The Client/Agent Relationship

The relationships between real estate brokers and buyers and sellers are governed by the LAW OF AGENCY.  The principal or client (buyer or seller) is owed FIDUCIARY DUTIES by his or her agent. An agent is obligated to place the client's interests above all others, including his own.  Specific fiduciary duties include loyalty, obedience, maintenance of confidentiality, full disclosure of relevant information, reasonable care and diligence, and protection of the client's assets that are in the agent's custody. 

Prior to 1995, "sub agency" was the standard practice in Illinois and most other states. When a potential buyer looked at homes with a real estate agent, that agent was really hired by the listing agent of the seller and was, therefore, a subagent of the seller (and not an agent of the buyer).  

 In 1995, a law was passed in Illinois* that eliminated sub-agency. Instead it provided for “Designated Agency” wherein a real estate company designates a specific agent of the firm to represent the buyer.  In instances where a buyer wanted to view another listing of the same company, the company designated a different agent to represent the seller.  In this instance, when dealing with each other on behalf of clients with adverse interests, the firm's agents must treat each other "at arms length" and only discuss or share information with each other that would be in the interests of their respective clients.

Therefore, as a buyer, you can presume that the agent you are working with represents you alone, unless there is a written notification otherwise. You can count on your agent to put your interests first as he or she identifies homes for you to purchase.  In addition to searching for available properties, your designated agent will help you acquire the property best suited to you on terms and conditions as favorable to you as possible.

A potential for conflict arises when a buyer becomes interested in purchasing a home that is listed by his same designated agent (A buyer represented by Mary Smith wants to see one of Mary’s own listings).  The law of agency, as a general rule, restricts an agent from representing, at the same time, two principals or clients who have "adverse" interests (commonly known as “dual agency”).

Dual Agency – Not in Your Best Interests!

Dual agency is permitted in Illinois, however, but only if both clients are aware of the agent's conflict of interest, understand the possible consequences of it, and expressly agree in writing that the agent may continue to act as a dual agent.  The policy of CENTURY 21 Kreuser and Seiler, Ltd., however, is to NOT practice dual agency, but to recommend that each party to a transaction be represented by his or her own agent. (Most people familiar with the concept feel that the only party to benefit from dual agency is the dual agent!)

Therefore, if a buyer represented by a CENTURY 21 Kreuser and Seiler agent wishes to purchase a home listed by the same agent, the buyer will be referred to a different CENTURY 21 Kreuser and Seiler agent, who will now represent the buyer in this transaction and act only in the buyer's interest. The buyer's previous designated agent will continue to represent the seller, but will not disclose anything to the seller that may have been previously disclosed in confidence by the buyer. (Prior to this circumstance arising, both the seller and buyer will be notified and asked to consent to this procedure.)  The bottom line is this: At no time will your CENTURY 21 Kreuser and Seiler designated agent act as a dual agent, representing both a buyer and seller in the same transaction.  He or she will be representing you alone!

Buyer Representation Agreements – Best if in Writing!

At CENTURY 21 Kreuser and Seiler we don't require you to sign a buyer representation agreement, but it is strongly suggested that you do so. You and your agent will then know exactly what to expect from each other.  This agreement is similar to the listing agreement used when selling a home.  Our company’s standard "Limited Exclusive Buyer Agency Agreement" is a single page form that provides for (among other things):

(1) No fee on your part!  (We will show you those listed properties where the seller or listing office has already agreed to compensate the buyer’s agent).
 
 (2) Cancellation by either party on one day's notice.

A Footnote About New Construction and REALTOR® Open Houses

Most builders in Lake County include REALTOR® fees in their new construction prices. (We'll be happy to tell you if we know otherwise.)  Since the cost is the same, it is to your advantage to have your designated agent represent you in any new construction purchase.  Otherwise you are dealing with a builder or developer who is obviously looking out for his own interests as opposed to yours. Your CENTURY 21 Kreuser and Seiler agent will objectively advise you on comparisons with other builders, location within a subdivision, extras that may or may not add value to your home, resale, and a number of other important factors. 

To protect your right to be represented by your agent, it is important that you do not “register” or “sign in” should you visit any model home or development without your designated agent.

This applies to REALTOR® Open Houses as well – Just provide the builder or agent hosting the open house one of your agent’s business cards.     

* Agency law differs from state to state.