Real Estate Word of the Day: Agency
In general terms, agency typically refers to a business relationship wherein an agent is employed by a principal to do certain acts on the principal's behalf. What this translates to in the real estate world, is that agency is used to help determine the legal responsibilities a real estate professional owes to their client. According to the National Association of Realtors, "Agency ... creates a legally binding relationship between the real estate agent and their client during the buying and selling process, [and] is one of the most important aspects of the real estate profession. Because of agency, real estate agents [are required] to act in their client’s best interest." A real estate agent may represent the seller, buyer, or both parties as a dual agent. This relationship must be disclosed to all parties via an agency disclosure form--an agreement signed by both parties (real estate agent, and their client). The agreement states that the agent is acting on behalf and in the best interest of the client, while also disclosing the specifics of the relationship. This form is typically one of the first agreements to be signed between agent and client. Real estate agents are legally required to keep documentation of this.
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