One of the first documents Michigan home buyers and sellers may receive when working with a real estate professional is the Disclosure Regarding Real Estate Agency Relationships. Its purpose is to explain the different ways a real estate licensee may work with a buyer or seller and help you understand who the agent represents before you share confidential information about your real estate transaction.
The disclosure explains seller’s agency, buyer’s agency, dual agency, transaction coordinators, and designated agency. It also outlines some of the duties and services an agent provides when representing a client. One of the most important things to understand is that signing the Agency Relationships Disclosure does not, by itself, create an agency contract. The form specifically states that it is not a contract for agency services.
What Is the Michigan Agency Relationships Disclosure?
The Disclosure Regarding Real Estate Agency Relationships is designed to help Michigan buyers and sellers understand the relationship they have with a real estate licensee. Before confidential information is shared, the form explains the different types of agency relationships that may exist and identifies the agency status of the real estate professional involved.
The form also describes important duties an agent owes to a client, including reasonable care and skill, loyalty to the client’s interests, compliance with applicable laws and regulations, proper accounting for money or property received, and confidentiality of information obtained during the agency relationship, subject to the exceptions stated on the form.
Understanding the Different Types of Real Estate Agency
Seller’s Agent
A seller’s agent represents the seller under a listing agreement and acts on the seller’s behalf. The disclosure explains that a seller’s agent and any subagent may disclose known information about a buyer to the seller when that information may be used for the seller’s benefit.
For a buyer, the important point is that the listing agent showing or discussing a property may represent the seller rather than you. Understanding that relationship can help you decide what information you should share during a conversation or negotiation.
Buyer’s Agent
A buyer’s agent represents the buyer under a buyer agency agreement and acts on the buyer’s behalf. According to the disclosure, a buyer’s agent and any subagent may disclose known information about the seller to the buyer when that information may benefit the buyer.
The Agency Relationships Disclosure explains what buyer agency means, but it is not the Buyer Agency Agreement itself. Learn more about how buyer representation is established in my Buyer Agency Agreement guide and what it establishes between the buyer and real estate brokerage.
Dual Agent
Dual agency occurs when a real estate licensee acts as the agent of both the seller and buyer in the same transaction. According to the disclosure, this can occur only with the knowledge and informed written consent of both parties.
Because the agent is representing both sides, there are limitations. The disclosure states that the dual agent cannot disclose all known information to either party and cannot provide the full range of fiduciary duties to either the seller or buyer.
Transaction Coordinator
A transaction coordinator is a real estate licensee who provides services to help complete a transaction but does not act as an agent for either the buyer or seller. The disclosure states that because the transaction coordinator is not an agent for either party, the coordinator owes no fiduciary duty to either party.
This is an important distinction from buyer agency or seller agency because the transaction coordinator is helping facilitate the transaction rather than representing one party’s interests as that party’s agent.
Designated Agency
Under designated agency, the buyer or seller is represented by the specific agent or agents named in the agreement. Other agents within the same real estate company who are not named in the agreement do not represent that buyer or seller and may represent another party in the transaction.
This becomes particularly relevant when the buyer’s agent and seller’s agent work for the same real estate brokerage. The designated agency structure allows the specifically named agents to represent their respective clients as described in the disclosure.
What Services Does a Real Estate Agent Provide?
The disclosure also describes services provided under a service provision agreement. Depending on the relationship, these can include marketing a seller’s property, accepting and presenting offers and counteroffers, assisting with developing and negotiating offers and related documents, and providing assistance after a purchase agreement has been executed through completion of the transaction.
This section is worth understanding because agency isn’t simply about showing houses or putting a home into the MLS. Representation continues through important parts of the transaction, including negotiations, contingencies, documentation, and ultimately helping the client complete the transaction according to the agreement.
The Agency Disclosure Is Not an Agency Contract
This deserves its own section because I think it’s one of the easiest parts of this document for consumers to misunderstand.
The form specifically identifies itself as “NOT A CONTRACT FOR AGENCY SERVICES,” and the acknowledgment at the bottom again states “THIS IS NOT A CONTRACT.”
Signing the disclosure acknowledges the agency information and status being disclosed. A separate agreement, such as a Buyer Agency Agreement or Listing Agreement, establishes the contractual relationship for those services.
What Should You Understand Before Signing?
Before signing the Agency Relationships Disclosure, make sure you understand who the real estate licensee represents in the transaction. The disclosure provides choices including seller’s agent, buyer’s agent, dual agent, transaction coordinator, and no agency relationship, along with limited-service options.
You should also understand whether designated agency applies and ask questions about anything on the disclosure that isn’t clear to you. The acknowledgment states that the parties confirm they received and read the agency disclosure and that it was provided before disclosure of confidential information specific to the potential buyer or seller.
Does signing the Michigan Agency Relationships Disclosure mean I hired an agent?
No. The Agency Relationships Disclosure explains the agency relationship being disclosed. The form states that it is not a contract for agency services. A separate agreement, such as a Buyer Agency Agreement or Listing Agreement, establishes the contractual relationship for those services.
What does a sellers agent do?
A seller’s agent acts solely on behalf of the seller and represents the seller’s interests in the real estate transaction. The agent’s responsibilities include duties owed to the seller as described in the agency disclosure.
What does a buyer’s agent do?
A buyer’s agent acts solely on behalf of the buyer and represents the buyer’s interests in the real estate transaction. The agency disclosure explains the responsibilities associated with that relationship.
What is a disclosed dual agent?
A disclosed dual agent represents both the buyer and the seller in the same real estate transaction with the knowledge and consent required from the parties. Because the same brokerage or licensee may be working with both sides, the disclosure explains the limitations associated with dual agency.
Is the Agency Relationships Disclosure a purchase agreement?
No. The Agency Relationships Disclosure explains agency relationships and representation. It is separate from the purchase agreement, which contains the terms and conditions of a buyer’s offer to purchase real estate.
Ready to Buy or Sell a Home in West Michigan?
Understanding who represents you is just one part of a successful real estate transaction. Whether you’re buying or selling, I’ll help you understand the process, the documents involved, and what to expect from beginning to closing.