"Agency Relationships" in Tennessee Sounds boring...

But, read how it can impact you!

"Agency Relationships" are important concepts for you to understand as a buyer OR seller of real estate in Tennessee.

This term refers to the disclosure of information required of all Tennessee real estate agents to prospective buyers and sellers within the State of Tennessee.

For example, as a Nashville real estate agent I'm required to explain to you exactly what my fiduciary relationship is with you in any given real estate transaction in Tennessee. Simply put, acting as your "fiduciary" in a real estate transaction means my primary loyalty is to you. I'll look out for your best interests at all times.

But, this relationship must be established IN WRITING - not verbally!

I know the terminology of agency relationships may be confusing (unless you're an attorney) but the concept is really pretty simple.

Every Nashville Tennessee real estate agent (agents may also be referred to as a "licensee") is required by state law to disclose, in advance, whose interests they will be representing in any potential real estate transaction.

Personally, I like this disclosure requirement because I think every client has a right to know who is being represented by whom. However, regardless of whose interests the agent represents, he/she can't legally withhold any known material defects or other adverse information about a given property from either party.

Let me explain the following terms applicable in Tennessee law. It will be helpful because you'll see these terms again if you buy or sell any property in this state using Tennessee real estate agents:

Facilitator/Transaction Broker (not an agent of either party):

The licensee (remember, this means the real estate agent) is not working as an agent for either party in a given transaction. A facilitator may advise either or both of the parties in a transaction but cannot be considered a representative or advocate of either party. Essentially, an agent acting in this role is simply involved to accurately complete the necessary paperwork required to buy or sell a property.

Agent or Subagent for the Seller:

The licensee's company is working as an agent for the property seller and owes primary loyalty to the seller. An agency relationship of this type cannot, by law, be established without a written consent.

An example of this might be that you agree to list your home with me. Following the signing of a listing agreement, my company (SilverPointe Properties) becomes your agent with primary loyalty to you in the sale of your home. The reason I mention the Company is because all listings are actually controlled by the managing broker of each real estate office, not the individual real estate agent. (unless they also happen to be the managing broker for that office)

Agent for the Buyer:

The licensee's company is working as an agent for the prospective buyer, owes primary loyalty to the buyer, and will work as an advocate for the best interests of the buyer. An agency relationship of this type cannot, by law, be established without a written consent.

An example of this would be where I represent you in the search for a new property. I would negotiate on your behalf with the seller(s) or listing agents in oder to get you the best possible pricing and terms on your next home or investment property.

Click here to learn more about the benefits of being represented as a buyer.

Disclosed Dual Agent (for both parties):

Refers to a situation in which the licensee has agreements to provide services as an agent to more than one party in a specific transaction and in which the interests of such parties are adverse. This is legal in Tennessee but not used by every Nashville real estate agency. Some feel it is too difficult to represent both parties equally when the parties have competing interests.

In many cases, I don't agree that two opposing parties cannot be fairly represented by the same person in a real estate transaction. Provided of course, both parties are fully aware of my role and are comfortable with that position. If there is anything short of complete agreement, then I suggest another agent be brought in to represent one of the parties.

Designated Agent for the Seller:

The individual licensee that has been assigned by his/her Managing Broker and is working as an agent for the the seller or property owner in this consumer's prospective transaction, to the exclusion of all other licensee's in his/her company. Even if someone else in the licensee's company represents a possible buyer for this seller's property, the Designated Agent for the Seller will continue to work as an advocate for the best interests of the seller or property owner. An agency relationship of this type cannot, by law, be established without a written consent.

An example of this is you agree to list your home with me. My broker then assigns me as the designated agent to handle the sale of your home. Remember, your actual listing is held by the managing broker of the Nashville real estate agency, not the individual Nashville real estate agent.

Designated Agent for the Buyer:

The individual licensee that has been assigned by his/her Managing Broker and is working as an agent for the the buyer in the buyer's prospective transaction, to the exclusion of all other licensee's in his/her company. Even if someone else in the licensee's company represents a seller in whose property the buyer is interested, the Designated Agent for the Buyer will continue to work as an advocate for the best interests of the buyer. An agency relationship of this type cannot, by law, be established without a written consent.

This is similar to my prior example above except that it occurs when a real estate agent is representing you as a buyer, rather than a seller, of real estate. Hopefully, agency relationships now make a little more sense.

Although it's a bit boring (O.K., a lot boring) it serves a valuable purpose in protecting your interests when dealing with multiple real estate agents in Nashville. For example, when you talk with that friendly agent at an Open House it's important to understand that agent represents the interests of the seller and owes them their primary loyalty - not you. That's another example of Agency law and how it impacts you.

Please contact me via email at any time if you would like to learn more about agency relationships in Tennessee or anything else related to buying and selling real estate in Nashville.