Alabama Real Estate Consumer Agency Disclosure (RECAD)

Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

Establishing a relationship with a client includes setting up reasonable expectations and identifying the appropriate type of representation you will offer the buyer or seller. Learn how to navigate these steps.

What is RECAD?

You've been a real estate agent in Alabama for some time. Your friend's sister, Mandy, has just contacted you to help her sell her home. She's unsure of the process and wants your expertise. You set up an appointment to meet with her later today.

As you prepare to meet Mandy, you pull the information and contracts you will need for the contract. Hopefully everything goes well and you can list Mandy's house for sale.

One of the most important documents you prepare is the real estate consumer agency disclosure, or RECAD. This form provides fundamental information that help Mandy understand what services you provide and how you will help to sell her home.

The RECAD offers important details about what Mandy can expect from working with you and must be provided to her when you list her home or immediately following. The Alabama Real Estate Commission is focused on protecting the rights of consumer and this is one vital step they require in ensuring your clients are informed and empowered in their real estate transaction.

Beyond the RECAD form, your broker should maintain an agency disclosure office policy that outlines the types of relationships that will be offered to clients from your office. While Alabama law allows many types of agencies, your broker may want to limit the varieties offered in your office. Make sure you study office policy and inquire of your managing broker if you are unclear.

Types of Brokerage Services

In the RECAD, there are several types of agency or brokerage relationships that are identified. Mandy has a right to understand the different ways you can represent her and select the relationship that is most fitting for her goals. Let's look at what options she has:

Single Agency - The agent represents only the buyer or seller and focuses on his or her client's needs. This is the most common and favored type of agency relationship because it allows the agent to be loyal to the client, doing negotiations and sales details in a way that is best for his or her customer.

Sub-Agency - An unusual, yet legal arrangement in Alabama where an agent represents another broker's customer in the sale. A subagent does not represent the buyer and seller, just one client. It's a situation where a broker may need additional support to get a property sold and may subcontract agents from another brokerage to get the sale completed.

Limited Consensual Dual Agency - The same brokerage is representing both the buyer and seller in one transaction. This can be handled in two ways. First, one agent in the brokerage represents the seller while a different agent represents the buyer and the broker oversees the entire transaction.

The second way this situation may arise is when the same agent represents both the buyer and seller. For instance, you become Mandy's agent, and when you hold an open house, an interested buyer comes through who does not have an agent.

The buyer asks you to be his agent and help him buy Mandy's home. You can represent both parties, although it is difficult to help both parties and stay neutral without being partial or biased to either the buyer or seller.

Disclosure Document

You review the RECAD with Mandy and determine you can best help her as a single agent. You provide an agency disclosure statement that identifies you as Mandy's exclusive agent and you both sign the agreement to ensure you both agree.

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