Indiana Real Estate Agency Relationships: Rules & Disclosures

Instructor: Tara Schofield
Not sure what type of agency you have with a client? Here are several types that are more frequently seen in real estate transactions, with descriptions of how each agency works with clients or other brokers.

Types of Agency Relationships

There are many ways you can represent buyers and sellers in real estate transactions. Each of these relationships has responsibilities and obligations.

Broker - This is the most common relationship, as a broker is the person who represents either a buyer or seller in a real estate transaction. When you are a broker, you have a responsibility to ensure your client has his or her interests protected. If you are a broker for the seller, your job is to make sure your client gets the most money, best terms, and most ideal sale possible.

In-house agency relationship - This relationship involves both the buyer and the seller who are each represented by different brokers within the same agency. Let's say you work with the local Keller Williams office and your buyer finds a home they want to make an offer on that another broker in your office has listed. Although you are each representing different clients, your clients must be informed that agents in the same brokerage are listing and offering on a home.

Dual agency - An agreement where one agent handles the same transaction for the buyer and seller. This situation can also be called transaction agency because the agent is doing transactional work rather than negotiating and representing. This is not an ideal situation, as it is difficult for a broker to be neutral and favor neither the buyer or seller. When the broker is representing both parties, the seller and buyer must both know about the arrangement and the broker cannot give advice to either party. The agent simply passes on information, offers, requests, and handles the paperwork. The agent cannot effectively represent either party but must be a neutral person to both sides of the transaction.

Managing broker - The person who manages a real estate agency, serves as a mentor to other brokers, and is responsible for actions of agents within the brokerage. If you are a broker, you must have several years of experience before taking additional training and an exam to become a managing broker. You can earn more money, but you are also responsible for ensuring your brokers are following rules and regulations and correctly handling transactions.

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