Why are realty professionals called “agents?” What is the meaning of the term “agent” in the context of real estate?
Real Estate is practiced under the ‘Law of Agency,” in which one party – the agent – represents the interests of another – the principal. The association is termed an “agency relationship.”
As the sellers’ agent, the representative acts on the sellers’ behalf, with their best interests in mind, to locate a buyer. The buyers must be treated honestly and fairly, but they are not “represented” by that agent. The sellers’ agent is always faithful to the sellers’ best interests (but not necessarily those of the buyer).
In the past, most buyers were not represented by an agent – they made their buying decisions using factual information presented to them by the sellers or their agent. Because of the increasingly complicated nature of real estate transactions, however, “buyer agency” has become more common. To gain representation in their purchase, buyers may employ an agent to represent their interests and fulfill the obligation to faithfully serve them.
What’s the real message about agency? Both buyers and sellers should know whether they are represented and by whom. To find out, ask the agent(s), “Who are you representing in this transaction?” Inform yourself and make confident decisions by learning the facts about agency relationships before you buy or sell.