All Agents are required to inform you about the Rules of Agency* before providing what’s called “specific assistance” when you buy a home in the Iowa City area or sell a home here. The Rules of Agency will impact your real estate transaction when you buy or sell real estate in Iowa. That’s a fact. You need to know up front how Agency works and what the differences are between Seller Agency, Buyer Agency and Dual Agency.
Seller Agency in Iowa
Let’s start with Seller Agency. 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 the goal is to negotiate the highest price and best possible terms for the seller.
Dual Agency in Iowa
Let’s move onto Dual Agency. This is when a buyer calls the listing agent, views the home with that listing agent and decides to make an offer. In this scenario, both the buyer and the seller must sign a dual agency agreement BEFORE signing any documents relating to the purchase of a home. This is 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 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 some input from me when it comes to making decisions. One way to avoid getting into a dual agency situation is for buyers to find an agent to work with before looking at homes. And that takes us to Buyer Agency.
Buyer Agency in Iowa
As a Buyer you can choose 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. Price of course is only one aspect of a real estate transaction. I use it to make my point as it’s the most graphic way to illustrate the difference in the motivation of buyers and sellers and the agents representing them.
As you understand more about the Rules of Agency it becomes apparent what the advantages are to each party to have their own Agent. I’m a great believer in Single Agency and tend to advise my buyers and sellers to avoid dual agency, particularly if they have no experience in buying or selling 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. Whatever you decide to do it’s important that you know exactly what you’re getting into so make sure the agent you work with explains the ins and outs of the process before you go signing anything.
*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.