QUAD CITIES REAL ESTATE WITH RE/MAX

SERVING THE ENTIRE IOWA AND ILLINOIS QUAD CITIES ............................................................

DAVENPORT - BETTENDORF - ROCK ISLAND - MOLINE AND SURROUNDING COMMUNITIES

TOM & CYNDEE BROWNER   

CRS, ABR, GRI, e-PRO, CRB, MRA.

BROKER OWNERS - RE/MAX BI-STATE 

SERVING IOWA & ILLINOIS 

DAVENPORT - BETTENDORF - MOLINE - ROCK ISLAND & SURROUNDING COMMUNITIES 

563-388-0008 Office - 563-570-7629 Cyndee's Cell - 563-343-1092 Tom's Cell

Contact us at tom&cyndee@quadcitiesrealestate.com Have a real estate question? The answer is just a phone call or E-mail away. Buying or Selling a home is an important financial decision. WHEN YOUR MONEY MATTERS, be careful and check out who you are dealing with. You deserve the best information and service available. If you would like to know what you should expect, check out our Buyer Representation or Seller Representation pages.

We are both Accredited Buyers Representatives (Certified Buyer's Agents) we know you want to make the best decision. You want the best home possible for your investment. We know the market, and we work at your pace and not ours. We will guide you through all the forms, take you through the first time buyer programs and/or financing, inspections and explain everything each step of the way. We take care of all the details and problems before they become a problem to you. Call us on our private line at 570-7629 at RE/MAX BI-STATE or Contact us at tom&cyndee@quadcitiesrealestate.com - LOOKING TO SELL? Check out the services an Certified Residential Specialist can mean to you.

Our Goal is to provide you with the most up to date information and Exemplary Service at all times. Homes are an important decision and a long term investment. When Your Money Matters, you need and deserve the most competent professional help available. We strive to always be on top of the market and to further our education's, that we may be knowledgeable to give you the best service and advice at all times.

AGENCY DEFINED FOR HOME BUYERS

There have been many changes in Real Estate Agency in recent years. Gone are the days when Broker companies offered "Sub-Agency to other agents and companies. At that time everyone represented the Seller. At the time you bought, the seller paid a commission and this was split between the two companies and their agents. This created a real loyalty problem for Buyers and agents alike. The agent might be helping the buyer for months before the actual purchase. Helping the buyer's to save money, know the market, and solve financing or other problems. Then the agent spends several days driving the buyers around to look at homes of seller's that the agent probably has never seen before. When a home was chosen and it was time to negotiate the offer, the agent was legally supposed to be representing the seller.

This was further complicated by the fact that buyers thought their agent was representing them. Guess what, the sellers also thought the agent was representing the buyers. It was very confusing, as the agent became emotionally attached to the buyers and yet represented seller's he did not know.

Then a large change took place. It was determined that buyers were entitled to their own representation. Sellers could still pay the commissions which could still be dispersed according to existing sharing agreements. Today, buyers sign an agency agreement which outlines the duties of agent representing them. This disclosure is read and signed before they make an offer on any home.

Many buyers are now going a step further. They are signing "Exclusive Representation" contracts with agents or brokers to represent their interest in procuring a home. This allows them to use their representative with listed properties and even "For Sale by Owners". Normally an agreement is signed between the Buyer and their Agent which outlines what is expected of the agent and compensation to be paid. Normally earnest money, $100 to $250 is given to the "Buyers Agent" to legally seal the contract. At the time the Buyer's purchase, this money goes towards commissions is several ways. If the seller is paying the entire commission, whether it is a listed property or a for sale by owner, the money comes back to the buyer. If it is a For Sale by Owner and the seller refuses to pay commission for you, the earnest money will be applied to the commission you agreed to pay your agent. Of course your offer will be lower to the FISBO to cover your representation expense, or higher with an agreement that the seller will pay the expense for you. What you are buying are the services of a Buyer's Agent. You can get more on what duties a Buyer's agent performs by going to Buyers Representation at the bottom of this page. So what is "Agency"?

