(Who Does My Broker Work For?)
Nevada recognizes three types of professional representation, also known as Agency in all real estate transactions. Real estate licensees are required to provide clients a written form disclosing their agency status. Unfortunately, this disclosure is often delayed until well after the relationship between licensee and client has developed. Absent that written disclosure, here are a few rules of the road that will help consumers understand the process.
● Single Agency: This is the most common type of representation. One party(the client)is represented by a licensee/brokerage while the other is represented by a second licensee from a different brokerage. There are many responsibilities in the duties owed to a client by a licensee, perhaps the most important duty is confidentiality. Due to the competitive nature of real estate, single agency implies that confidential information such as the client’s motivation and bottom line will not be discussed between the licensees. The lines of single agency are equally clear when one party is unrepresented. New home subdivisions are a good example of this. The on-site sales person is working for the seller exclusively and in the endobligated to share everything they know about the customer (you) with their client (the builder).
● Assigned Agency: In this situation you have two licensees affiliated with the same brokerage and they are “assigned” the task of representing the buyer and seller independently. Separate files are maintained and only the managing broker has access to all pertinent and sometimes confidential information contained within. Regarding client confidentiality amongst colleagues, the State further defines the duties of assigned agents as working behind an “ethical wall”. When compared to single agency this scenario might sound like a potential conflict of interest, however, it rarely is. That said, some highly organized real estate teams working in traditional brokerages may not pass this litmus test. Most real estate teams are organized under a team leader, who almost always is the listing agent and not a managing broker. The team leader typically has total access to all files related to the team and often manages the day-to-day activities of its’ junior members.A junior member of a team would be a “buyer’s agent”. This agent has little or no access to the seller’s information and specializes in showing properties, writing offers, and overseeing the buyer’s side of the transactions they initiate. When a buyer’s agent writes an offer on his or her team leader’s listing, can the team leader truly say they represent the seller exclusively? I hope you see where I’m going with this as it leads nicely into my next topic.
● Dual Agency: With the proper disclosure, it is perfectly legal for one licensee to represent multiple parties in the same real estate transaction. While dual agency is legal in Nevada some say it is patently unethical and there are instances where those people are right. It is an absolute conflict of interest to truly represent the best interests of separate parties with clashing agendas. Imagine an attorney representing both parties in a contested divorce or bitter lawsuit. On the other hand, many real estate transactions are cooperative rather than contentious. Perhaps it’s a transaction between two long-term clients or mutual friends of the licensee. Also consider the plight of a managing broker actively selling real estate, such is the case with this author. A managing broker is technically locked into a dual agency role in every transaction they conduct with the agents they directly supervise. There is no doubt that dual agency can harm a client’s position if abused by their licensee. Conversely, there are times that dual agency is technically unavoidable and/or in the best interest of sophisticated parties with cooperative agendas.
For brokers, this is a complicated topic that should be clearly addressed in both training and policy. For buyers and sellers, understanding agency is often about knowing how much to say, to whom and when. Ask for a written disclosure if those lines are not clear.