Earlier in the week when sitting with a new seller I tried and did a poor job of explaining the different types of agency in a real estate transaction.
Agency can be a confusing subject for both consumers and even REALTORS®. In a nutshell there are three types of agents – the seller’s agent (or listing agent), the buyer’s agent and an agent who represents both seller and buyer (called a dual agent). The agent represents the client(s), and Massachusetts requires licensed real estate agents to present an agency disclosure form to all potential clients.
Dual agency is legal in Massachusetts as long as it’s fully disclosed. An argument can be made that a dual agent has a conflict of interest, even though all real estate agents are obligated by our code of ethics to act in a professional manner and do their best to serve the interests and needs of both parties. The one overriding thing that a dual agent can’t do is disclose to the buyer or seller is their client’s financial position without written consent. For example the dual agent can’t disclose to the buyer that the seller is willing to take less than the asking price, without written consent. That said, unless you know something about the seller’s situation (i.e. estate sale, they are carrying multiple mortgages, neighbor told you that they are broke), you aren’t going to know about their financial state.
A buyer’s agent represents only the buyer and has a fiduciary responsibility to the buyer only. Only recently all REALTORS® were “subagents” of the seller. This created a problem for the seller and buyer. For example, a seller has a 3 bedroom home in Rowley and an agent calls and says they would like to bring a buyer to see the property. After the showing this agent tells the buyer that the property is on town sewer and, even though it is in the historic district, you can knock it down and put a 5 family home on the lot. Obviously this isn’t true, but since this agent is a subagent of the seller, the listing agency and the owner could be parties to future lawsuits under vicarious liability laws. Vicarious liability is defined as the liability one suffers for the acts of others.
Selecting a Buyer’s Agent
Any licensed real estate agent or broker can represent you as a buyer’s agent. The first step is to select an agent who is experienced in the area where you’re conducting your property search. The agent should have a thorough knowledge and understanding of all the local issues which affect the value of real estate. The agent should also be a good listener and understand your needs. It’s important to establish a relationship built on mutual respect and trust. Often times I have seen buyers represented by agents simply because they are the first agent they spoke with. Take the time to see if your agent knows the area, if they listen to what you need and are respectful of your time.
Most importantly, your buyer’s agent should be someone that has a track record of success in your area and can negotiate on your behalf in a cooperative manner. If you clash with your agent, chances are they will do the same with other agents. The job of your buyer’s agent is not to create an unnecessary atmosphere of adversity within the negotiation process, but to get you the home that you want. When you’re ready to make an offer, the buyer’s agent helps you present the offer and advises you while negotiating. They help you arrange for financing, inspections, paperwork and facilitate the process. If you choose the right REALTOR®, one who knows your area and has a track record for success, your home buying or selling process should be a smooth one.
If you have any questions about this article, real estate in general or are looking to buy or sell a home please contact me, John McCarthy at Rowley Realty, 165 Main St., Rowley, MA 01969, Phone: 978 948-2758, Cell 978 835-2573 or via email at firstname.lastname@example.org