Agency has been around for thousands of years in common law. Simply the "Principal" (person being represented) gives authority to an "Agent" or "Fiduciaries" (person performing the task) to perform a specific task or group of tasks. Usually there is "Consideration" (money or value) that is given to the agent by the principal for completing the task. Money is not absolutely necessary for a contract for agency to exist. A relative may receive love or good will as consideration and still be obligated under an agency agreement. Others may also be involved in the agency agreement called "Third Parties" ("Customers" are a very important type of third party).

Through an agency agreement, both the principal and the agent have liability and responsibility to each other and third parties. "Universal Agency" is complete responsibility for everything of an agent for his principal. Slightly less authority is called "General Agency" which gives the agent authority to do most things for the principal. "Special or Limited Agency" is the authority allowing an agent to perform tasks in a very limited area or specific purpose. An attorney's power of attorney to close a real estate transaction or a Real Estate agent's listing agreement are examples of special or limited agency.

Since agency creates responsibility and liability for both the agent and principal, it requires some form of agreement which stipulates the task, authority and compensation. In real estate, these agreements are written. Written agreements creating agency are called "Expressed". Agency agreements can also be "Implied" when by words or actions of the principal or agent, a third party would logically assume that an agency agreement exist.

Agency states that a person will set aside his best interest and act instead in the best interest of his principal. Agency is based on common law and years of court decisions. These decisions are based on what are called the "Fiduciary Responsibilities" of the agent. These responsibilities are Loyalty, Obedience, Care and Diligence, Accounting, and Disclosure or Confidentiality. Ultimately, the principal is responsible for the actions of his agent. The agent agrees to be loyal to the principal and work only in his best interest. To be obedient and obey the lawful instructions of his principal. To use care, refers to the fact that the agent must use diligence to do everything lawful the principal instructs and to make sure that their actions are beyond reproach. Accounting requires that the agent can account for all monies accepted on the behalf of the principal. Such things as escrows, deposits, fee's, royalties, etc... Disclosure and confidentiality are more difficult to explain. An agent normally has the requirement to disclose material defects. Not to do so, would put him and his principal at risk to a law suite on the basis of fraud. However, the agent also may have knowledge of personal problems, goals, current plans of his principal. This information under loyalty may not be divulged unless the principal has given permission for the information to be broadcast. So confidential information must be kept secret to protect the negotiation interest of the principal.

Agency is usually created by written contract. A contract is simply a promise or set of promises to perform a task or set of task. For a contract to be valid it should be in writing. It must be between competent parties, (over 18, mentally balanced, with the right or ability to contract. Another element is valuable consideration or an agreed upon payment for the service rendered. The task or agency must be legal. Finally there must be agreement, a meeting of the minds. This means there can not be any misrepresentation by either party or to a third party by principal or agent.

There are alternatives to agency where a principal and third party may agree to use another person as a counselor, facilitator, negotiator or arbitrator. In these situations, the middleman has no allegiance or loyalty to either party. There is no fiduciary responsibility to either the principal or third party. The middleman is just a broker (someone who puts buyer and seller together and tries to suggest solutions to any problems they may have in resolving their transaction). In Real Estate, these middlemen may be called "Duel Agents".

Agency normally continues until a set date as expressed in the contract terminates the relationship, a party to the contract dies, the task is completed, by announcement or mutually withdrawn, or abandonment of one party to the relationship of their responsibilities under the arrangement.

