Agency Relationships

Minnesota law requires that early in any relationship, real estate brokers and salespersons discuss with consumers what type of agency representation or relationship they desire.

To help you better understand representation so you can make an informed decision, I have included a brief explanation of what an agency relationship is and the various types of representation Ami Bonrud of REALTY EXECUTIVES Lake and Home Sales can provide to buyers and sellers.


An agency relationship is based on one person representing the interests of another person. Real estate agents are licensed by the state of Minnesota to represent a person for the sale, purchase, or leasing of a property. The responsibility of the real estate agent is defined by the state law, the REALTOR® Code of Ethics and the general principles of agency law.

In real estate transactions, an agency is formed between real estate broker and the client. The client generally works with one real estate agent associated with the broker. The client may be either a buyer or a seller. The agent owes certain duties to the client. The duties include undivided loyalty, reasonable care, confidentiality, full disclosure, obedience, and accurate accounting.

The source of compensation does not determine agency. Commissions can be paid by the buyer, seller, both, or neither (subject to restrictions under applicable state law).


A real estate agent who is employed by and represents only the seller in a transaction is a "seller's agent." This agent is also known as a "listing agent," because the agent lists the home for sale and generally markets it through Multiple Listing Service (MLS). The listing agreement serves as a contract between the seller and the agent, and spells out how the seller's agent will be paid. Responsibilities of the seller's agent include marketing and negotiating strategies regarding price and terms for the seller, etc. The seller's agent is expected to act honestly and in good faith and disclose to the buyer all facts, which materially affect the home.

However, a seller's agent cannot divulge confidential information to the buyer that is not in the best interest of the seller, such as what price the seller will accept, the motivation of the seller in the sale or offer an opinion of the home's value.


A real estate agent who is employed by and represents only the buyer in a real estate transaction is a "buyer's agent." The buyer/broker agreement between the buyer and the buyer's agent serves as a contract between them and typically spells out the agent's duties and how the agent will be paid. The buyer's agent is normally paid by the seller through a commission split with the listing agent or, in rare situations, paid a sales commission by the buyer.

In addition to helping the buyer with the house-hunting process, the responsibilities of a buyer's agent include showing property to the buyer, writing up the purchase agreement offering negotiating strategies regarding price and terms for the buyer and offering an opinion on value.


A real estate agent who is representing both the buyer and seller with the knowledge and written consent of both is a "disclosed dual agent."

Dual agency occurs when a buyer working with a buyer's agent wants to purchase an in-house listing; that is, a home listed by the company of the buyer's agent. All agents in the company are automatically agents of the seller by virtue of their association with the listing agent's company. Even though the buyer and seller are working with different associates from the company, the real estate company and both associates have a dual agency relationship with both buyer and seller.

The broker and associates may not share, without permission, any confidential information that would represent the interests of either party to the detriment of the other. Confidential information includes such things as what price a seller would accept or how much a buyer is willing to pay. When a dual agency relationship occurs, the buyer and seller must agree to modify the agency relationship. Though the relationships have changed, the basic goals haven't; the seller wants to sell, the buyer wants to buy, and the agents want to help close the transaction.


The real estate company that lists the property is called the listing broker. The real estate company working with the buyer is called the sub-agent, or cooperating broker because the company actually works for the listing broker. Although the buyer has the use of a real estate agent (and that agent may have been working previously with the buyer to find properties), the buyer actually has NO representation at this point (even though the agent or broker in this circumstance keeps the selling side AND the buying side of the commission). The buyer becomes a customer, not a client, and the duties are owed directly to the seller in all transactions where there is no agent representing the buyer. It is important that the buyer is aware that the agent represents the seller, and the buyer should keep to themselves any information about the price or terms of their offer, or their motivation for making an offer, that they do not want the seller to know.

Ami Bonrud does NOT use the Sub-Agency System. I have chosen to represent the buyer when I am working with the buyer and represent the seller when I am working with the seller. In those situations when I represent the buyer and also represent the seller (REALTY EXECUTIVES Lake and Home Sales, or an affiliate, has the property listed), I will be a Disclosed Dual Agent.