WORKING WITH A REAL ESTATE BROKER
**THIS IS NOT A LEGALLY BINDING CONTRACT**
Approved 01/2003 By MS Real Estate Commission P. O. Box 12685 Jackson, MS 39232
Before you begin working with any real estate agent, you should know whom the agent represents in the transaction. Mississippi real estate licensees are required to disclose which party they represent in a transaction and to allow a party the right to choose or refuse among the various agency relationships.
There are several types of relationships that are possible and you should understand these at the time a broker or salesperson provides specific assistance to you in a real estate transaction,
The purpose of the Agency Disclosure is to document an acknowledgement that the consumer has been informed of various agency relationships, which are available in a real estate transaction.
For the purpose of this disclosure, the term seller and/or buyer will also include those other acts specified in Section 73-35-3 (1), of the Miss. Code, “…list, sell, purchase, exchange, rent, lease, manage, or auction any real estate, or the improvements thereon including options.”
A seller can enter into a “listing agreement” with a real estate firm authorizing the firm and its agent(s) to represent the seller in finding a buyer for his property. A licensee who is engaged by and acts as the agent of the Seller only is known as a Seller’s Agent. A Seller’s agent has the following duties and obligations:
To the Seller:
*The fiduciary duties of loyalty, confidentiality, obedience, disclosure, full accounting and the duty to use skill, care and diligence.
To the Buyer and Seller:
*A duty of honesty and fair dealing.
*A duty to disclose all facts known to the Seller’s agent materially affecting the value of the property, which are not known to, or readily observable by, the parties in a transaction.
A buyer may contract with an agent or firm to represent him/her. A licensee who is engaged by and acts as the agent of the Buyer only is known as the Buyer’s Agent.
If a Buyer wants an agent to represent him in purchasing a property, the buyer can enter into a Buyer’s Agency Agreement with the agent.
A Buyer’s Agent has the following duties and obligations:
To the Buyer:
* The fiduciary duties of loyalty, confidentiality, obedience, disclosure, full accounting and the duty to use skill, care and diligence.
To the Seller and Buyer:
* A duty of honesty and fair dealing.
DISCLOSED DUAL AGENT
A real estate agent or firm may represent more than one party in the same transaction.
A Disclosed Dual Agent is a licensee who, with the informed written consent of the Seller and Buyer, is engaged as an agent for both Seller and Buyer.
As a disclosed dual agent, the licensee shall not represent the interests of one party to the exclusion or detriment of the interests of the other party.
A disclosed dual agent has all the fiduciary duties to the Seller and Buyer that a Seller’s or Buyer’s agent has except the duties of full disclosure and undivided loyalty.
A Disclosed Dual Agent may not disclose:
(a) To the Buyer that the Seller will accept less than the asking or listed price, unless otherwise instructed in writing by the Seller.
(b) To the Seller that the Buyer will pay a price greater than the price submitted in a written offer to the Seller, unless otherwise instructed in writing by the Buyer.
(e) The motivation of any party for selling, buying, or leasing a property, unless otherwise instructed in writing by the respective party, or
(d) That a Seller or Buyer will agree to financing terms other than those offered, unless otherwise instructed in writing by the respective party.
“Customer” shall mean that person not represented in a real estate transaction.
It may be the buyer, seller, landlord or tenant.
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 Agreement with the firm that shows him properties, that firm and its agents may show the buyer properties as an agent or subagent working on the seller’s behalf. Such a firm represents the Seller (not the Buyer) and must disclose that fact to the Buyer.
When it comes to the price and terms of an offer, the Seller’s Agent will ask you to decide how much to offer for any property and upon what terms and conditions. They can explain your options to you, but the final decision is yours, as they cannot give you legal or financial advice. They will attempt to show you property in the price range and category you desire so that you will have information on which to base your decision.
The Seller’s Agent will present to the Seller any written offer that you ask them to present.
You should keep to yourself any information that you do not want the Seller to know (i.e. the price you are willing to pay, other terms you are willing to accept, and your motivation for buying).
The Seller’s agent is required to tell all such information to the Seller.
You should not furnish the Seller’s agent anything you do not want the Seller to know.
If you desire, you may obtain the representation of an attorney or another real estate agent, or both.
