Overview of Agency

1
Overview of Agency
2
Course Goal

• To effectively practice real estate, licensees
  must fully understand their relationships with
  buyers and sellers.
• The goal of the presentation is to provide a
  simple, yet comprehensive workshop on real estate
  relationships.
• The basis of this course is Virginias agency law
  (Effective October 1st 1995, revised July 1,
  1997.)

3
Course Objectives

• After completion of this course, students will be
  able to
• Identify areas where the Code of Ethics
  supplements the law.
• Demonstrate successful agency disclosure
  techniques.
• Explain agency terminology.
• Identify how agency relationships are
  established.
• List the duties of STANDARD AGENT.
• Explain the importance of confidentiality.
• Demonstrate how to practice dual and designated
  representation.
• Explain property disclosure procedures.
• Recognize liability issues.

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Terminology

• Customer Does not have a brokerage relationship
  with you.
• Client Does have a brokerage relationship with
  you.

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Terminology

• Brokerage Relationships Contractual
  relationships between a client and a licensee to
  sell, lease, etc.
• Agency Every relationship where a real estate
  licensee represents a person in a real estate
  transaction. The Client must expressly authorize
  the relationship.

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Terminology

• Standard Agent A Standard Agent has the
  specific duties and obligations stated in the new
  law. Licensees are presumed to be standard
  agents unless they expressly declare otherwise.
• Ministerial Acts Routine acts that a licensee
  can perform that do not involve discretion or the
  exercise of the licensees own judgment.

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How Are Brokerage Relationships Established?
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Preconditions of Relationships

• Advise Potential Clients About
• Types of Relationships Proposed
• Terms of Compensation
• How Compensation will be shared

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Brokerage Relationships ARE Created By

• Written agreements between you and your client
• Actions you take on behalf of someone
• Oral agreements

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Brokerage Relationships Are NOT Created By

• Participate in a MLS Service or other common
  source information service
• Compensation
• Performing Ministerial Acts

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Ministerial Acts

• Routine in nature
• Do not involve exercise of your judgment

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Duties of a Standard Agent
Fiduciary
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Duties Of A Standard Agent To Clients

• Perform to contract
• Promote their interests by seeking acceptable
  transaction
• Maintain confidentiality
• Exercise ordinary care
• Comply with laws

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Duties Of A Standard Agent To Customers

• Be Honest
• Do not knowingly give false information
• Make certain disclosures
• Agency
• Known material adverse facts about the physical
  condition of the property

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Confidentiality

• During
• Keep confidential all personal and financial
  information from your client
• Keep confidential other information at client
  request
• Release such information only if required by law
  or with clients written consent

16
Confidentiality

• After
• DITTO! Maintain all previous confidential
  information forever

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Dual Representation
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Designated Representation
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Disclosure Rules

• Whom do you represent?
• Material adverse facts

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Agency Disclosure

• To whom?
• Non-client who is not represented
• When?
• At time of substantive discussion about specific
  properties

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Material Facts

• Disclose adverse material facts about physical
  condition
• Disclose if actually known

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Stigmatizing Events

• Virginias Seller Disclosure Law defines
  stigmatizing events that had no material effect
  on the property as non-material - ghosts,
  murders, suicides, etc.
• Virginia licensees have no obligation to disclose
  such non-material events
• Standard of Practice 2-5 releases Virginia
  REALTORS from the obligation of disclosing
  stigmatizing events

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Safe Harbor Forms

• Not Mandatory Forms
• Sample Language

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Limitation of Liability

• Duties are clarified
• No vicarious liability for the actions of
  others
• No imputed knowledge or presumption of
  information
• Safe harbor forms provide good risk management