What Is a Real Estate Agency? (2023)

Simply put, real estate agencies are business organizations that assist people with real estate matters. These agencies generally represent either the buyer or the seller in terms of home sales transactions, and work as a collective group of licensed agents and/or brokers who operate in a given geographical area. The difference between real estate agents and brokers will be further discussed below.

For smaller real estate issues, such as a boundary dispute, the use of a real estate agent may not be necessary. However, for larger transactions such as those involving large properties or a considerable amount of land, it may be absolutely necessary to hire a real estate agent.

What Is The Difference Between A Real Estate Agent And A Real Estate Broker?

A real estate agent is a licensed professional who is authorized to conduct real estate business in a specific state. Real estate agents are generally educated in real estate matters and have passed a state board exam. In many states, there are significant distinctions between the terms “agent”, “salesperson”, “broker”, etc although they are often used interchangeably. In most cases, when a person uses the term “agent,” they are referring to a salesperson instead of a broker. A broker generally addresses higher-level real estate issues.

There are many different tasks that real estate agents may perform. This depends on their education, licensing, and certification. Some examples of common, general tasks include:

  • Handling standard client forms and questionnaires;
  • Answering any basic questions that buyer or seller clients may have;
  • Reviewing real estate contracts;
  • Engaging in negotiation of prices, up until the closing of a deal;
  • Showcasing property and guiding clients during walk-throughs and open houses; and
  • Providing clients with information up to a certain level of knowledge and expertise.

Real estate agents, or salespersons, are sometimes limited in their actual work capacity. An example of this would be how they sometimes must obtain confirmation from a supervising broker in terms of more important transaction decisions. For the majority of home buyers, this distinction does not seriously affect them. However, more experienced investors and commercial investors may prefer a broker over a sales agent.

In some states, an “agent” is referred to as a “real estate broker,” while the broker is known as a “qualifying broker.” Furthermore, in some states such as Colorado, all licensed real estate professionals are considered to be brokers.

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A real estate broker acts as an agent for both the buyer and seller. Under many circumstances, the seller retains the broker while working with the buyer. The broker works for the seller to solicit potential buyers, and the seller evaluates the proposed offers to determine whether a sale would be in their best interest. Additionally, a broker must be licensed by a state regulatory agency.

Dual agency refers to when the same brokerage firm represents both the buyer and the seller in the transaction. This is not so common in some states; however, it can often be acceptable if the same brokerage firm represents the clients, but different agents within the firm represent the buyer and seller respectively. This creates a somewhat different agency relationship, which will be further discussed below.

It is important to note that dual agency arrangements must always be disclosed to both the buyer and the seller. Undisclosed dual agency work is considered to be illegal in all U.S. states. Examples of other legal disputes associated with real estate agents include fraud and misrepresentation. In terms of remedies, a lawsuit is sometimes necessary to allow the plaintiff to recover damages resulting from the violations.

What Tasks Do Real Estate Agencies Perform?

Real estate agencies assist their clients with a number of different tasks. For the sellers of property, a real estate agency may:

  • Assist with writing, editing, and reviewing real estate contracts;
  • Assist with real estate listings;
  • Help in terms of marketing and advertising the property;
  • Provide potential buyers or investors; and/or
  • Research the specific details of the property in order to ensure that the title is marketable.

For buyers, a real estate agent’s tasks might include:

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  • Examining the client’s needs and budget in order to determine a suitable buying range;
  • Finding properties for sale within their client’s range;
  • Researching the history of a property in order to ensure that there are no encumbrances on the property, such as debt issues or easements;
  • Assisting with mortgage and other loan issues;
  • Assisting with an appraiser in order to help determine the property’s value;
  • Representing the client during all negotiations; and/or
  • Securing and finalizing the details of the sales contract.

Real estate agencies can provide a wide range of tasks and services. Additionally, laws vary greatly by state in terms of the scope of an agent’s duties and responsibilities.

What Are Licensed Real Estate Agent Relationships?

There are several methods that a home buyer or seller can use to establish an agency relationship with a licensed real estate agent. Some examples of such methods include:

  • Express Contract: Express contracts can be either written or verbal. A listing agreement is the most common example of a written contract between an agent and a home seller. When the document is signed by both the principal and the licensee, an agency relationship is created. While verbal contracts are not as common, they may still be sufficient in terms of creating an agency relationship;
  • Implied Agency: An agency relationship may also be implied by the actions of the agent, as well as how a home buyer or seller relies on those actions when making their decisions. If someone acts as an agent, or leads you to believe that they are acting in your best interests as an agent would, they will generally be labeled as an agent and will be held to the same standards; and/or
  • Gratuitous Agency: It is important to note that the payment of compensation does not determine whether an agency exists between an agent and a buyer or seller. What this means is that an agent does not have to be paid by the principal in order to be considered their agent.

In real estate transactions, an agent’s duty to their client(s) depends on which party(s) are being represented. An example of one requirement in all transactions would be that the agent must disclose to all parties which party(s) they will be representing. Because a licensee may be an agent for the buyer, the seller, or both, their duties will vary as follows:

  • Buyer’s Agent: An agent is required to disclose all reasonably discoverable material defects. What this means is that anything that may affect the buyer’s desire to purchase the property must be disclosed to the buyer. The agent must represent the buyer’s best interests during the transaction;
  • Seller’s Agent: Duties include:
    1. Retaining the highest cash amount for the seller, which means that all offers given must be presented to the seller;
    2. Refraining from disclosing facts that would compromise the seller’s position, such as whether the property is overpriced or whether foreclosure is eminent, or if the seller may be nearing bankruptcy; and
    3. Representing the seller’s best interests in all aspects of the transaction.
  • Dual Agent: As a dual agent, a licensed agent must perform all of the traditional duties that are owed to a buyer and seller. A dual agent must also disclose to both parties that they will be acting as a dual agent.

If an agency relationship has been formed between an agent and their client, there are various standards that must be adhered to. An example of this would be the agent has a duty to maintain privacy, professionalism, and ethical guidelines. A violation could result in a separate legal proceeding against the agent or their agency.

Do I Need An Attorney For Assistance With A Real Estate Agency?

If you are working with a real estate agency and are experiencing issues, you should consult with an experienced and local real estate lawyer. An attorney will be best suited to helping you understand your legal rights and options according to your state’s specific real estate laws. Additionally, an attorney will also be able to represent you in court, as needed.

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Travis Peeler

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Travis earned his J.D. in 2017 from the University of Houston Law Center and his B.A. with honors from the University of Texas in 2014. Travis has written about numerous legal topics ranging from articles tracking every Supreme Court decision in Texas to the law of virtual reality. In his spare time off from the legal world and quest for knowledge, this 3rd degree black belt and certified instructor aspires to work with various charities geared towards bringing access to entertainment and gaming to all persons.


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