The Basics of Agency
You may not know this, but Real Estate Agency in Minnesota is only created through a written agency contract between you, the consumer, and a broker. Many times, consumers may have a “relationship” with an agent, either now or in the past, but unless they are operating under a written agency contract (such as an “Exclusive Right to Represent the Buyer” contract), agency has not been created. Without agency being established, a consumer is not owed the statutory duties of Loyalty, Confidentiality, Disclosure, Obedience, Reasonable Care, and Accounting, and is in fact considered only a “customer.” Customers are entitled to disclosure of all “material facts” (known facts that would affect your use and enjoyment of the property) pertaining to the property or the transaction, but nothing more. So, it does make some sense to put yourself under an agency contract.
Why Agency Matters
Once you are acting under a written agency contract, that buyer’s agent has a duty to keep your information confidential at all times. That does not apply to the listing agent who is sitting in an open house (or receiving your text message or email inquiry about their listed property) and who represents the best interests of the seller only. Thus, if you disclose anything related to your price, terms, and motivation, that listing agent is duty-bound to disclose that to his Seller. That is why all agents are required to disclose agency, and what it’s about, at the “first substantive contact” with a consumer, so that you understand the rules of the game, and can make an informed decision as to how you would like to be represented.
The foregoing is for informational purposes only and shouldn’t be construed to be legal advice. For complete information on agency, including rules about “dual agency” where both the buyer and seller are represented by the same broker (whether through two different agents, or through one agent), please read the standard agency disclosure form. For more information on home buying, or to learn more about our services, please visit our Home Buyer Page.