various agency relationships for both buyers and sellers.
They also publish a booklet entitled “A Consumer Information Booklet,” available to the public and recorded in the statutory law, Rule 790-X-3-.13 of the Alabama License Law which states; “As real estate transactions have become more complex and varied, the types of real estate brokerage arrangements available to the public have evolved to meet the changing needs of consumers entering this market. This booklet is intended to provide buyers and sellers with a description of the different types of brokerage arrangements so that consumers can choose the type of brokerage services best suited to their needs.”
Know Your Rights
At the initial contact between a licensee (both sales persons and brokers) and the public, the licensee shall be considered to be a transaction broker. As soon as reasonably possible and before the exchange of confidential information, Alabama law requires the licensee to provide you with a written disclosure form that describes different types of brokerage arrangements. You are encouraged to read and sign this disclosure form.
After disclosure you may then choose the type of brokerage agreement best suited to your needs. This brokerage agreement will contain a statement of the specific brokerage services the broker will provide. In the absence of a signed brokerage agreement, the transaction brokerage relationship will remain in effect. Make sure you talk to the real estate licensee with whom you are working to determine the type of services you need or will receive under alternative brokerage arrangements.
Customer or Client?
The most important thing you need to know when working with a real estate licensee is whether you are a client or a customer. A licensee owes certain duties to a client that are different from the services the licensee performs for a customer.
Agent and Client
An agent is a person who acts for or represents you in negotiations with other parties. The client or principal is the person the agent represents. The licensee when acting as an agent must loyally represent the best interest of the client by placing the interests of the client ahead of the interests of any other party. In a real estate transaction, when a real estate salesperson is employed as an agent, the salesperson is obligated to negotiate the best price and terms for his or her client.
What is a Customer?
A customer is a person who is provided services by a real estate broker, but who is not a client of the broker. In this case, the real estate license is not acting as an agent. The actual services you receive from a real estate broker depend on the arrangement that is established between you and the licensee. The different types of real estate agreements are described below.
There are basically three types of real estate brokerage relationships that can be established between the consumer and a real estate licensee: Single agency, limited consensual dual agency, and a transaction brokerage arrangement.
You can read the rest of the booklet by going to the Alabama License Law. The important thing is for you to understand for sure that your best financial interests are represented by the agent working with you. When the agent explains the various agency relationships their firm offers, you should be certain that you understand each option thoroughly so you can determine which one best suits your needs. Should you not completely understand, don’t hesitate to ask them to explain them further.
Make sure you are represented in a client relationship. Section 34-27-85 of the Alabama License Law states that the agent must disclose to the client all information known by the licensee that is material to the transaction and not discoverable by the client through reasonable investigation and observation.
Give Me A Break
In many cases the consumer doesn’t know the importance of being explained the agency relationships a brokerage offers. Matter of fact they don’t understand the laws that regulate the actions taken by a real estate agent. All they know is they want more information about a particular property and they don’t want to get involved with one particular agent at this point. Since they don’t understand how real estate agents work, they don’t realize that state laws prohibit agents from sharing certain information with the consumer under certain agency relationships. The consumer feels a little uncomfortable speaking about representation when they hardly know you. On the other hand the agent feels the same discomfort but the law forces them to disclose the various relationships available. The agent may come across as being a little to forceful when he does disclose the information but they don’t have a choice. If fact, the agent is doing the consumer a big favor by explaining the available options, even when it’s against their own will. So the next time you speak with an agent and they tell you they have some paper work they need to explain, be kind and understanding by listening to them. They truly can make buying or selling a home much easier and more profitable.
Do You Have Questions?
Should you have specific questions concerning various issues, please let me know and I’ll research the answer for you. I also want to encourage you to subscribe to our “News & Updates” weekly report so you can stay abreast of issues that might affect you when buying or selling real estate. If you haven’t visited my website, please go to www.AlabamaRealEstateInstitute.com and view previous articles.