physical condition of the property

Confidentiality During… Keep confidential all personal and financial information from your client Keep confidential other information at client request Release such information only if required by law or with client’s written consent

Confidentiality After… DITTO! Maintain all previous confidential information forever

Dual Representation BROKER BIG TIME REALTY LISTING AGENT BIG TIME REALTY SELLER BUYER AGENT BIG TIME REALTY BUYER

Designated Representation BROKER BIG TIME REALTY LISTING AGENT BIG TIME REALTY SELLER BUYER AGENT BIG TIME REALTY BUYER

Disclosure Rules Whom do you represent? Material adverse facts

“Agency” Disclosure To whom? Non-client who is not represented When? At time of substantive discussion about specific properties

Material Facts Disclose adverse material facts about physical condition Disclose if actually known

Stigmatizing Events Virginia’s Seller Disclosure Law defines stigmatizing events that had no material effect on the property as “non-material” - ghosts, murders, suicides, etc. Virginia licensees have no obligation to disclose such non-material events Standard of Practice 2-5 releases Virginia REALTORS® from the obligation of disclosing stigmatizing events

Safe Harbor Forms Not Mandatory Forms Sample Language

Limitation of Liability Duties are clarified No “vicarious liability” for the actions of others No “imputed” knowledge or presumption of information “Safe harbor forms” provide good risk management