As you embark on your journey to become a real estate agent, it's crucial to understand the different types of agency and how they apply to your role. Your agency classification will determine how you can represent your clients and the specific situations you'll encounter. Let's dive into what you need to know.
What Does Agency Mean for Real Estate Agents?
Agency refers to the ability to make decisions and take action. As a real estate agent, you represent clients while working with third parties. The person you represent is known as the principal, and the relationship between you and the principal is called agency.
3 Types of Agency Classifications
When studying for your real estate license, you must familiarize yourself with the three types of agency classifications and how they affect your role as an agent. Here's a brief overview:
Special Agency
Special agency empowers you to complete specific tasks on behalf of another person to achieve a particular objective. It does not include the authority to bind and is limited to a single situation, not an ongoing relationship. For example, when a broker represents a buyer or seller in a real estate transaction, they are granted special agency to complete that particular sale.
General Agency
General agency allows you to take action for another person on an ongoing basis to accomplish various tasks within a specific area. Unlike special agency, general agency is not limited to a single event. As a general agent, you may be given the authority to bind within the specific area you are managing. For example, a property manager acts on behalf of clients continuously, handling their real estate affairs. A general power of attorney can grant general agency.
Universal Agency
Universal agency grants you full power to make decisions and carry out tasks for another person in a wide range of areas, not limited to a specific field. Universal agents have the nearly unlimited ability to bind and possess ongoing authority. This relationship requires a power of attorney. For instance, a real estate investor who wants to retire may appoint a universal agent to manage their business dealings.
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