Every buyer in a real estate transaction should understand what side of the fence their agent is on. What am I talking about you ask?
Agency!
Real estate agency is one of those areas that few buyers or seller understand and sometimes real estate agents. By understanding what side of the agency fence an agent is on, you will know if he or she is working for the buyer, the seller or some where in between.
When I got started in real estate I didn’t really understand agency. I thought that whoever your client was that is where your agency relationship resided. I learned very quickly that wasn’t the case.
I remember going to a family member I was helping to purchase a home and having to tell them sorry I don’t really represent you because of little stipulation called sub-agency. I told them because of the agency relationship with the broker and seller (who was my broker also) that there maybe information I can’t disclose to you.
Because I couldn’t represent them completely the way I would liked, we had to rely more heavily upon inspections and investigation.
Needless to say when things changed and we got the ability to represent buyer exclusively I was a very happy person.
Agency relationships keep buyers and their agents on the same side of the fence. When a buyer understand what side of the fence an agent is on, they understand who’s interest is at heart.
There are basically three types of agency, they are:
1. Buyer’s Broker or Buyer’s agent – in this relationship the agent is working for the buyer exclusively even if he is receiving compensation from the sellers broker. An agent in this kind of relationship has a fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting in dealings with his client.
2. Seller’s Broker or Seller’s Agent – in this type of agency the agent has the same obligation as the Buyer Broker to his client.
3. Limited Representation – Here a broker may be representing both parties to a contract but only after the broker has received consent from both parties. In this situation the broker can not disclose to either party if the other will accept a lower offer. The broker can also not confidential information to the other party without the writen consent of the other party.
A broker or his agents is not obligated to disclose:
* The site of a natural death, suicide, homicide, or other crime classified as a felony.
* Owned or occupied by a person exposed to HIV, diagnosed as having AIDES, or any other disease not transmitted through common occupancy.
* If the property is located in the vicinity of a sex offender.
The caveat to disclosure is if a item would materially affect a buyer decision to purchase the property. If a material fact would affect the decision, it must be disclosed regardless of the agency relationship.
Next time you go to buy or sell a house, think about the kind of agency relationship you are establishing. Is it what you want? Some buyers refuse to allow their agent to be paid by the seller and would prefer to pay them so they work directly for them uncovering everything they can about a property. The choice is yours as a buyer, you make the decision. How do you wan to be represented?
Question: Do you think agency is important or is it over blown?
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