There are two potential problems to be aware of when dealing with a FSBO and MLS Only or Limited Service Listings. The first potential problem is handling the commission. The second, and potentially more difficult, problem is handling the increased risk of an unintended agency relationship created by dealing directly with an unrepresented party.
An MLS Only or Limited Service Listing, like any MLS listing, may or may not include a unilateral offer of compensation from the listing broker. If an offer of compensation from the listing broker is made in the MLS, the cooperating buyer broker can treat the commission issue pretty much as they would any other MLS listing. If, however, no offer of compensation is made by the listing broker, and cooperating brokers are instructed to negotiate a commission with the seller, the buyer’s agent must treat the situation as they would a FSBO.
The commission issue when dealing with a FSBO, or listings that do not include compensation, has been a source of considerable confusion. Historically, agents have handled the commission issue when dealing with an unrepresented seller by having the seller sign a Aone-party listing. This approach creates a dual agency situation in which the agent represents both the buyer they brought to the sale and the seller. As in any dual agency situation, the risk associated with the transaction is increased.
Most states, and Oregon is no exception, allow a real estate licensee to act as the buyer’s agent only even when the commission is paid by the seller. (See e.g., ORS 696.810(1)) It is, therefore, possible for a buyer’s agent, when dealing with a FSBO or in a situation where a listing broker is not paying compensation and authorizes negotiations with the seller, to have a commission agreement with the seller that does not include representation. In this way, a single agency situation can be maintained and the risks associated with the transaction reduced.
The legal ability to represent only the buyer while receiving a commission from the seller does not reduce the risk of an unintended agency claim. Such claims, commonly made by buyers against subagents in the days when all licensees represented the seller, are Aimplied agency claims. Under the common law, an agency relationship can be implied from the conduct of the parties. In an unintended agency situation, a principal in the transaction claims an agent’s actions lead the principal to reasonably believe the agent was acting as their agent. If the belief was indeed reasonable, the court may find an agency relationship actually existed.
Licensees must be aware of the potential for an unintended agency relationship when dealing directly with unrepresented parties. When dealing with unrepresented sellers, the buyer’s agent often performs services, such as providing forms, suggesting solutions to problems, finding information and so on, that could be construed as evidence of an agency relationship. Therefore it is critical that the seller (and the agent for that matter) understand that any actions undertaken by the agent are done for the sole benefit of the buyer even if the seller might also benefit as a result. How to avoid unintended agency claims and collect commissions from someone you don’t represent is the next topic in this subject.
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