Designated Agency is a real estate representation arrangement in which a brokerage assigns different agents to represent the buyer and the seller in the same transaction, allowing both parties to receive individual representation while operating under one brokerage firm.
This model is used to address conflicts of interest that can arise when a brokerage works with both sides of a transaction.
How the Representation Model Works
In a Designated Agency structure, the brokerage remains involved with both parties, but specific agents are formally designated to represent only one client each. One agent represents the seller’s interests, while another represents the buyer’s interests.
Each designated agent owes full fiduciary duties to their respective client, including loyalty, confidentiality, disclosure, and reasonable care.
Difference From Other Agency Relationships
This arrangement differs from single agency, where one brokerage represents only one party, and from dual agency, where one agent represents both buyer and seller.
Unlike dual agency, Designated Agency allows each party to have their own advocate, even though the agents work under the same brokerage umbrella.
Brokerage Oversight and Responsibilities
While agents are designated separately, the brokerage itself must maintain internal safeguards to protect confidential information. This often includes policies restricting information sharing between designated agents.
In a Designated Agency relationship, brokers may limit their direct involvement to avoid influencing negotiations or breaching fiduciary duties.
Legal Disclosure Requirements
Most jurisdictions require written disclosure and consent when this representation model is used. Clients must be informed of how representation works and must agree to the arrangement before proceeding.
Failure to properly disclose Designated Agency can lead to legal disputes, disciplinary action, or loss of commission rights.
Advantages for Buyers and Sellers
One key benefit is access to full representation without requiring separate brokerages. Buyers and sellers each have an agent focused solely on their interests.
A Designated Agency arrangement can also provide efficiency, especially in markets where large brokerages represent a high volume of clients.
Potential Limitations and Risks
Although safeguards exist, some clients may still feel concerned about shared brokerage oversight. The success of this arrangement depends on strong internal controls and professional ethics.
Clients should understand that while agents are separate, the brokerage still benefits financially from both sides of the transaction under Designated Agency.
When This Model Is Commonly Used
This approach is commonly used in larger real estate firms where multiple licensed agents operate under one broker. It is especially prevalent in competitive markets where listings and buyers often come from the same firm.
Smaller brokerages may use this model less frequently due to staffing limitations.
Common Misunderstandings
A common misconception is that this arrangement is the same as dual agency. In reality, representation duties are separated between agents.
Another misunderstanding is assuming confidentiality cannot be maintained. When properly implemented, Designated Agency includes strict controls to protect client information.
Importance in Real Estate Transactions
Understanding Designated Agency helps buyers and sellers make informed decisions about representation. It clarifies who owes duties to whom and how conflicts are managed.
In real estate transactions, agency relationships shape negotiation dynamics, trust, and legal obligations. Knowing how this model works empowers clients to consent knowingly and proceed with confidence.
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