When dealing with a REALTOR® in a real estate transaction, you are either a client or a customer of that REALTOR®. A client is someone who has formed a brokerage relationship with a REALTOR®, usually by signing a contract, and the REALTOR® is their agent. Parties who do not have a brokerage relationship with a REALTOR® are customers.

While acting as a standard agent, a REALTOR® has certain duties and obligations. The basic duties, are defined in Virginia law (see especially Section 54.1, Chapter 21, Article 3) and additional duties can be created by a brokerage agreement with a client, usually in writing. REALTORS® are also governed by a strict Code of Ethics.

A REALTOR® you choose as your agent will fully represent your best interests. An agent owes first allegiance to his or her client. There are some limits, when an agent has two clients in the same transaction (see overlapping brokerage relationships). Brokerage relationships with an individual REALTOR® also bind the other agents and employees of the same real estate company. Among the standard duties a REALTOR® owes a client are:

Perform the terms of the brokerage agreement.
Promote the clients best interest by seeking a transaction acceptable to the client.
Provide financial accounting.
Disclose known material facts about the property or the transaction.
Exercise ordinary care.
Maintain client confidentiality, unless the information to be disclosed is required by law.

An agent does have duties to a customer as well. Standard agents must:
Treat all parties honestly, and not knowingly give false information.
Inform all customers, and potential customers of the nature of their brokerage relationships, if any.
Disclose material adverse facts pertaining to the physical condition of the property of which the REALTOR® is actually aware.
Comply with the law, including the fair housing act.

There are limits on what an agent must tell a customer. Customers may wish to look to other sources for information important to their decisions.

Standard Seller Representation

If you're selling property or offering it for lease, and sign a listing agreement with a REALTOR®, then the REALTOR® and their brokerage firm become your agent, and you are their client. Salespersons for other companies who are cooperating with the listing company, and showing it to prospective buyers or tenants may also be your agents. Their goal is to seek a transaction on terms acceptable to you, and they owe you the standard duties outlined above.

If you are a prospective buyer or tenant who is dealing with a REALTOR® who represents the seller or the landlord, remember that you are a customer of that REALTOR®, and not a client.

A seller's representative can still provide valuable service to customers, like showing the property, preparing and presenting any offers, comparing financing alternatives, and disclosing known adverse material facts about the condition of the property. All agents in a transaction must be truthful to all parties, but the seller representative's highest duty is to the client.

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Standard Buyer Representation
Prospective buyers and tenants have realized in recent years that they may want to have a REALTOR® of their own representing them in a transaction. They do this by forming their own brokerage relationship, usually by written agreement with a REALTOR® who becomes their agent, and who owes them the duties of a standard agent. A representative for the prospective buyer can freely advise the buyer client about all aspects of the property.

A seller dealing with a buyers’ agent should remember that in this relationship the seller is the customer, and the REALTOR® is working for the buyer. In many cases, the listing agent will share the commission with the buyer's representative, but that does not diminish the buyer representative's obligation to the buyer.

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Overlapping Brokerage Relationships

The increasing popularity of buyer representation has increased the number of transactions where a REALTOR® might have overlapping brokerage relationships. This happens when a buyer or tenant client of a real estate company wants to buy or rent one of that companies listings. Even if different REALTORS® are working with different clients, their dual loyalties are created by their company, which has contractual obligations to both clients.

In dealing with these situations, there are two ways for the transaction to proceed.

Option 1:
Standard Dual Representation
Virginia law allows a real estate firm or salesperson to represent both sides of a real estate transaction, as long as all the parties give consent. Because the company has a legal obligation to both parties, and may know confidential information about one party of value to the other party, there are limits on what the company or salesperson may do in dual representation situations.

The company or salesperson must not disclose information that is confidential or would create a negotiating advantage to the other client, such as whether the seller will take a lower price, or the buyer will pay a higher price. Generally, information about the motivations of the parties must also be kept confidential. In effect, dual representation limits the REALTOR® to a neutral role.

Option 2:
Designated (Dual) Representation
If all the parties agree, a real estate company can designate one of its REALTORS® to represent the seller or landlord, and a second REALTOR® to represent the buyer or tenant in the same transaction. A supervising broker will need to maintain the confidentiality of any client information, which could be of value in negotiations. The two designated representatives must not share confidential information with each other. When working with their individual clients, they are free to gather important information from outside sources, free to help with negotiations, and will be thinking first of their clients needs and wishes.

You are not required to agree to either of these dual representation situations. If you refuse dual agency or a designated representation relationship, the real estate licensee must choose which party to represent, and the other party is free to arrange other representation for that transaction.