Real Estate Brokerage in Washington


Revised 01/2024

Real Estate Brokerage in Washington

Introduction

This pamphlet provides general information about real estate brokerage and

summarizes the laws related to real estate brokerage relationships. It describes a real

estate broker's duties to the seller/landlord and buyer/tenant. Detailed and complete

information about real estate brokerage relationships is available in chapter 18.86 RCW.

If you have any questions about the information in this pamphlet, contact your broker or

the designated broker of your broker's firm.

Licensing and Supervision of Brokers

To provide real estate brokerage services in Washington, a broker must be licensed

under chapter 18.85 RCW and licensed with a real estate firm, which also must be

licensed. Each real estate firm has a designated broker who is responsible for

supervising the brokers licensed with the firm. Some firms may have branch offices that

are supervised by a branch manager and some firms may delegate certain supervisory

duties to one or more managing brokers. The Washington State Department of

Licensing is responsible for enforcing all laws and rules relating to the conduct of real

estate firms and brokers.

Agency Relationship

In an agency relationship, a broker is referred to as an "agent" and the seller/landlord

and buyer/tenant is referred to as the "principal." For simplicity, in this pamphlet, seller

includes landlord, and buyer includes tenant.

For Sellers

A real estate firm and broker must enter into a written services agreement with a seller

to establish an agency relationship. The firm will then appoint one or more brokers to be

agents of the seller. The firm's designated broker and any managing broker responsible

for the supervision of those brokers are also agents of the seller.

 

For Buyers

A real estate firm and broker(s) who perform real estate brokerage services for a buyer

establish an agency relationship by performing those services. The firm's designated

broker and any managing broker responsible for the supervision of that broker are also

agents of the buyer. A written services agreement between the buyer and the firm must

be entered into before, or as soon as reasonably practical after, a broker begins

rendering real estate brokerage services to the buyer.

For both Buyer and Seller - as a Limited Dual Agent

A limited dual agent provides limited representation to both the buyer and the seller in a

transaction. Limited dual agency requires the consent of each principal in a written

services agreement and may occur in two situations: (1) When the buyer and the seller

are represented by the same broker, in which case the broker's designated broker and

any managing broker responsible for the supervision of that broker are also limited dual

agents; and (2) when the buyer and the seller are represented by different brokers in

the same firm, in which case each broker solely represents the principal the broker was

appointed to represent, but the broker's designated broker and any managing broker

responsible for the supervision of those brokers are limited dual agents.

Duration of Agency Relationship

Once established, an agency relationship continues until the earliest of the following:

(1) Completion of performance by the broker;

(2) Expiration of the term agreed upon by the parties;

(3) Termination of the relationship by mutual agreement of the parties; or

(4) Termination of the relationship by notice from either party to the other. However,

such a termination does not affect the contractual rights of either party.

Written Services Agreement

A written services agreement between the firm and principal must contain the following:

(1) The term (duration) of the agreement;

(2) Name of the broker(s) appointed to act as an agent for the principal;

(3) Whether the agency relationship is exclusive (which does not allow the principal to

enter into an agency relationship with another firm during the term) or nonexclusive

(which allows the principal to enter into an agency relationship with multiple firms at the

same time);

(4) Whether the principal consents to limited dual agency;

(5) The terms of compensation;

(6) In an agreement with a buyer, whether the broker agrees to show a property when

there is no agreement or offer by any party or firm to pay compensation to the broker's

firm; and

(7) Any other agreements between the parties.

A Broker's Duties to All Parties

A broker owes the following duties to all parties in a transaction:

(1) To exercise reasonable skill and care;

(2) To deal honestly and in good faith;

(3) To timely present all written offers, written notices, and other written communications

to and from either party;

(4) To disclose all existing material facts known by the broker and not apparent or

readily ascertainable to a party. A material fact includes information that substantially

adversely affects the value of the property or a party's ability to perform its obligations in

a transaction, or operates to materially impair or defeat the purpose of the transaction.

However, a broker does not have any duty to investigate matters that the broker has not

agreed to investigate;

(5) To account in a timely manner for all money and property received from or on behalf

of either party;

(6) To provide this pamphlet to all parties to whom the broker renders real estate

brokerage services and to any unrepresented party;

(7) To disclose in writing who the broker represents; and

(8) To disclose in writing any terms of compensation offered by a party or a real estate

firm to a real estate firm representing another party.

A Broker's Duties to the Buyer or Seller

A broker owes the following duties to their principal (either the buyer or seller):

(1) To be loyal to their principal by taking no action that is adverse or detrimental to their

principal's interest in a transaction;

(2) To timely disclose to their principal any conflicts of interest;

(3) To advise their principal to seek expert advice on matters relating to the transaction

that are beyond the broker's expertise;

(4) To not disclose any confidential information from or about their principal; and

(5) To make a good faith and continuous effort to find a property for the buyer or to find

a buyer for the seller's property, until the principal has entered a contract for the

purchase or sale of property or as agreed otherwise in writing.

Limited Dual Agent Duties

A limited dual agent may not advocate terms favorable to one principal to the detriment

of the other principal. A broker, acting as a limited dual agent, owes the following duties

to both the buyer and seller:

(1) To take no action that is adverse or detrimental to either principal's interest in a

transaction;

(2) To timely disclose to both principals any conflicts of interest;

(3) To advise both principals to seek expert advice on matters relating to the transaction

that are beyond the limited dual agent's expertise;

(4) To not disclose any confidential information from or about either principal; and

(5) To make a good faith and continuous effort to find a property for the buyer and to

find a buyer for the seller's property, until the principals have entered a contract for the

purchase or sale of property or as agreed otherwise in writing.

Compensation

In any real estate transaction, a firm's compensation may be paid by the seller, the

buyer, a third party, or by sharing the compensation between firms. To receive

compensation from any party, a firm must have a written services agreement with the

party the firm represents (or provide a "Compensation Disclosure" to the buyer in a

transaction for commercial real estate). A services agreement must contain the

following regarding compensation:

(1) The amount the principal agrees to compensate the firm for broker's services as an

agent or limited dual agent;

(2) The principal's consent, if any, and any terms of such consent, to compensation

sharing between firms and parties; and

(3) The principal's consent, if any, and any terms of such consent, to compensation of

the firm by more than one party.

Short Sales

A "short sale" is a transaction where the seller's proceeds from the sale are insufficient

to cover seller's obligations at closing (e.g., the seller's outstanding mortgage is greater

than the sale price). If a sale is a short sale, the seller's real estate firm must disclose to

the seller that the decision by any beneficiary or mortgagee, to release its interest in the

property for less than the amount the seller owes to allow the sale to proceed, does not

automatically relieve the seller of the obligation to pay any debt or costs remaining at

closing, including real estate firms' compensation.