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Agency Classifications | Real Estate Exam Prep Videos - YouTube
Channel: The Real Estate Classroom
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in this video we're gonna continue our
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series on agency which is a very
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important concept that you need to know
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for your real estate licensing exam
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today's video we're going to discuss the
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classifications of agency all of that
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and more in this video
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hi everyone my name is Paul Pacheco and
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welcome to the real estate classroom
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YouTube channel before we get started
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give this video a thumbs up hit that
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little red subscribe button click on the
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notification bell and please share this
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helped me grow this channel by sharing
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this video alright so today's video is
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part two of a series I've been doing on
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agency now agency is a very important
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key real-estate term and concept that
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you need to know for your real estate
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licensing exam now I already did video
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number one or part 1 of this series I'm
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going to put a link right up here in the
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upper right hand corner of your screen
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if you have not watched that one yet
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please go watch that one and then come
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back to this one because one video
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builds upon another and just a quick
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recap here what we talked about here in
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the first video remember we talked about
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the the agent who is the real estate
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agent or sometimes called the licensee
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alright the these are the same person
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agent is the real estate agent or
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licensee now they are the same person
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and they're at the core of the center of
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every real estate transaction where a
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licensee is involved alright then we
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talked about in the previous video
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what's called the fiduciary fiduciary
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duties that the agent or licensee owes
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to their client there are six fiduciary
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duties we discussed them in detail so
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that was the first part of this series
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in today's video we're going to discuss
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part two which is the classifications of
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agency first video was about the the
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fiduciary duties and those six fiduciary
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duties that the agent knows to the
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client today we're going to talk about
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the classifications now classification
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number one the first one I want to talk
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about is what's called special agency
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special agency now special agency has
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four key points that we have to
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understand the first one is it's for one
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specific action or act now think about
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this I'm a real estate agent with a
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license and the seller hires me to sell
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their house so I'm gonna make sure that
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I give them all those fiduciary duties
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that I owe them but it's for one
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specific act the classification when I'm
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selling somebody's house is special
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agency that is the type of agency that I
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have with the seller all right and part
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of that is one specific act meaning my
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only job is the one thing is to sell the
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sellers house period all right
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it also requires that there is a limited
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having a hard time spelling here you
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need to slow down it's a limited a
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limited time limited a limited purpose
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and there's a limited authority now
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let's look at each one of these one
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specific act my job is to sell the house
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that's it however I have a limited
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amount of time to sell that house and
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that is determined by the listing
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contract and how long that listing
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contract is a limited purpose again the
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only job I have is to sell that property
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and then limited Authority I cannot
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speak on behalf of my client in any way
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so give me let me give you an example
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here let's say that I have a on doing an
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open house on my sellers property that I
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have up for sale somebody comes through
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a prospective buyer walks through and
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says hey Paul I'll offer why don't you
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talk to your seller let's see if they'll
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take $200,000 now even if I've had
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previous conversations with my seller
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and that seller has indicated to me that
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they will take $200,000 I still can't
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speak on behalf of my client and say oh
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yeah my seller will take that I have to
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tell the buyer great thanks for the
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offer
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me talk to my seller or my client and
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and see what they want to do I'll be
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back in touch with you
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all right so special agency is for one
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specific action it's for a limited time
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limited purpose and limited authority
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that's the first classification now
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there are some subcategories of special
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agency the first one is what we call
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limited buyer's agency or limited tenant
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agency if I'm representing a tenant now
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all the same rules apply I still owe all
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the fiduciary duties to my buyer or my
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tenant and the type of agency that we
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have between me the licensee and that
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buyer is special agency so think about
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it that buyer I'm limited to
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representing the buyer in that real
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estate transaction and it's for what one
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specific action meaning I'm going to
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find a buy a house for my buyer to buy
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it is for a limited time right so as
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soon as I find a house for my buyer to
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buy or we separate our are we mutually
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agree to part ways that's the limited
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time limited purpose limited Authority I
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can't speak on behalf of my buyer just
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like I can't speak on behalf of my
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seller all right the second subcategory
