This article pertains to Florida real estate law and may or may not apply to your respective state.
I truly believe all homeowners and home-buyers expect confidentiality, obedience, loyalty and full disclosure when depending on a brokerage for their real estate needs. What a lot of people don’t know is that the brokerage is actually not required by law to demonstrate these four duties. That is, until a “Single Agent Notice” form has been signed by the buyer or seller.
This legal document binds the buyer or seller and the brokerage together, creating a special relationship recognized under Florida real estate law called “Single Agency.” At this point, the buyer or seller transitions from being a customer to the legal principal, or client. The brokerage then becomes an extension of the buyer or seller as a result.
Many folks unknowingly (but not unreasonably) enter into what is known as a “Transaction Broker” relationship instead, where their best interests may or may not come before that of the brokerage’s. If no mention is ever made concerning the relationships available, then there is also no question as to what sort of relationship has been created by default. In cases like these, a “Transaction Broker” relationship has been established [475.278 (1)(b)F.S.] and the buyer or seller is presumed a customer.
Many brokerages hold relationships with their customers very dearly, regardless. I can only imagine that the type of relationship created would not impact whether an agent would be working in a customer’s best interest or not. However, at the end of the day, no matter the intentions, the buyer or seller are still only customers… sort of like at Walmart.
In all fairness, there are situations where a “Transaction Broker” relationship is the best feasible option available. For example, a particular brokerage lists your home for sale, and they also bring you the buyer. In cases like these, it does not necessarily mean they will not have your best interest at heart. You are still benefiting from the sale, but they do not legally owe you the confidentiality, obedience, loyalty and full disclosure that would otherwise be due in a “Single Agency” relationship. In other words, they are working with two parties instead of just one, and it isn’t possible for them to honestly represent both parties at the same time.
It seems that the law has been written and is being practiced so that many who would otherwise desire to be represented will probably never actually receive representation. Technically speaking, you do not and cannot receive representation as a customer. Only a client is entitled to receive representation along with the four “extra” duties listed above.
Now I began by mentioning a “special” relationship, but what comes to mind? I think the best example would be that of a dog and it’s owner. Referring back to the values in the first paragraph, dogs can be both obedient and loyal. But what if man’s best friend could talk? I think they might also provide us with the other two duties, namely, confidentiality and full disclosure.
To sum it up, if you are a homeowner or home-buyer in the state of Florida and want to guarantee by law that a real estate brokerage (and subsequently any Realtor® or agent) is putting your interests first, you can ask to be presented with one of these: Single Agent Notice
If you would like to learn more, I have provided a link to the Florida Legislature’s website which lists all brokerage relationships along with their corresponding duties.