Real Estate Agency isn’t just a type of business, it is a word that describes a type of business (fiduciary) relationship.
Like a stockbroker or an insurance agent, when real estate agents establish a working relationship with a customer a client relationship is formed. These agents all have a responsibility to act on behalf of another’s interest. Unlike other states, in Illinois designated agency relationship is assumed unless otherwise documented. In other words, if you meet with an agent (as a buyer or a seller) to discuss your goals – any information you shared is private. The designated agency relationship started as soon as a consumer shares anything.
Agency describes what kind of relationship has is formed, by there are different kinds representation. There are real estate brokers that represent buyers and real estate brokers who represent sellers, and both the designated Realtor and their firm become the respective representative for you and your financial interests.
When the Buyer and Seller have a Realtor from different companies it is easy to see who is looking out for who. It can be confusing when the agents on opposite sides of the table work for the same real estate brokerage.
These are the three types of agency in Illinois and what they mean:
- No Agency: A Customer who has not entered into an agency relationship with a designated agent and will not receive representation. A realtor may still provide limited services considered to be Ministerial Acts such as:
* Talking to an inquiring consumer about availability and pricing of brokerage services
* Responding to phone calls from a consumer about the price or location of a property
* Setting an appointment to view a property
* Completing business or factual information on a contract for the consumer but on your behalf.
The Customer would receive a Notice of No Agency. Further, a Customer Agency relationship can evolve from No Agency to either Designated Agency or Dual Agency over time with the proper updated written disclosure or notice.
- Designated agency: When a fiduciary relationship is formed with a client and a designated agent, the Realtor and their Sponsoring Brokerage provide representation and owe the following: confidentiality, care, obedience, accounting, loyalty, and notice/disclosure.
For example, a Seller could have a Designated Listing Agent. A Buyer could have a Designated Buyer Agent. Both designated agents could have the same Sponsoring Brokerage. In Illinois, Buying Customers have the benefit of what is sometimes referred to as Implied Agency which means that unless the Customer is told otherwise, the Consumer is being represented by the Realtor.
- Dual agency: A relationship disclosed in writing to both parties where only one Realtor is involved who remains neutral and can perform a limited role unable to provide full advice to either party while facilitating the transaction for both buyer and the seller, and owes confidentiality to both parties.
All agency relationships need to be disclosed in writing, and these forms of agency apply for sales and rentals.
There is no transactional agency in Illinois; in other words, a Realtor can not just ‘draw up the agreement’ once parties have agreed. A Realtor must represent one party or the other, or disclose dual agency to both parties and perform a more limited role while providing each party statutory duties (care, obedience, accounting, loyalty, and notice/disclosure), including the duty of confidentiality.
That’s a high-level overview of representation and agency in Illinois. But it’s important to note that agency law varies from state to state, and not all agency types are covered here. Learn more at the link below.