In Real Estate, listing agreements are a common form of agency. Buyer representation agreements are another form of real estate agency. However, there are several types of listing agreements which all have a variety of responsibilities due to the type of relationship. The most common is the "Exclusive Right to Sell" listing contract. This kind of listing allows all agents, brokers and brokerages to participate in selling a home. Commissions are split according to contract between the agencies and agents. The Seller agrees to pay a commission to the listing company, no matter who sells the property. In Iowa and Illinois there is no sub-agency allowed (a system where all agents from all companies represent the seller and no one represents the buyer). The evolution of the business has dictated that the Listing agent and company and their agents represent the Seller and all other Companies and agents represent the buyer. An agent from the listing company who comes in with an offer from a client or buyer, must have the client and seller agree to duel agency and sign an agreement to allow duel agency. Some companies have gone further and appointed the listing agent as the "Designated Agent" and that agent only represents the Seller; and all other agents within the listing company and other companies represent possible buyers. In this system, the confidential information is only known to the listing agent and all records are kept private and away from all other agents within the company and other companies. Anyone given access to the files, must then act as a designated agent also or if agreed to by the seller, as a duel agent. Some companies like Re/Max have decided that all members of a team must be considered a designated agent.  If any team member enters into a contract with a client. a dual agency agreement must be signed, giving the agent permission to present the offer. Legally, if the files are secure and separate and there is no discussion of the client, separate representation within the team would be legal. Separate representation could also be problematical as anyone could maintain that it would be impossible for someone on a team not to overhear telephone conversations, see a memo on a desk etc.  So even if the files are kept separate and there is no discussion, meeting or interaction with the team member's client, most agents in a team situation will declare dual agency. Then if a team member accidentally overhears phone conversations, phone messages, or picks up information by accident that other agents might not have access to or gains information that would compromise the client, they then have a rigid definition of what is and is not allowed. 

The basic definition of duel agency is a negotiator or facilitator. It means the agent must be honest with both parties, bring the wants of both to the table and attempt to help them find common ground for an agreement. In my opinion, duel agency is more liability for the agent, but probably never affects either the buyer or seller much in the negotiation process. The offer is the offer is the offer. No matter who represents whom, the price paid will normally reflect the value for that home in that market that day. No one can steal a home through representation. Sellers only want green money and will not give away their property to anyone, even if they have Billy Graham or the Pope representing them. In the real world, the only bargains are when a buyer buy's a home from their mother or grandmother.

All agents and brokers should disclose themselves as seller's agent when the seller is the agent, family member or a close associate. If the seller is a recent or current client, past client or friend the agent should declare themselves the agent of that person or a dual agent. If the buyer is highly knowledgeable like a lawyer or another broker, if the agent is not competent in Buyer Agency, when the buyer has another agent or if the seller has requested representation, the agent may wish to either have a form signed that the party is waiving representation or demanding representation even if there is a conflict of interest.  Full disclosure is the only defense for an agent in any situation.  If both parties agree to a looser or tighter definition of representation and it is put in writing, then other versions of representation can be used. Likewise, if the buyer is the agent, close associate, friend, or if the seller is highly knowledgeable, the agent should disclose them self as being a buyer's agent.

Dual Agency does not relieve an agent of doing their job.  They must still give full service like educating the buyer and seller by doing Comprehensive Market Analysis of the properties, giving advice on financing, terms, etc.  What they can not do is put a price on the property, tell the buyer what to offer or the seller what to accept or counter.  At offer time, the dual agent must become the errand boy or girl.  Take the messages to the other party, but allow them to negotiate at arms length without interference of an agent that may know information detrimental to one of the parties to the contract.  Each parties secrets, needs, and negotiation strategy must be held mute by the agent.  If done properly, there is no damage done to either party to the negotiations.  Any information that is desired to be presented must be done by the parties or permission and instruction given to the agent to relay to the other party.

If you go to an open house, you are a customer. You have no representation.  Before, you give any information to the agent, you may wish to require him to agree to dual agency.  That way, he can not relay any information you give that might strengthen the negotiation hand of the sellers.  A good agent will bring up agency immediately if you begin crossing the line of independent customer viewer to representation.  If you have any questions, Please call Cyndee or myself.  We would be happy to help.

For more of what a Buyer's agent does for his client please check out 

EXCLUSIVE BUYER REPRESENTATION CONTRACT  -  AGENCY  -  BUYER REPRESENTATION 

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