We’ve talked about Information About Brokerage Services in the past on this site, but The Texas Real Estate Commission has launched a new version of the form, that is already in use and will be required use by all Texas real estate agents on February 1, 2016. This form is informational in nature and is not a contract between agent and client. It serves to inform the public about how real estate agency works in the state of Texas, so that buyers and sellers (as well as landlords and tenants) can fully understand how the agents can represent them in a real estate transaction. The new Information About Brokerage Services form should help clear up some of the issues found in the past iterations of the form and also now provides a clear and concise set of contacts for consumers should an issue arise. Let’s take a look at the new form, shall we? (You can download the form (PDF file) if you’d like to follow along.)
The New Information About Brokerage Services Form
The first section covers Types of Real Estate License Holders – either a broker or a sales agent. All real estate agents in Texas must be sponsored by a broker and all transactions are actually done through the broker, with the agent acting as their representative. It’s important to know that when you sign a Buyer Representation Agreement or a Listing Agreement, you might be sitting with an agent and talking to them, but you are actually signing a contract between you and the broker.
The second section covers a Broker’s Minimum Duties Required by Law. There are four duties that all brokers (and by extension their agents) must always adhere to: putting the interests of the client above all other interests (including their own), informing the client of any material information about the property or transaction that the broker has received, answer the client’s questions and present any offers or counter offers from the client, and treat all parties in a real estate transaction honestly and fairly. It should be noted that a client is defined as a person or party that the broker represents (typically through a written agreement such as the Buyer Representation Agreement or Listing Agreement).
The third and largest section of the Information About Brokerage Services covers how a real estate agent can represent a party in a transaction. This is the heart of the form and the reason the form exists. Let’s separate each part out and cover them separately:
- As Agent for Owner (Seller/Landlord): This section covers what we would call a “listing agent.” When a real estate agent lists a home for sale (or lease), they become the agent of the owner through an agreement (typically and preferably through a written listing agreement) with that owner. At this point, an agent-client relationship is formed and the agent must perform the broker’s minimum duties (in the second section of this form) and must inform the owner of any material information about the property or transaction. The agent must do this even if the source of the information is the buyer or their agent. This is a crucial part of agency, as the agent representing the seller must pass on anything they know or discover. This is why a buyer or their agent should never tell the listing agent anything they don’t want the seller to know.
- As Agent for Buyer/Tenant: Much like when the agent represents the seller, the buyer (or tenant) enter into an agreement to begin the agent-client relationship, typically and preferably in written form, such as the Buyer Representation Agreement. Once again, anything the real estate agent knows about the property or transaction must be passed to the buyer, including information given to the agent by the seller or their agent.
- As Agent for Both – Intermediary: Intermediary is Texas’ form of disclosed dual agency. This situation can often be very confusing for buyers and sellers and we suggest you read our post on intermediary to get a better understanding of how it works. It is important to note, all parties to the transaction must agree in writing to allow intermediary and the written agreement must state who will pay the broker and in bold or underlined print outline the broker’s duties as an intermediary. These obligations for the broker are: they must treat all parties to the transaction impartially and fairly; they may, with the parties’ written consent, appoint a different license holder (agent) associated with the broker to each party to communicate with, provide opinions and advice to, and to carry out the instructions of each party (buyer and seller or tenant and landlord); and they must not, unless authorized in writing by the party, disclose the following: that the owner will accept a price less than the asking price, that the buyer (or tenant) will pay a price greater than the asking price, and any confidential information or information that a party specifically instructs the broker in writing not to disclose (unless required by law).
- As Subagent: Subagents are license holders (agents) who aid a buyer in a transaction without any agreement in place to represent the buyer. This agent can assist the buyer, but does not represent them, and most importantly, the agent must place the interests of the owner (the seller or landlord) first. This is why we highly encourage any buyer to seek true representation through a written agreement, since according to the law of subagency, if you are not represented, everything you say as a buyer should be passed onto the seller. Confidentiality is a huge part of hiring an agent and moving through the process of a real estate transaction.
The fourth section is a basic warning to the consumer to always enter into any agreements in writing. This helps avoid disputes and also establishes the broker’s duties and responsibilities to you, your obligations under such an agreement, who will pay the broker for services, when payment will be made, and how that payment will be calculated.
The final section of the Information About Brokerage Services form contains the name, license number, and contact information (email and phone) for the brokerage, the broker of the real estate company, the supervisor of the agent, and the agent themselves. This gives the consumer a clear set of contacts for the company and their representatives should the need arise. It also clearly states their license numbers, which you can look up on the Texas Real Estate Commission website and will give you quite a bit of information about the agent or broker (including information about their continuing education and license status).
Remember, the Information About Brokerage Services is an informational form. The real estate agent will ask you to initial and date it, but it does not create any sort of contractual relationship or representation between the agent and you. The agent will ask for the initials/date for documentation purposes – to show that they did present you with the information (it’s required by law for an agent to provide you with this information).