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  • What is Limited Agency

    Posted on September 12th, 2010 admin No comments

    Limited agency occurs when one agent (and/or brokerage) represents both buyer and seller for a specific property at the same time.


    Danger Will Robertson, Danger!


    Question: How can an agent effectively represent two negotiating parties and get the best deal for each?
    Answer: They can’t.  Hence the term limited agency.
    Nothing makes a Realtor pop more Prilosec than walking this thin line.
    The agent is limited in their disclosure, confidentiality and loyalty to each party.  The primary limitation is in negotiating the price.  A limited agent cannot disclose whether the price is as low (or high) as one side is willing to go.  The limited agent is still bound to treat each party fairly, ethically and neutrally.  And they cannot withhold material facts about the property or the buyer’s ability to complete the transaction.
    For example if they learn that the roof leaked last year (but it hasn’t rained much since then) or that their buyer just got fired and the loan approval was contingent on employment.


    There are at least 3 ways in which limited agency can happen.
    1. You are a seller who has listed your home for sale with Barbara from Better Hovels and Herbs RE.  Barb’s client Bill decides that your home is perfect and asks her to write you an offer.
    2. The inverse of the above. You are a buyer with an agent and happen to fall in love with a home that they are already representing as a selling agent.
    3. Buying or selling a home where the seller’s agent and the buyer’s agent are associated with the same brokerage.  In this case the broker (someone you will probably never meet) would be the limited agent, but the individual agents still work for their respective clients to full effect as buyer and seller agents.  This type of limited agency is fairly benign and usually inadvertent.
    In all cases you will have to sign a disclosure, that you understand and agree to limited agency before proceeding.

    Note: Do not confuse these examples with a situation where an unrepresented buyer works directly with a builder, new construction developer or contacts a listing agent directly.  That buyer would have to sign a document agreeing that they had the right to have professional representation but chose not to.  The inverse is also true, such as when a “for sale by owner” receives an offer from an agent representing a buyer.  With these examples the agent is not limited because they only represent their client and not the other party.

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