Agency:

An agency relationship is formed when one person represents the interests of another person. Illinois real estate agents are licensed to represent a person for the sale, lease, or purchase of a property. The person represented is the client.

Agent responsibility to the client is defined by state law, the REALTOR® Code of Ethics and general principles of agency law.

The relationship created between the agent and the client is a fiduciary relationship. A fiduciary relationship is based on trust. The agent owes the following duties to the client:

• Confidentiality
• Loyalty
• Disclosure
• Diligence
• Obedience
• Accounting
• Reasonable Care

Courts enforce agency duties. This ensures that the client can rely on the agent putting the client's interests before those of anyone else. Courts also require that the real estate agent be fair and honest with all parties involved in the transaction.

On June 1, 1997, the Illinois Real Estate practices on agency changed.

Previously, by law, Real Estate Agents always represented the interests of the Seller - even if they were working with the Buyer and had never met the Seller. Legally, that meant that the Agent who had a relationship with the Buyer could not disclose any information that might have harmed the Seller's interests and, at the same time, that the Seller was being represented by Sub-Agents that he or she had never met. Under the new law, agency is defined by contractual obligations.

Unrepresented Buyer:

In some cases, A Buyer, wishing to purchase a property listed by Realty Pros, may choose not to be represented. In this case, he or she would be considered a "customer". All fiduciary responsibilities would still be owed to the Seller.

The Agent would then be obligated to be honest and fair to both the Buyer and the Seller, and to disclose all material facts to the Buyer as required by state law. However, the Agent would still represent the Seller and would not disclose any information regarding Seller motivation or offer assistance in determining a price.

Buyer Agency:

Once the Agent enters into a contract with a Buyer, the Agent must offer him or her total confidentiality and representation. The Buyer becomes the client, and the Agent can now:

• Disclose problems that Buyers might not have questioned
• Advise a Buyer on what to pay
• Research comparable homes and their sales prices
• Recommend the best negotiation procedures

Dual Agency

A dual agency situation arises when one of Realty Pros "Buyer Clients" wants to purchase a listing from one of the Realty Pros "Seller Clients". In this case, the Agents involved must treat all parties fairly and impartially. They may not disclose any information that would create a negotiating advantage for either client.

Designated Agency:

Designated agency occurs when Realty Pros contractually represents both the Buyer and the Seller and either party declines dual agency. In this case, all parties consent to "Designated Agency". Although Realty Pros Principal Broker assumes a dual agency position, the individual Agents within the company will represent their clients according to their original contracts. Each client will then receive personalized and confidential representation.

Who Pays the Commission?

In almost all cases, the commission is still paid to the Seller's Agent, who then pays a "Buyer Broker Commission" to the Broker that represents the Buyer. The commission is paid out of the proceeds of the transaction (technically by the Seller), as it has always been paid. The final price is understood to include the cost of commissions.

Who Benefits?

Buyers are not the only ones who benefit from Buyer Brokerage. Sellers have fewer liability problems because they no longer are faced with "vicarious liability" for anything a "Sub-Agent" says to a potential Buyer. Previous to the new law, the Sellers had no direct contact with many Agents who were showing and disclosing things about their homes. Now, if a Buyer remains unrepresented, the listing Agent must ask the Seller to agree to show his or her home to an "Unrepresented Buyer" and must disclose to the Seller that he or she will incur liability.

A Win Win Situation

Buyer Brokerage is a win win situation:

• For the Buyer, who receives all the added benefits of the Agent's research and knowledge of the market.
• For the Seller, who is relieved of some liability.
• For the Agent, who can now comfortably disclose much more and work much harder for his or her client.