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is limited seller agency or owner in the
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case of a proper in the case where I
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have a home for lease so maybe there is
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an investor that's hired me to lease
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their property it's limited limited
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seller's agency or owner agency again I
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owe all the fiduciary duties to the
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seller and special agency exists and
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again that one specific action is to
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sell the house it's for a limited time
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limited purpose limited Authority I
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think you get the picture where I'm
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going the next one is a little more
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complicated it's called dual agency dual
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agency this is where I'm going to
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represent the buyer and the seller or
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the tenant and the owner in the same
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trans
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action so let me give you an example I
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have a house listed for sale and I I do
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an open house a prospective buyer walks
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through and says hey I want to make an
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offer at that point I say listen before
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you move forward I just want to let you
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know I represent the seller they're my
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client and the buyer says great let's
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write it up anyways at that point I say
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great and I can treat him as a client as
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well so when I when I represent the
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buyer in the seller or a tenant in an
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owner in the same transaction that's
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called a dual agency now not every
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broker will allow dual agency so let's
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say there's a broker that does not allow
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dual agency how does that work well
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let's go back to our example let's say
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that I'm the listing agent I'm doing an
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open house a prospective buyer comes
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through and says and the buyer says
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listen Paul I want you to write up the
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offer and I say well here's the deal the
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seller is my client and I represent them
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I cannot represent you I cannot give you
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those fiduciary duties but you can be a
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customer and here's what being a
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customer means I have to be fair and
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honest and all those things we talked
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about in in part 1 of this series all
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right so that way there I'm representing
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the seller and then the buyer is a
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customer I owe the seller all the
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fiduciary duties I owe the buyer all the
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duties that that the the law requires
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that I give to the buyer and again we
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talked about that in that first video
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all right now one thing I need you to
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know here here's an asterisks dual
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agency for dual agency to be authorized
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or to be legal all parties in the
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transaction have to agree to dual agency
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in writing meaning the buyer and the
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seller and both brokers or all the
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brokers involved in the transaction have
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to agree and simply say it just simply
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means that they're all authorizing dual
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agency but that authorization has to be
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in writing it cannot be verbal all right
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and then the last one I want to talk
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about is sub agency
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sub-agency isn't used too much anymore
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but it still does exist and let me map
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this out let's say we have one two three
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main street up for sale and I am the
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listing agent all right and I work for
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one two three main street brokerage firm
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and I put it out on the network or the
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Multiple Listing Service so we have
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hundreds and hundreds of buyers agents
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out there from many many different
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companies they all represent or they all
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have buyer clients under sub agency all
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of these buyers agents represent my
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seller so what does that mean that means
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every one of these buyers agents they
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owe my seller all these fiduciary duties
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those six fiduciary duties that we
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talked about in in part 1 of this video
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series all right agency can be very
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complicated at times no doubt and it's
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very difficult to learn sometimes and
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that's why I kind of map it out the way
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I do and if you agree with me give this
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video a thumbs up but sub-agency then
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all the buyer's agents out there
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represent my client meaning they owe my
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client the seller fiduciary duties even
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though even though the listing is with a
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different company these are all
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different companies company one company
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to company three company for four
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different companies involved but they
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all represent my seller now again like
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dual agency there has to be in
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authorization and writing for that to
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exist now the question is buyer agent
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number one they've been representing
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their their buyer now for two weeks
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showing them a ton of homes they don't
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know me and they don't know my seller so
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they represent obviously as a limited
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buyer's agent they represent their buyer
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but they also represent my seller is a
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limited seller agent so that means once
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the deal gets started here then it's
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going to go to dual agency remember if
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you represent both parties in the same
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transaction it ends up being dual agency
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and that would it require the informed
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written consent of all the parties
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involved sub-agency can be very
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confusing at time but you do have to
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know sub agency for the real estate
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licensing exam all right the next
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classification of agency I want to talk
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about is what we call general agency
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general agency now a couple of things we
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have to know about general agency number
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one is it's an ongoing relationship
