Real Estate Agency Law - How Agency is Created

Express Agency:

Express agency is created by either an oral or a written agreement between the principal and the agent. It indicates their express intent for this representational status.

In real estate, agency is normally created by either a written listing agreement with a seller, or a buyer agency agreement with a buyer. Some states allow verbal agreements, but most do not.

Implied Agency:

It is also possible to create an agency relationship by the actions of the parties. If a real estate agent takes on responsibilities that are normally those of an agent, but hasn't signed an agency agreement, she may still be considered an agent via implied agency. By the same token, if the customer asks the agent for advice or actions that are normally those in agency, then an implied agency could be created.

Some states have created specific legislation that states that no agency can exist without a written agency agreement. This helps to avoid accidental implied agency.

Don't become an Undisclosed Dual Agent:

In the states that haven't ruled out implied agency, if you have an agency representation status with your listing client, be careful what you do if you are working with a buyer interested in that listing. First, you would need to disclose the agency status to the buyer and then not undertake duties that would imply that you are also their agent.