To have or not to have a fiduciary, that is the question!
In a previous article we wrote, we delved into the different types of real estate agency relationships and how some of those relationships benefit you. In this article we want to jump in a little deeper and home in on the Single Agency Relationship, as to when it is the right time to enter into this type of realty agreement.
As previously noted, a single agency relationship provides certain duties to a buyer or seller. In a nutshell, the real estate sales associate and their employing Broker become your fiduciaries. They are officially the “agents” and you are officially the “client”. They owe you, as the client, a set of duties that are only present in this agreement whether you are the home seller or the home buyer.
You can learn more about this agency relationship, the duties associated with this relationship and others in our previous article called “Your Realtor Agency Relationships and What They Mean to You”. Below we highlight when it is a good time to take advantage of this relationship and when you’re better off with a Transaction Broker or Nonrepresentation.
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When A Buyer Should Use A Single Agency Relationship
Keep in mind that this type of agreement is not the end all be all, most real estate transactions in the State of Florida are listed under the Transaction Broker Agency Relationship, especially in the State of Florida. For a buyer that has many options in the real estate market, this relationship could be a good deal for you. With a robust market with many listings, the likelihood that you’ll fall in love with a home that is listed under the same Broker helping you find a property is less plausible.
In such a scenario, you’re well within the scope to benefit from this type of relationship. Depending on the State, another variable to consider is that most Brokers will not want to enter into this agreement, when a transaction Broker relationship will do just fine. Don’t let it be a deal breaker, you will still be owed certain duties that allows your real estate Broker and their Sales Associates to protect your interest.
In the State of Florida, a Duel Agency is illegal and therefore, a real estate agent will not be able to show you adequate properties that are listed by the same Broker helping you to find a home. A Broker or real estate agent cannot represent you as a fiduciary while simultaneously representing the home seller in a transaction broker relationship with limited duties. Equally, they cannot represent you and the seller in a single agent capacity. This type of agreement presents a conflict of interest that is not allowed by the Florida State Administrative laws. It’s considered a Dual Agency and as mentioned above, illegal.
If you fall in love with a property that is also listed by the same Broker’s Real Estate Firm that is helping you buy a home, then talk to your Broker about switching your relationship to a Transaction Broker. We highlight how, when and the benefits of doing so in this following article. This can be done by signing a Consent to Transition form.
When a Seller Should Use A Single Agency Relationship
As a seller, you want your real estate agent and their Broker to represent you in the best capacity possible. However, this may not be the best option for you, and we dig deeper into this further below on this article.
Now, let’s say that there are ample home buyers in the market and that you don’t need to rely on your broker to bring you a buyer that they too have a contractual agreement with. In this case, a Single Agency agreement could be a good deal for you. The negotiations between two separate realty Brokers will allow your agent to represent you in their highest capacity. As a fiduciary with all the trimmings that come with this agency relationship.
If the real estate market is void of ample home buyers, and if you need to rely on some of the buyers your Brokers has an agreement with, then maybe this agency relationship is not right for you. The concept of Dual Agency kicks in if the same Broker listing your home is also bringing their buyers to you in a Single Agency Relationship. As previously mentioned, this type of Agency is illegal in the State of Florida, so you’d need to sign a Consent to Transition form to remedy this situation.
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When is a Single Agency Relationship Not Right For your Real Estate Transaction?
Whether you’re a buyer or a seller, a single agency relationship is not beneficial when the same Broker providing you with realty services is also providing services to the other party involved in the deal. By Florida State Law, the Broker will need to have a transaction Broker Agreement with both you and the corresponding party.
The Broker can also have a Nonrepresentation agreement with the other party in replacement of a transaction Broker Agreement. This allows the Broker to bring you the buyer you so much desire, while simultaneously providing you with limited representation. If you’re the seller, the buyer on the other hand will need to simply rely on the 3 basic duties provided under a nonrepresentation agreement.
Commercial Properties are a special case, you don’t need a single agency relationship if you’re looking for a real estate transaction. Depending on the State, this type of relationship is not allowed in a commercial transaction. Only a Transaction Broker and Nonrepresentation relationship is viable for this type of realty deal. Speak to your attorney when it comes to commercial transactions as there is a lot more you can expect to deal with under such a purchase or sale.
If you have any questions concerning your next home purchase, please feel free to reach us at Kashmiri Realty & Property Management or call us direct at 904-644-7006. Leave your Questions or comments behind and review our other articles to help you better understand the market in your area.