One of the most important forms that Realtors use with either a buyer or seller is called “Disclosure Regarding Agency Relationship,” which I’ll shorten to the agency disclosure form for the purposes of this article.
This disclosure basically outlines the role the agent plays when representing either the buyer, the seller and — in some instances — both the buyer and seller in the same transaction.
First of all, agency follows the company, not the real estate agent. In essence, that means the agency doesn’t just follow the individual real estate agent that you are working with, but all of the real estate agents working for the same broker. Therefore, in the agency disclosure form, the agent (office) has the opportunity of representing the seller exclusively, the buyer exclusively or an agent representing both the buyer and seller. In the latter, an agent representing both the buyer and seller can be either an individual real estate agent representing both parties or different agents from the same company.
In agency, there are three steps. The first is to disclose, the second is to elect the type of agency and the third is to confirm this agency in writing.
The first step is the agency disclosure form itself, which is presented to either the seller or the buyer before any contracts are signed. The second and third steps — that is the election and confirmation — are actually done in the Residential Purchase Agreement itself. Once it’s determined whether the individual agents are from the same company or different companies, they will check the box in the RPA (elect), and then the buyer and seller will confirm this agency by signing the RPA.
For the seller, the real estate agent must have the seller sign the agency disclosure form, before the signing of the listing agreement itself. For the buyer, the agent must have the buyer sign the agency disclosure form as soon as practical, but again, before the signing of the RPA.
Finally, when the selling agent (representing the buyer) presents his or her offer to the seller or the seller’s agent, the selling agent must again provide the agency disclosure form to the seller (unless the selling agent is also representing the seller), so that all parties know who is representing whom.
While it can be a little confusing, the point is that before any transaction takes place, it is California law that the real estate agent must disclose to all parties (the buyer and/or the seller) who he or she is representing, and this must be in writing and acknowledged by both the buyer and seller in the agency disclosure form.
— Randy Freed is a broker-associate with Prudential California Realty. He is a Certified Residential Specialist and is EcoBroker Certified. He can be reached at 805.895.17990 or randyfreed@prusb.com.