What do real estate "agents" do? Who do they represent? What is the meaning of the word "agent" in the context of real estate?
Real estate is practiced under the "Law of Agency" - a concept in which one party, the "agent", represents the interests of another, "the principal". Their relationship is said to be an "agency relationship".
In the past, real estate brokers have most often acted as the representative of the property owners, the sellers. As the sellers' agent, the broker acts on their behalf, and with their best interests in mind, to locate a suitable buyer for the property.
When the broker represents the sellers, buyers must be treated honestly and fairly, however they are not "represented" by that broker. Keep in mind that the sellers' agent - the broker - must be always faithful to the sellers' best interests (not those of the buyer).
The concept of agency is an important one to buyers also. Most buyers are not "represented" by an agent. Their buying decisions are made using factual information presented to them by the sellers or their "agent", the real estate broker.
Can buyers be "represented" by an agent? Yes. This relatively new concept, called "buyer agency" is quickly becoming more common. To gain representation in their purchase, the buyers may employ a broker to represent their interests. This broker becomes their "agent" and has the obligation to faithfully serve the buyers.
What's the real message about agency? Both buyers and sellers should know whether or not they are represented in a real estate transaction. To find out, they should ask the real estate broker: "Who are you representing in this transaction?"
As an informed buyer or seller, with factual information in hand, it is possible to make a good real estate decision. Learn the facts about agency relationships before you buy or sell.