Review of Agency types Flashcards
All good things must come to an end, Anthony. So it is with life, and so it is with this chapter. But before you go, let’s review some of the important terms, concepts, and principles you’ve learned along the way.
Key Terms
There were no key terms, but look at all those key concepts!
Key Concepts & Principles
Here are the concepts and principles you’ll want to master from this chapter:
Types of Agency Relationships
Here are the types of agency relationships allowed in Arizona:
Single agency (buyer’s brokers & seller’s brokers)
Dual agency (aka limited representation)
Subagency (almost always sponsored salespersons)
Single Agency
Single agency is an agency arrangement in which one agent represents one party in a real estate transaction. This is also known as exclusive agency, which makes sense! The agent is exclusively responsible for their client and their client only.
This agency relationship should be documented in writing with either a listing agreement or a buyer-broker agreement.
Dual Agency
Dual agency is an agency relationship wherein both the buyer and the seller are represented by the same broker in an in-house real estate transaction. Before a client can enter into a dual agency relationship, that client MUST consent in writing to this type of limited representation.
Implied dual agency is what you get when an agent gives a party to the transaction the impression that they are the only ones being represented by that agent when that is not the case.
Undisclosed dual agency grows out of implied dual agency. When one or more parties unaware that their agent is not exclusively looking out for their interests, the agent has placed themselves in a position where fulfilling their fiduciary duties to one client will violate their fiduciary duties to the other.
Subagency
Subagency is a form of agency that arises when an agent enlists the use of other agents to accomplish a client’s goal. Essentially, a subagent is an agent of an agent.
Subagency can also refer to cooperating brokers (from unaffiliated brokerages) and their employed licensees whenever they help a listing broker find a buyer. This is only true when the cooperating broker is NOT representing the buyer but views the seller as the client.
Here’s a quick visual of the forms of agency allowed in Arizona.
Recaps the forms of agency in Arizona: single agency, subagency, and dual agency.
Image description
Designated Agency: NOT Practiced in Arizona
Designated agency is an agency arrangement in which:
Both parties to the transaction are represented by their own agent.
Both agents are employed by the same brokerage.
In states where designated agency is practiced as its own form of agency, meaning distinct from dual agency, the expectation is that the designated salespersons assigned by the broker to the parties in the in-house transaction will be able to perform their full fiduciary duties.
Arizona feels that this setup is still a limited or compromised form of representation, so it doesn’t recognize designated agency. Instead, they see this arrangement of assigning one agent to each client in an in-house transaction as a variation of dual agency.
Transaction Brokerage
Transaction brokerage does NOT involve an agency relationship nor the fiduciary duties that come with agency relationships. For this reason, transaction brokers are sometimes referred to as non-agents or facilitators.
In the absence of an agency relationship (and fiduciary duties), the transaction broker fulfills ministerial acts to assist in the completion of the transaction.
Chapter Summary
