Rules of Agency Iowa
How Rules of Agency Will Impact Your Real Estate Transaction in Iowa
So what exactly are the benefits of Buyers and Sellers each having an Agent represent them in a real estate transaction in Iowa? To answer that question you first need to understand the Rules of Agency.*
There are different types of Agency, depending on the relationship you are establishing with your Realtor. If you are selling a home there are rules the Listing Agent must abide by. These are laid out in the Seller’s Agency Agreement – a written contract that is signed by both the Seller and the Agent. Basically the Listing Agent agrees to act in the best interests of the Seller at all times. The Agent agrees to represent the Seller in the sale of the home under the understanding that her goal is to negotiate the highest price and best possible terms for the Seller.
If you’re buying a home, you can elect to work with the Listing Agent, and this is known as Dual Agency. Both the Buyer and the Seller must sign off on this, because the rules change when an Agent is representing both parties. At this point, the Agent becomes something of a messenger for both parties, passing along documents without actually getting involved or giving advice in the transaction. (The term “transaction broker” is often used in this context). Any information the Agent has that would affect negotiations is strictly confidential and may not be shared with either party. Both Buyer and Seller are expected to make their own decisions. This form of Agency can be problematic. In my experience both Buyers and Sellers appreciate advice when it comes to making decisions. And advice is the one thing a dual agent cannot give you.
As a Buyer you can elect to work with your own agent and this is known a Buyer Agency. As with the Listing Agent, there are rules that the Buyer’s Agent must abide by and these are laid out in the Buyer’s Agency Agreement. In this case the Buyer’s Agent agrees to act in the best interests of the Buyer. The basic understanding is that the Agent will negotiate the lowest possible price with the best possible terms for the Buyer.
As you understand more about the Rules of Agency it becomes apparent what the advantages are to each party to have their own Agent. Not all Agents agree with me on my views on this, but I find it hard to imagine how as an Agent you can negotiate the highest price for one party while negotiating the lowest for the other… That’s my opinion and I tend to advise my buyers and sellers to avoid dual agency, particularly if they have no experience in buying real estate. Ultimately though it is your decision as a buyer or a seller to decide whether or not you want to work with an Agent representing both sides of a transaction.
Fortunately with so much information available on the Internet, Buyers and Sellers are becoming more savvy and recognize the benefits of having personal representation.
*The Rules of Agency are laid out by the Iowa Association of Realtors, but each Real Estate Company is likely to have it’s own version of the form.
Please email me if you would like more information on these forms.