THIS IS NOT A CONTRACT. THIS IS AN ACKNOWLEDGEMENT OF DISCLOSURE
The below named Licensee has informed me that brokerage services are being provided me as a:
Consumers shall be fully informed of the agency relationships in real estate transactions identified in Section 73-35-3.
This rule places specific requirements on Brokers to disclose their agency relationship.
This does not abrogate the laws of agency as recognized under common law and compliance with the prescribed disclosures will not always guarantee that a Broker has fulfilled all of his responsibilities under the common law of agency.
Compliance will be necessary in order to protect licensees from impositions of sanctions against their license by the Mississippi Real Estate Commission.
Special situations, where unusual facts exist or where one or more parties involved are especially vulnerable, could require additional disclosures not contemplated by this rule.
In such cases, Brokers should seek legal advice prior to entering into an agency relationship.
Miss. Code Ann. §73-35-3 Rule 4.2
A. “Agency” shall mean the relationship created when one person, the Principal (client), delegates to another, the agent, the right to act on his behalf in a real estate transaction and to exercise some degree of discretion while so acting.
Agency may be entered into by expressed agreement, implied through the actions of the agent and or ratified after the fact by the principal accepting the benefits of an agent’s previously unauthorized act.
An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty.
B. “Agent” shall mean one who is authorized to act on behalf of and represent another.
A real estate broker is the agent of the principal (client) to whom a fiduciary obligation is owed.
Salespersons licensed under the broker are subagents of the Broker, regardless of the location of the office in which the salesperson works.
C. “Client” shall mean the person to whom the agent owes a fiduciary duty.
It can be a seller, buyer, landlord, tenant or both.
D. “Compensation” is that fee paid to a broker for the rendering of services. Compensation, when considered alone, is not the determining factor in an agency relationship.
The relationship can be created regardless of whether the seller pays the fee, the buyer pays the fee, both pay the fee or neither pays a fee.
E. “Customer” shall mean that person not represented in a real estate transaction.
It may be the buyer, seller, landlord or tenant.
F. “Disclosed Dual Agent” shall mean that agent representing both parties to a real estate transaction with the informed consent of both parties, with written understanding of specific duties and representation to be afforded each party.
There may be situations where disclosed dual agency presents conflicts of interest that cannot be resolved without breach of duty to one party or another.
Brokers who practice disclosed dual agency should do so with the utmost caution to protect consumers and themselves from inadvertent violation of demanding common law standards of disclosed dual agency.
G. “Fiduciary Responsibilities” are those duties due the principal (client) in a real estate transaction are:
(1) ‘Loyalty’ – the agent must put the interests of the principal above the interests of the agent or any third party.
(2) ‘Obedience’ – the agent agrees to obey any lawful instruction from the principal in the execution of the transaction that is the subject of the agency.
(3) ‘Disclosure’ – the agent must disclose to the principal any information the agent becomes aware of in connection with the agency.
(4) ‘Confidentiality’ – the agent must keep private information provided by the principal and information which would give a customer an advantage over the principal strictly confidential, unless the agent has the principal’s permission to disclose the information.
This duty lives on after the agency relationship is terminated.
(5) ‘Reasonable skill, care and diligence’ – the agent must perform all duties with the care and diligence which may be reasonably expected of someone undertaking such duties.
(6) ‘Full accounting’ – the agent must provide a full accounting of any money or goods coming into the agent’s possession which belong to the principal or other parties.
H. “First Substantive Meeting” shall be:
(1) In a real estate transaction in which the Broker is the agent for the seller, first substantive meeting shall be before or just immediately prior to the first of any of the following:
(a) Showing the property to a prospective buyer.
(b) Eliciting confidential information from a buyer concerning the buyers’ real estate needs, motivation, or financial qualifications.
(c) The execution of any agreements governed by Section 73-35-3 of the Mississippi Code of 1972 Annotated.
(2) For the seller’s agent, the definition shall not include:
(a) A bona fide “open house” or model home showing which encompasses (1)(a) above only; however, whenever an event described in (1)(b) or (1)(c) occurs, disclosure must be made.
(b) Preliminary conversations or “small talk” concerning price range, location and property styles.
