What is an Agency Disclosure?

An agency disclosure is a document that realtors are required to present to prospective clients when first meeting to discuss a property. The core function of this type of disclosure statement is to ensure that the client is aware of any business relationships that exist between any buyers and sellers who are involved with the possible purchase or sale of the property under consideration. Agency disclosures make it possible to determine if there is a potential conflict of interest, and if it would be in the best interests of the potential client to seek another advocate to represent his or her interests in the outcome of the transaction.

It is not unusual for many jurisdictions to require the use of an agency disclosure form. In the United States, most states have enacted regulations that require a real estate agent to present an agency disclosure brochure along with the actual disclosure statement. This is to help educate the potential client regarding the contents of the statement itself. The brochure also helps the client understand his or her right to seek out the services of a buyer’s or seller’s agent who can focus on the interests of the client, without having to consider the interests of another party.

The exact scope of agency disclosure requirements does vary somewhat from one jurisdiction to another. In some cases, the realtor is not required to reveal the actual identify of other parties they represent, only that they do represent other parties. At other times, revealing the identity of those other parties is considered necessary before the discussions surrounding the transaction can take place. All local real estate companies are well-versed in the nature of the agency disclosure laws and regulations that are in force in the area, which makes it relatively easy to make sure the agent in question is complying with those regulations.

Agency disclosures actually protect all parties involved with the transaction. Since a form of this type requires that the realtor reveal any preexisting business relationships that have a bearing on the sale or purchase of a given property, the propriety of the agent is assured. Both buyers and sellers can rest assured that the agent is acting in their best interests, and will not engage in activities that may expedite the sale at the expense of one party or the other. From this perspective, the agency disclosure prevents the possibility of questions about ethical and possibly legal issues with the transaction from manifesting at a later date.