When you hear the word agency, does an office or building come to mind?

Here’s the term agency in a nutshell:

Agency or “designated agency” in the real estate industry means how and by whom a person is represented in a real estate transaction.  

Who does a real estate agent represent? 

  • broker: a salesperson who has passed a special exam to earn the designation and is licensed by the state*
  • agent: legally speaking, an agent is the person who represents and acts on behalf of another person
  • seller’s agent: contracted by and represents only the seller’s interest in a transaction
  • buyer’s agent: contracted by and represents only the buyer’s interest in a transaction; buyer’s agent services are generally free of charge
  • disclosed dual agency: this occurs when the buyer is working with an agent that also listed the home for sale

Are you properly represented? 

Depending on laws and regulations in your state, you’ll get what’s usually called an “agency” or brokerage disclosure to sign. It explains how the agent is required to work with you. Expect to get it when you list a home for sale or begin a search to buy one.  

*A broker salesperson (associate broker) is an agent who has at least 3 years experience working in the industry and 90 additional hours of education. A broker has also passed the state broker’s exam.*

More ‘fine print’ information about agency:

Before you disclose confidential information to a real estate licensee regarding a real estate transaction you should understand what type of relationship you have with that licensee. 

Note: This information is an effort to be accurate in quoting Michigan law regarding “agency relationships,” computers and web browsers are subject to error. The law may also change from time to time. Obtain a copy (from your real estate broker) of the latest interpretation of the law in the state where you are buying or selling property. 

(Jan 1, 1994) Michigan law requires real estate licensees who are acting as agents of sellers or buyers of property to advise potential sellers or buyers with whom they work of the nature of their agency relationship. 

A Michigan broker or salesperson may function in any of the following capacities, representing: 

  • the seller as an authorized seller’s agent
  • the buyer as an authorized buyer’s agent  
  • both seller and buyer as a disclosed dual agent authorized by both the seller and buyer
  • neither the seller or buyer as an agent but provide services authorized
  • by the seller or buyer to complete a transaction as a “transaction coordinator”

A firm may also practice “designated agency:” Designated agency is the homebuyers’ & sellers’ answer to a confusing question: Who does my real estate licensee really work for?


You’re looking for a new home and carefully select a real estate licensee based on referrals and credentials. A professional and trusting relationship develops as your real estate licensee guides you through a confusing maze of home buying decisions, assists with financial questions and shows you home after home. A lot of confidential information is disclosed by you to your agent. Finally, just the home you’ve been looking for is now on the market and, as luck would have it, the same real estate firm your real estate licensee works for has the listing.

You’re thrilled since you are already comfortable with the company and know your real estate licensee is working hard for you. But wait, if that firm is the agent for the seller, does that mean your real estate licensee is also an agent for the seller? This development creates a confusing and awkward situation for the buyers and real estate licensee.  

Why designated agency is a good thing:

By practicing the new designated agency model all parties agree up front who is representing whom. Under this plan, the buyer or seller signs a buyer agency agreement at their first meeting. This means the real estate licensee working with the buyers agrees to work in their best interest while the real estate licensee listing the property is working for the seller. The agents agree not to share any confidential information about their clients and customers, and for all practical purposes, could be working for different firms rather than in the same office. This removes the confusions and questions about agency even before they can crop up. 

With designated agency both buyers and sellers are assured that their agent is working for them. With designated agency, supervising brokers and the real estate firm act as dual agents when the firm represents both buyer and seller just as they do now.

Types of agents:

Seller’s Agent 

A seller’s agent under a listing agreement with the seller acts solely on behalf of the seller. A seller can authorize a seller’s agent to work with buyer’s agents and/or transaction coordinators. Seller’s agents will disclose to the seller known information about the buyer which may be used to the benefit of the seller. 

The duties that a seller’s agent owes to the seller include: 

  • promoting the best interest of the seller
  • fully disclosing to the seller all facts that might affect or influence the seller’s decision
  • to accept an offer to purchase
  • keeping confidential the seller’s motivations for selling
  • presenting all offers to the seller
  • disclosing the identities of all buyers and all information about the willingness of those
  • buyers to complete the sale or to offer a higher price

Buyer’s Agent

A buyer’s agent, under a buyer’s agency agreement with the buyer, acts solely on behalf of the buyer. Buyer’s agents will disclose to the buyer known information about the seller which may be used to benefit the buyer.

The duties a buyer’s agent and subagent owe to the buyer include: 

  • promoting the best interest of the buyers
  • fully disclosing to the buyer all facts that might affect or influence the buyer’s decision
  • to tender an offer to purchase
  • keeping confidential the buyer’s motivations for buying
  • presenting all offers on behalf of the buyer
  • disclosing to the buyer all information about the willingness of the seller to complete
  • the sale or to accept a lower price 

Dual Agent

A real estate licensee can be the agent of both the seller and the buyer in a transaction but only with the knowledge and informed consent, in writing, of both the seller and the buyer. In such a dual agency situation the licensee will not be able to disclose all known information to either the seller or the buyer. As a dual agent, the licensee will not be able to provide the full range of fiduciary duties to the seller or the buyer. The obligations of a dual agent are subject to any specific provisions set forth in any agreement between the dual agent, the seller and the buyer. 

Transaction Coordinator

A transaction coordinator is a licensee who is not acting as an agent of either the seller or the buyer, yet is providing services to complete a real estate transaction. The transaction coordinator is not an agent for either party and therefore owes no fiduciary duty to either party. The transactional coordinator is not the advocate of either party and therefore has no obligation to negotiate for either party.

The responsibilities of the transaction coordinator typically include providing: 

  • access to and the showing of the property
  • access to market information
  • assistance in the preparation of a buy and sell agreement which reflects the terms of the parties’ agreement

and also:

  • presenting a buy and sell agreement and any subsequent counter-offers
  • assisting all parties in undertaking all steps necessary to carry out the agreement, such as the execution of documents, the obtaining of financing, the obtaining of inspections, etc.