This post pertains only to real estate in Minnesota.
If there is one thing that homes buyers and sellers are hesitant about, it’s signing documents with a real estate agent upon first meeting.
Although real estate agents are now ranked above, among others, Members of Congress in honesty/ethics in professions, buyers and sellers are still wary about signing documents when first meeting a realtor. It is my goal explain why this situation arises so buyers and sellers can feel more comfortable with the documents they will encounter.
When first meeting with a real estate agent, you should be asked to review (if the Realtor doesn’t review the form with you) and sign the AGENCY RELATIONSHIPS IN REAL ESTATE TRANSACTIONS form (Figure 1). This is norm for when interacting with a real estate agent in Minnesota. The purpose of this form is to provide consumers with a thorough understanding of where their best interests lie in any real estate situation.
The AGENCY RELATIONSHIPS IN REAL ESTATE TRANSACTIONS Form Breakdown
As you can see below, the very first sentence on the form states:
MINNESOTA LAW REQUIRES that early in any relationship, real estate brokers or salespersons discuss with consumers what type of agency representation or relationships they desire.The available options are listed below.
What this means to you (future buyer/seller) is that the following information is necessary for the you to fully understand what type of working relationship you can expect with the real estate agent and must be discussed “early” in any relationship. The term “early” is the key. To avoid any confusion it is best that these topics be discussed as soon as possible, which is the first meeting.
Next the form states:
This is not a contract. This is an agency disclosure form only. If you desire representation you must enter into a written contract, according to state law (a listing contract or buyer/tenant representation contract).
What this means to you is that you are not reading or signing a legally binding document. The form you are looking at is a solely a disclosure and meant for information presentation only. The only way to enter into a representation relationship with the real estate agent is by completing a listing contract (for sellers) or buyer/tenant representation contract (for buyers).
Next the form reads:
Until such a time as you choose to enter into a written contract for representation, you will be treated as a customer and will not receive any representation from the broker or salesperson. The broker or salesperson will be acting as a Facilitator (See paragraph V on page two (2) of Figure 1), unless the broker or salesperson is representing another party, as described below.
What this means to you is that unless a representation agreement is entered between you and the Realtor, you will be treated as a customer. The broker or salesperson will be acting as a Facilitator and will not owe you fiduciary duties (see page two of Figure 1) beyond confidentiality. Of course, if the real estate agent is already representing a buyer or seller in which you are a third party to, the Realtor will act in his/her client’s best interests.
Then the form notes:
ACKNOWLEDGMENT: I/We acknowledge that I/we have been presented with the below-described options. I/We understand that until I/we have signed a representation contract, I/We am/are not represetned by the broker/salesperson. I/We understand that written consent is required for a dual agency relationship.
THIS IS A DISCLOSURE ONLY, NOT A CONTRACT FOR REPRESENTATION.
Then the form asks for your signatures and the date.
What this means to you is that, again, the form is not a contract of any type but purely a disclosure. But due to the important nature of the disclosure, your signature is required to acknowledge that you understand exactly what the disclosure states and there for understand the different types of relationships with a Realtor.
If you have any questions about Minnesota agency feel free to contact one of our agents in Duluth or Cloquet. If you have questions about Wisconsin agency, please contact one of our Realtors in Superior, Ashland, Iron River, Spooner, Washburn, or Minong.
Our next post will focus on the remainder of this form which are the different types of relationships between a consumer (you) and a real estate agent. Please remember that this form only pertains to real estate in Minnesota. Although, many states may have similar laws, this is only specific to Minnesota.
Figure 1: Agency Relationships In Real Estate Transactions (Minnesota Real Estate Only)