DRAFT

DESCRIPTION OF AGENT DUTIES AND RELATIONSHIPS

Every listing contract, buyer agency contract or other contract for brokerage services in a real estate sales transaction in North Carolina must contain this "Description of Agent Duties and Relationships." Real estate agents should carefully review this information with you prior to entering into any agency contract. Before you begin working with any real estate agent, you should know who the agent represents in the transaction.

AGENTS' DUTIES

Whether you are the buyer or seller, when you contract with a real estate firm to act as your agent in a real estate transaction, the agent must try to obtain for you the best bargain possible. The agent also owes you the duty to:

Act with reasonable skill, care and diligence    Safeguard and account for any money handled for you

Disclose to you any information which might influence your decision to buy or sell     Be loyal and obedient to you

Even if the agent does not represent you, the agent must still be fair and honest and disclose to you all "material facts" which the agent knows or reasonably should know. (Typically, a fact is "material" if it relates to defects or other conditions affecting the property, or if it may influence your decision to buy or sell.)

AGENTS WORKING WITH SELLERS

A seller can enter into a "listing contract" with a real estate firm authorizing the firm and its agent(s) to represent the seller in finding a buyer for his property. The listing contract should state what the seller will pay the listing firm for its services, and it may require the seller to pay the firm no matter who finds the buyer.

The listing firm may belong to a Multiple Listing Service (MILS). The MLS provides a means of exposing the seller's property to other agents who are members of the service. Some of those agents may be working with buyers as buyers' agents; others will be working with buyers but still representing the sellers' interests as a "subagent." Both buyer's agents and seller's subagents may desire to share in the commission the seller pays to the listing firm; the listing agent may share the commission with the seller's permission.

AGENTS WORKING WITH BUYERS

A buyer may contract with an agent or firm to represent him (a buyer's agent), or may work with an agent or firm that represents the seller (a seller's agent or subagent). All parties in the transaction should find out at the beginning who the agent working with the buyer represents.

If a buyer wants a buyer's agent to represent him in purchasing a property, the buyer should enter into a "buyer agency contract" with the agent. The buyer agency contract should state how the buyer's agent will be paid. Unless some other arrangement is made which is satisfactory to the parties, the buyer's agent will be paid by the buyer. Many buyer agency contracts win also obligate the buyer to pay the buyer's agent no matter who finds the property that the buyer purchases.

A buyer may decide to work with a firm that is acting as agent for the seller (a seller's agent or subagent). If a buyer does not enter into a buyer agency contract with the firm that shows him properties, that firm and its agents will show the buyer properties as an agent or subagent working on the seller's behalf. Such a firm represents the seller, and not the buyer.

A seller's agent or subagent must still treat the buyer fairly and honestly and disclose to the buyer all material facts which the agent knows or reasonably should know. The seller's agent typically will be paid by the seller. If the agent is acting as agent for the seller, the buyer should be careful not to give the agent any information that the buyer does not want the seller to know.

DUAL AGENTS

A real estate agent or firm may represent more than one party in the same transaction only with the knowledge and consent of all parties for whom the agent acts. "Dual Agency' is most likely to occur when a buyer represented by a buyer's agent wants to purchase a property listed by that agent's firm. A dual agent must carefully explain to each party that the agent and the agent's firm are also acting for the other party.

A dual agent owes both parties the full range of duties listed above, including the duty to disclose to both parties any material facts. Therefore, both the seller and the buyer should be careful not to disclose to a dual agent any information that he does not want the other party in the transaction to know-, for example, a seller's willingness to accept less than the asking price, or a buyer's willingness to pay more than offered.

In any dual agency situation, the agent must obtain a written agreement from the parties which fully describes the obligations of the agent and the agent's firm to each of them.