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ongoing and number two is the licensee
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can speak on behalf or for the client
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all right now under special agency
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remember it was limited time limited
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purpose limited Authority in one
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specific act and once that one specific
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action ended then their relationship is
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done but under general agency that a
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that agency relationship continues now
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where do we see this the most common
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it's in property management so and it
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doesn't matter the type of real estate
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that the licensee is is managing general
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agency is typically what you see now let
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me give you an example and why it's
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important and one other thing I want to
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point out here you can speak on behalf
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of your client but there is limits on
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what you can and can't do on behalf of
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your client and here's what I mean let's
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say that I I am managing a single-family
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home for an owner it's a rental property
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a single family rental and every time
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there is a maintenance item and I need
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to spend five bucks or $10 on a washer I
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would literally under special agency I
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would have to go get the permission of
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the owner that's just not practical so
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what many times what property managers
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will do is they'll have a certain
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threshold or a dollar amount in the
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management contract that says any
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maintenance up to let's say three
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hundred or five hundred dollars then I
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as the licensee I make those decisions
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without contacting the owner
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anything above a certain dollar amount
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then I will have to contact the owner to
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get permission to do it so from a
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practical point of view it makes sense
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but there are some limits on on how much
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you can speak on behalf of the client
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the third classification is called
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Universal agency Universal agency or
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sometimes known as common law common law
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agency every state kind of has their own
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their own verbage here now it looks a
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lot like general agency on steroids
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alright so it's an ongoing relationship
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and the you can speak on behalf or speak
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for your client and the authority is
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much greater than specially our general
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agency actually under Universal agency
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it's a power of attorney and many times
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the authority of the licensee is goes
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beyond the actual real estate
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transaction they can buy vehicles for
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the property management company and
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things like that and the other thing you
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remember about both general agency and
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Universal agency is if the licensee
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makes a decision for the owner that
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decision is binding on the owner so let
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me give you an example let's say I have
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a Universal agency with an investor of
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mine and I see a great realist or what I
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think is a great real estate deal and so
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I buy that piece of property because I
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have the authority to do that on behalf
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of my owner the owner turns around and
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sees the property and says oh no no no I
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don't like this property well guess what
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they're gonna buy the property because I
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have the legal right to bind them under
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under a Universal agency now the fourth
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classification of agency I want to talk
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about is called implied so this is
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number four implied now implied agency
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goes by a couple of different names and
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I'll put them down here in the notes
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here on the screen it can also be called
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agency by estoppel or Austin scible
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agency and again you need to know that
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because you don't know how the real
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estate exam is gonna phrase the
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questions this simply means by
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implication you represent somebody and
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let me give you just a weird example of
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where you might see this let's say that
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I have 1 2 3 Main Street listed for sale
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on I'm doing an open house a buyer
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potential buyer comes through and says I
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really don't like this house but I love
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your neighbor's house and you say
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whether it's true or not you say oh yeah
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I have this house for sale so you want
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to write an offer and the prospective
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buyer says yes so you sit down with the
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perspective buyer you write up an offer
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then you take the offer to the neighbor
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and say hey I got an offer for you
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now the neighbor could say aunt done
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nope go away house is not for sale or
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are they they could say great let's take
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a look at it well there's nothing in
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writing with you and the neighbors
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saying that you represent them in the
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transaction but by implication because
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they're gone they're moving forward with
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the sale then by implication you are
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their agency are you there you're their
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agent so that's implied agency so you
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become the agent and they become your
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client now once you put everything into
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writing then it's called agency by
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ratification now in many many states
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this is not legal but I do want to point
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it out because I do here every once in a
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while students that will have that
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question or a version of that question
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on their licensing exam well that's all
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I got for this video if you're gonna
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continue study and check out this video
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and hey if you have not subscribed to
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this channel do me a favor click the
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little circle to my left I would
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appreciate it I'll see you in the next
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video
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