What does Agency mean?

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Agency is the relationship created between a buyer or seller and the agent by a written agreement relating to the performance of real estate brokerage services by the agent.

The ADRE or Arizona Department of Real Estate licenses and regulates real estate brokers.  The term REALTOR® is a federally registered membership mark used by real estate licensees who are members of the National Association of Realtors® and agree to abide by its strict Code of Ethics. Not all real estate licensees are REALTORS®.

If a buyer or seller does not want to be represented, you should have a notice of NON-REPRESENTATION written out and signed by the person you are not going to represent.

Remember too that if your principal asks you to do something that you know that it is a violation of the law, you are not obligated to follow through  even though you have a fiduciary duty of obedience.

The agent is a licensee and can enter into an agency relationship with the buyer or seller either in writing or verbally or implied by actions of the agent. The buyer’s agent works for the buyer to find a property that is acceptable to the buyer. The listing agent is hired by the seller to market the property  in order to bring a ready, willing and able buyer to purchase the property.

The buyer has duties to the agent(s) to be loyal to the agent and work solely with the agent they hired as the buyer’s agent. Especially when working with a buyer that is needing a loan to purchase.

The buyer should be  notified and advised of the following:

DO read all contracts and addenda requiring your signature.

DO Contact an Insurance Representative for a quote on insurance and insurability of the property.

DO contact a Home Warranty Company if needed.

DO Keep all pay stubs, bank statements and other important financial documentation handy. Most lenders are required to update documents that are over 30 days old prior to the closing, EVEN IF YOUR LOAN HAS BEEN APPROVED.

DO NOT change anything such as your employment, transfers or change of pay status. If these occur, notify your loan officer immediately.

DO NOT change jobs or employers or quit your job even if your loan has been approved. Final underwriting may deny your loan at the last hour if they call your employer and are notified that you no longer work there.

DO NOT open or close or transfer any asset accounts without inquiring about necessary documentation required for your loan file.

DO NOT open or increase any liabilities during the loan process as this may impact your qualification ratios.

Make sure before your buyer does anything, they consult with their lender.

Note: Anything that increases or lowers the buyer’s liabilities and/or assets, job change, etc. could effect the buyer’s ability to have loan approval. Even home insurance may knock the buyer out of the ability to purchase if the insurance premium is so high that the ratios will not allow loan approval through underwriting.


Quick Quiz

Fill in the Blank:
The agent is a licensee and can enter into an relationship with the buyer or seller either in writing or verbally or by actions of the agent.

We all have duties, and as an agent, we are held to the highest standards in this industry through our ethical values and the Code of Ethics which establishes obligations that may be even higher than the law itself. Of course, law would take precedence.

Anyone we talk to is a potential client or customer until we have an agreement between the buyer or seller and the agent. Once we have an agreement the agent has fiduciary duties to that client.

Let’s talk about our fiduciary duties to our client.

The Agency disclosure spells this out beautifully. So, when you are talking to your client and filling this form out you can go over these duties right there. A good way to remember them is by the acronym CARLOAD.

Fiduciary Duties


Unless your client allows you to share confidential information you are bound to confidentiality even after termination of your agency relationship. The agent has a duty to the principal not to use or to disclose to third persons, matters given to only for the principals use. An example of confidentiality would be: Unless given authority to do so, while in the process of working with a buyer as the listing agent, the listing agent should not ever reveal information related to the monetary status or financial willingness  of a seller to accept less than the asking price.


Agents are required to account for all funds and documents entrusted to them by the principal. This includes money, deeds, and other documents that a client has entrusted to the agent. License laws in the majority of states require that brokers provide copies of all documents to each interested party. These documents are also to be kept on file for state-specified amounts of time usually 7-10 years.

Money entrusted to brokers is to be kept in an escrow or trust account. Most of the time

· As a seller’s agent, you must account for any money or documents that have been entrusted  to you.

· As a buyer’s agent, you must account for any money or documents that have been entrusted to you.

Quick Quiz

Fill in the Blank:
Agents are required to for all funds and documents to them by the principal.

You will also want to make sure that your buyers understand what they will possibly be paying items  such as:

Title insurance premium (according to contract)
Escrow fees (according to contract)
Document preparation (if applicable)
Notary fees
Recording charges for all documents in buyer’s names
Termite inspection (according to contract)
Tax pro-ration (from date of acquisition)
Home Owner Association (HOA) monthly, quarterly, annually and transfer fee, possible capital improvement one time charge
Interest on new loan from date of funding to the end of that month  plus 30 days prior to first payment date
Appraisal fees
Inspection fees (roofing, property inspection, geological, etc.)
Home warranty (according to contract)
City transfer/conveyance tax (according to contract)
Lender fees  and Home insurance premium for first year if purchasing with a loan



A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to the principal. This duty obligates a real estate broker to act at all times solely in the best interests of their principal to the exclusion of all other interests, including the broker’s own self-interest. Thus, a real estate broker’s duty of loyalty prohibits them from accepting employment from any person whose interests compete with, or are adverse to, their principal’s interests.
An example of the breach of this duty of loyalty by a real estate broker would be that of a broker who purchases the property listed with his brokerage and then immediately resells it at a profit. This conduct ordinarily is perfectly appropriate and lawful by persons acting “at arm’s length.” But a fiduciary will be deemed to have “stolen” a profit opportunity rightfully belonging to his principal and thus to have breached his duty of loyalty.

The duty of loyalty requires that all acts of the agent are for the benefit of the principal and not for the agent’s personal benefit and again that the client or principal’s interests are at the utmost number one act at all times and any action, decision or thought is solely in the best interests of the client or principal.

Quick Quiz

Fill in the Blank:
A duty of is one of the most fundamental fiduciary duties owed by an agent to their .


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