What is Designated Agency and why does it matter to you? Licensed Illinois Realtors are governed by the Real Estate License Act of 2000. According to Section 15-10 of that Act, “Licensees shall be considered to be representing the consumer they are working with as a designated agent for the consumer unless there is a written agreement” stating otherwise. That means that unless you are given a written disclosure that you are not being represented by the Realtor you are working with, you are a client of that Realtor and are owed certain duties.
These laws were put in place to protect the consumer and to make sure they are being properly represented in real estate transactions. It used to be that all agents worked for the seller and no one represented the buyer in a home purchase. It was the “let the buyer beware” model for a very long time. Because the seller paid the commission or compensation to the Realtors involved, it was thought that the Realtors’ owed duties only to that seller and the buyers were on their own. Our industry has evolved past that thinking and now buyers and sellers both have the right to representation by their Realtor. Even when the seller is paying the compensation to both Realtors, the buyer is allowed to have their own Designated Agent representing their interests in a purchase.
When you begin to work with a Realtor, you should be given a written disclosure telling you who your designated agent will be and what kind of representation you will have with that agent. Depending on the type of agency agreement you have with your Realtor, there are minimum services that must be provided to you. If you are a seller and are listing your home with a Realtor, that agency disclosure is contained in the listing contract you sign to list your house. The minimum services that you can expect to be provided are in your listing contract as well. These include such things as accepting delivery of and presenting all offers and
counter offers on your property, assisting you in developing and negotiating offers and counter offers and answering all your questions relating to those offers and counter offers. The Realtor you are listing with is your “Designated Agent” and will be representing your interests in the sale of your home. There is only one type of agency available to you in this situation so there is no choice to make as a seller. The only thing that may change this is if you decide to allow your Designated Agent to also be Dual Agent.
What exactly is Dual Agency? The simple answer is that you are allowing your realtor to also represent the potential buyer for your property. Illinois law currently allows for dual agency in real estate transactions but only with “informed written consent” of all parties. When you list your property with a Realtor, they will ask you if you will allow dual agency in the sale of their property. You will be asked to sign a written agreement allowing for dual agency and describing what your Realtor will be allowed to do for you in this situation. By consenting to dual agency, you do acknowledge the potential conflict of interest and that you will be not getting the same level of representation that you would without the dual agency agreement in place. Your Realtor will not be allowed to recommend or suggest prices or terms that you should accept, reject, or counter offer. They will not be allowed to disclose any confidential information they may know about that buyer or that they know about you, the seller, to a buyer. You will be agreeing that you will have to act on your own behalf and that you alone will be representing your own best interests in the transaction.
This decision is a personal preference and, although it is legal in Illinois, most attorneys will recommend that you not agree to dual agency. It does not afford you a level of complete representation and you need to understand that before you consent to it. Most sellers assume their Realtor is working only for them and should understand that is not the case with dual agency. If you agree to dual agency initially, you will have to consent again if your Realtor does also represent the buyer. There is a paragraph on the sales contract where both the buyer and seller have to initial that they are consenting to dual agency in the transaction, so you will have the chance to change your mind if you wish. There are various types of agency available to buyers, as well. Next month I will explain the different types of Buyer Agency allowed in Illinois. Don’t forget to check the batteries in your smoke & carbon monoxide detectors as you are changing your clocks today! For
more information about agency visit my website at www.choicerealtyfreeport.com.