Agency Relationships and Disclosure
Who represents whom
In Arizona the brokerage is the agent and the salesperson acts on the broker's behalf. A written employment agreement creates the relationship. At the earliest practicable time - and always before the client signs anything - the licensee must disclose in writing which party, if any, is represented. Unrepresented parties are customers: they are owed honesty and disclosure of material facts, but not loyalty or advocacy.
The menu of relationships
- Seller agency under a listing agreement.
- Buyer agency under a buyer-broker exclusive employment agreement.
- Consensual dual agency, permitted only with the informed written consent of both parties; the dual agent must disclose all material facts to both sides but cannot advocate for either.
- Transactional broker (neutral facilitator), engaged through a compensation agreement, who represents neither party.
Duties owed
Loyalty, confidentiality, disclosure, accounting, obedience to lawful instructions, and reasonable care. Confidential information - the seller's bottom price, the buyer's urgency, financial circumstances - survives the end of the relationship, subject to exceptions such as information that becomes public or that the law requires to be disclosed.
Traps
Compensation does not create agency: a seller paying a buyer's broker does not make that broker the seller's agent. Handing over a business card is not written disclosure. A dual agent keeps the duty of disclosure but loses advocacy, and cannot tell one side what the other said in confidence. Duties owed to a customer never include loyalty or confidentiality of the customer's bargaining position.
Rule of thumb: if one brokerage is helping both sides, obtain signed consent before showing property or writing an offer.