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2014-11-11 06:53:15
Utah Real Estate Agency and You

Did that REALTOR® ask you to sign a form making him or her your real estate agent? Did the agent brush over it lightly or did they explain the role of agency in Utah real estate law? This article is meant to be a fair approach to this part of the law, agency. I say fair because as in many things there are two sides to what makes a successful relationship.


First an example regarding agency.  This took place while I was a full time volunteer missionary in the LDS Church Family History/Genealogy headquarters. I served there helping people with questions on areas they needed help in doing there genealogy. During that 2 1/2 year period I was not licensed as a real estate agent. One of my associates came to me with an agency issue. He and his wife had decided to stay in Utah, buy a home somewhere within reasonable distance to downtown Salt Lake City, moving here from Minnesota. They did like most of us do, started shopping neighborhoods.  The stopped at a new development in North Salt Lake and were highly impressed with one particular home.  The site agent was not the listing agent; he worked in the same real estate company. This situation is common where two agents licensed under the authority of the same Managing Broker become involved in the same transaction.


My friend and his wife considered that this might be the home they would buy and were encouraged to make an offer on it. They wanted to continue looking but this home might be what they would purchase. At that point the site agent provided the paperwork to purchase which included a form they didn’t understand, a buyer’s agency agreement. In other words, this was a contract for my friends to hire this agent as their exclusive real estate agent. As written and presented the agency would apply to any home in Utah that my friends purchased. What is significant is that this contract was not discussed, just thrown in with the REPC (Real Estate Purchase Contract).


I have been taught that one of the most binding types of contracts is personal service contracts. A buyer’s agency contract is a personal service contract.


I refer back to how I began this article, referring to there being two sides to a successful relationship. This agent had not earned the exclusive right to represent my friends. He had earned the right to a commission if they purchased a home he had shown them. It is possible that he could have presented a persuasive case where they wanted him to be their agent. He didn’t.  Agency should work for both the agent and the client. Is it fair to ask an agent to spend time and money showing homes to someone that intends or is willing to waste that agent’s time? I have come across buyers, not you of course, with the absolute intention of letting me do the work and never considering that I would write the contract or earn the commission. Two sides, two extremes right?


There are three types of agency: buyer’s agents, seller’s agent, and limited or dual agent. The State of Utah takes the duties and responsibility of each very seriously. Serious legal ramifications can come by violating the duty of the agent. A buyer’s agent violates his trusted role by giving the seller or the seller agent any information that weakens the buyer’s position. And in like manner the seller’s agent is to never divulge any information that would weaken the seller’s position. A typical violation, one I cringe with as I still see it happen occasionally, is a statement to me such as, “the seller is anxious to sell and I suggest you make an offer”. The relevant question here is did the agent have in writing the permission to say this? If not, the agent violated the agency.


Dual agency is common. Dual agency is acceptable and legal. As in the first of this article where the listing agent and the buyer agent were different people, both licensed in the same company, dual agency exists. I recently sold my own listing. That too often happens. This is fine under the rules of a limited agency agreement. I could not divulge any information to either party that would hurt them. If I knew their bottom line, as agents sometimes do, there is no situation whereby I could expose that fact. The same would apply if I knew the buyer would negotiate a higher price. The first person, many years ago, to explain dual agency to me was a Salt Lake City Realtor. I was representing a Washington State investor purchasing land in West Valley City. I was staff not an agent. The agent, in this case a limited or dual agent, expressed his role as a win win role. His job as he explained it was to bring the buyer and seller together where both win, his bringing us together was his role.


So how did my friends handle the site agent? He actually scared them away. They didn’t purchase from him and they bought a home in Utah County. I don’t believe they would have ended up buying the North Salt Lake home. However, he could have helped his chances in a couple of ways. I hope it helps you to see this. First he could have limited his role by specifying the agency to that home. He also could have given them reasons to hire him. For sure he should have gone over the document clearly when giving it to them so it wasn’t some sort of mysterious form they had to ask me about.


And to you buyers, please be fair and considerate. Do not be a user. Understand agency.  Understand the risk agents take in showing homes to you.


To my colleague agents: Explain the document. If the relationship isn’t working, cancel the agreement. Have the integrity to earn what you earn. Don’t be like the agent in Weber County who surface around closing time expecting to receive a commission on a home he did not sell. This agent had an exclusive agreement but had not worked with the client, actually had not returned calls from the buyers, and was in a sense fired. Still having the contract with no rescission signed this agent demanded to be paid. Isn’t this a sticky situation?



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