(c) Responding to general factual questions from a prospective buyer concerning properties that have been advertised for sale or lease.
(3) In a real estate transaction in which the Broker is the agent for the buyer, first substantive meeting shall be at the initial contact with a seller or a seller’s agent or before or just immediately prior to the first of any of the following:
(a) Showing the property of a seller to a represented buyer.
(b) Eliciting any confidential information from a seller concerning their real estate needs, motivation, or financial qualifications.
(c) The execution of any agreements governed by Section 73-35-3 of the MS Code.
(4) For the buyer’s agent, the definition shall not include:
(a) A bona fide “open House” or model home showing which encompasses (3)(a) above only; however, whenever an event described in (3)(b) or (3)(c) occurs, disclosure must be made.
(b) Preliminary conversations or “small talk” concerning price range, location and property styles. (c) Responding to general factual questions from a prospective buyer concerning properties that have been advertised for sale or lease.
I. “Single Agency” shall mean a broker who has chosen to represent only one party to a real estate transaction. It may be either the buyer, seller, lessor or lessee or any party in a transaction governed by Section 73-35-3. Miss. Code Ann. §73-35-3 Rule 4.3
A. In a single agency, a broker is required to disclose, in writing, to the party for whom the broker is an agent in a real estate transaction that the broker is the agent of the party.
The written disclosure must be made before the time an agreement for representation is entered into between the broker and the party.
This shall be on an MREC Agency Disclosure Form.
B. In a single agency, a real estate broker is required to disclose, in writing, to the party for whom the broker is not an agent, that the broker is an agent of another party in the transaction.
The written disclosure shall be made at the time of the first substantive meeting with the party for whom the broker is not an agent.
This shall be on an MREC Agency Disclosure Form.
C. Brokers operating in the capacity of disclosed dual agents must obtain the informed written consent of all parties prior to or at the time of formalization of the dual agency.
Informed written consent to disclosed dual agency shall be deemed to have been timely obtained if all of the following occur:
(1) The seller, at the time an agreement for representation is entered into between the broker and seller, gives written consent to dual agency by signing the Consent To Dual Agency portion of MREC Form A.
(2) The buyer, at the time an agreement for representation is entered into between the broker and buyer, gives written consent to dual agency by signing the Consent To Dual Agency portion of MREC Form A.
(3) The Broker must confirm that the buyer(s) understands and consents to the consensual dual agency relationship prior to the signing of an offer to purchase.
The buyer shall give his/her consent by signing the MREC Dual Agency Confirmation Form which shall be attached to the offer to purchase.
The Broker must confirm that the seller(s) also understands and consents to the consensual dual agency relationship prior to presenting the offer to purchase.
The seller shall give his/her consent by signing the MREC Dual Agency Confirmation Form attached to the buyer’s offer.
The form shall remain attached to the offer to purchase regardless of the outcome of the offer to purchase.
D. In the event the agency relationship changes between the parties to a real estate transaction, new disclosure forms will be acknowledged by all parties involved.
E. In the event one or more parties are not available to sign one or more of the Disclosure Forms, the disclosure will be accomplished orally.
The applicable form will be so noted by the Broker and said forms will be forwarded for signature(s) as soon as possible.
Written electronic transmission will fulfill this requirement.
F. In the event any party receiving a disclosure form requests not to sign that form acknowledging receipt, the Broker shall annotate the form with the following statement:
“A COPY OF THIS FORM WAS DELIVERED TO DATE . RECIPIENT DECLINED TO ACKNOWLEDGE RECEIPT OF THIS FORM.”
G. The terms of the agency relationship shall be ratified on all contracts pertaining to real estate transactions.
H. The Commission mandated disclosure form may be duplicated in content and size but not altered.
I. Completed Agency Disclosure Forms shall be maintained in accordance with Rules and Regulations IV. B (6). Miss. Code Ann. §73-35-3 Rule 4.4
A licensee shall not be required to comply with the provisions of Section 3, when engaged in transactions with any corporation, non-profit corporation, professional corporation, professional association, limited liability company, partnership, real estate investment trust, business trust, charitable trust, family trust, or any governmental entity in transactions involving real estate.
Operating under this exception in no way circumvents the common law of agency. Miss. Code Ann. §73-35-35