Page 264 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

Types of Agency

The brokerage agreement will cover a concept called agency . Agency
spells out to whom the broker has a fiduciary responsibility. There are

three types of agency: buyer ’ s , seller ’ s , and dual .
With a buyer ’ s agency, the broker has a fi duciary responsibility to
the buyer. He works on behalf of the buyer ’ s best interest at all times.
That means if the buyer tells the broker something confidential to the

deal, the broker will not tell you.
When you ’ re buying properties, some brokers ask you to sign an
exclusive buyer ’ s agency agreement. When you sign this, you have
agreed that the broker represents you in all transactions in a particular
location. Do not sign this agreement. Even if a broker says that he will
not work with you unless you sign the agreement, don ’ t sign it. Go to
another broker.
Such an agreement would prevent you from working with listing
brokers. You need the freedom to be able to work with all brokers in
any market at any time.
The most common type of agency that your broker will have you
sign is the seller ’ s agency agreement. In this arrangement, the broker ’ s

fiduciary responsibility is to you alone. Everything the broker knows

about you and the property is completely confidential, unless the bro-
ker knows that there is a reportable issue with the property, such as
hazardous waste. During negotiations, if your broker tells the buyer
that he thinks you might accept an offer of a certain amount, he will
have violated the agency agreement.
Finally there is the dual agency agreement. This happens when a
broker has signed a seller ’ s agency with you and is supposed to be
working for you alone — but he then brings you a buyer. Now he ’ s in a
difficult situation: He needs to work for you alone, but naturally wants

to please his buyer, too. In this situation, your broker may come to you
and request that the agreement be changed to a dual - agency one. That
way he can be fair to both sides.

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