How other real estate agencies are legally able to interact with consumers, whether buying, selling or both at the same time can seem overwhelmingly complicated. Whenever you are even contemplating engaging the services of a real estate company, it is best to keep two things in mind at the outset:

1) CONFLICT OF INTEREST creates DUAL AGENCY!!

No one would hire a lawyer from the same law firm that ALREADY represents his/her opponent. That creates a Conflict of Interest. Conflict of Interest sounds bad because it is, well, BAD. For the consumer. Yet, conflicts happen all the time in a residential real estate setting. The same agency “represents” both buyer and seller in the same transaction. Buyers and Sellers “consent” to “legal conflicts” called Dual Agency.

Yet, when this happens, the Agency each side THOUGHT was going to fully represent each sides’ BEST interest throughout any transaction, all of a sudden ends up in the middle: Not actually being able to FULLY represent either buyer OR seller.

2) All commission income MUST pass through the BROKER of RECORD ( BOSS ) of a Real Estate COMPANY.

When dealing with INDIVIDUAL real estate licensees, keep one thing fully in view. Your legal relationship with an individual real estate licensee is ultimately dictated by the OFFICE AGENCY POLICY of that licensee’s BROKER and his/her entire COMPANY. Essentially, look at the BROKER as the Master Puppeteer of all the licensees of the ENTIRE company.

Regarding individual real estate licensees, Pennsylvania allows for a few basic types of real estate “relationships”. Seller’s Agents, Buyer’s Agents,Transactional Licensees, Dual and Designated Agents. How that individual licensee can legally deal with you, as a Buyer, is ultimately dictated by his/her company’s OFFICE AGENCY POLICY ! When a buyer hires a “buyer agent”, that buyer legally is contracting with the ENTIRE brokerage, NOT just the individual licensee.

Because a buyer is ultimately dealing with the ENTIRE BROKERAGE/COMPANY, a “Buyer ( or even “Seller” ) agent can morph into a Dual or Designated Agent as quickly as a chameleon changes color.

Any person with a real estate Salesperson license in PA is licensed THROUGH ONE person, known as the “Broker of Record” for a Real Estate Company. Also, unless a person is a “Broker of Record”, any person with a real estate Broker License is licensed THROUGH ONE Broker of Record.

Therefore, ANY of these “agents” actually FIRST work for (and at the pleasure of) the BROKER of RECORD (The Company). Without being sponsored (“employed”) BY a Broker of Record, a person who has passed the real estate licensing exam CANNOT perform real estate services for money.

So, each individual real estate “agent” is BOUND to follow what the Broker of Record legally dictates.

Seller Agent

A “Seller Agent” (aka Listing Agent) is the individual person a buyer calls/emails when s/he sees a sign in the yard or a photo on the internet. These agents are already obligated to get the best price for the seller. More than likely, the agent has discussed negotiating strategy with the seller and has developed a marketing plan, etc. with the seller. In fact, you, as a buyer, are to be presented with a Consumer Notice immediately upon speaking with that Seller Agent. This is to be your WARNING not to say anything to the Seller Agent that might compromise your negotiating position.

Therefore, if you, as a buyer, also uses this same agent as a “buyer agent”, that Agent’s Company, as well as that Agent, is in a Dual Agency position to you, the buyer. In a Dual Agency situation, neither the agent, nor the company, can act as a loyal advocate for either seller or buyer.

“Buyer Agent”

Everyone with a real estate license can call him/herself a “Buyer Agent”. Buyer’s Agents that work in a Traditional Real Estate office that also lists homes for sale can, indeed, “represent” a buyer. However, if a buyer wishes to see a home listed by not just THAT agent agent BUT even ANOTHER licensee within that agent’s COMPANY, everything can go haywire as the intra office agency alarms go off. Immediately, the COMPANY is in a Dual Agency position. This is true if the listing is with the “buyer agent” or even another agent in the company. Even if that listing is originated from a totally different office of THAT SAME BROKERAGE.

Transactional Licensee

In short, this is essentially a person who helps “facilitate” a transaction and acts on no party’s behalf.

Dual/Designated Agent

Pennsylvania has given real estate Brokerages a way to “deal” with this. It created the “Designated Agent”. This allows the Broker ( Boss of the Company) to “designate” one agent “FOR” the seller of an in house listing and another agent “FOR” the Buyer. Yet, the law also states that the Broker of Record (the BOSS) is STILL a “Dual Agent” to both the Buyer AND the Seller.

Thus, legally, 2 agents in the SAME PHYSICAL office location can “represent” 2 opposing parties (Buyer v. Seller) in the same transaction. Yet, ask yourself: How can 2 agents in THE SAME COMPANY effectively work FOR the interests of two OPPOSING parties?

While Act 112 in PA “allows” a real estate company to legally and “FULLY” represent OPPOSITE parties in a single transaction, we believe logic dictates otherwise.

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