| Is it written in your contract? Be Sure Your Interests Are Being Represented... |
One of the most common misconceptions that is shared by a large number of buyers
is that when working with a Real Estate Agent, he or she will "automatically" represent
you as a buyer.
As we will discuss, unless this is specifically disclosed in a written contract, in all
probability:
The Agent, listing the seller’s property, will be legally bound to represent the seller.
The traditional relationship has been that a Real Estate Agent's primary legal loyalty
was to the seller of the property. This relationship is in effect whether the Agent was the
listing agent or working with a buyer. This situation causes many home buyers to be
confused: they assume that the Agent that has been driving them around showing
them houses for the last 3 weeks was representing them. In reality, the Agent was
representing the owners of the houses they saw, and was bound to reveal to those
sellers any information he or she knew about the buyers.
Buyer Agency, a new concept in Hungary available now, changes that. The buyer now
has a choice in representation: the Agent who they were working with could continue to
represent the seller in the transaction, or the Agent could represent them as buyers.
The buyer is now able to compete on a more level playing field.
The following is a basic summary of the types of agencies, and who the Agent
represents.
SELLER AGENCY: The "default" situation. Unless disclosed to the contrary, all Agents
involved in a Real Estate transaction represent, and owe their allegiance to the seller. If
you contact an Agent who has a property listed, that Agent will receive a commission
from, and always represent the seller.
BUYER AGENCY: When an Agent represents the buyer, that Agent "rejects" the implicit
seller agency and thus owes loyalty to the buyer. For more information on this subject,
see the section devoted to Buyer Agency.
DUAL AGENCY: This occurs when an Agent represents a buyer and a seller in a
transaction. This situation must be disclosed to both the buyer and the seller.
Privileged information (e.g. the price that a buyer will pay or a seller will sell at) cannot
be disclosed to the other party without the permission of that party. The simplistic
explanation is: If I have a house listed, I represent the Seller. If I show you a house
listed by another real estate company, I am representing you as a Buyer. Agency
disclosure should take place at the first meeting when we begin to work together.
If I have your house listed, I represent you, the seller. I sell your house and you decide
to buy a house I have listed. I still represent you on the sale of your house and I have
been representing you on the purchase of another house. I now have a conflict of
interest when you decide to buy one of my listings, because I represent you as a buyer
and the seller in the sale of their house that you wish to buy.
Are you still with me? In this situation, I am limited in what I can do for you as a Buyer
and I am limited as to what I can do for the Seller. That is the origin of the term limited
agent or limited agency. Conflicts of interest are allowed in real estate as long as all
parties are informed of the conflict and agree to proceed.
Not understanding agency can cost you big money
You decide to purchase a house from a listing agent who represents the seller of the
home. You do not realize or do not pay attention, and believe the agent is representing
you as the Buyer. You say to the seller's agent: "I will offer $100,000 for this home. The
most I will give is $115,000." That Seller's agent is bound to disclose that you will give
$115,000. On the reverse end, if you made that statement to a Buyer's agent
representing you, the agent would be bound not to disclose your top price and not to
damage your negotiating power in any way. As you can see, it makes a huge difference
who the agent represents.
If you leave the agency question "as-is", your Agent will automatically represent the
seller in the transaction. To sum it up, if you want full representation, consider using the
services of a Buyer’s Agent.
is that when working with a Real Estate Agent, he or she will "automatically" represent
you as a buyer.
As we will discuss, unless this is specifically disclosed in a written contract, in all
probability:
The Agent, listing the seller’s property, will be legally bound to represent the seller.
The traditional relationship has been that a Real Estate Agent's primary legal loyalty
was to the seller of the property. This relationship is in effect whether the Agent was the
listing agent or working with a buyer. This situation causes many home buyers to be
confused: they assume that the Agent that has been driving them around showing
them houses for the last 3 weeks was representing them. In reality, the Agent was
representing the owners of the houses they saw, and was bound to reveal to those
sellers any information he or she knew about the buyers.
Buyer Agency, a new concept in Hungary available now, changes that. The buyer now
has a choice in representation: the Agent who they were working with could continue to
represent the seller in the transaction, or the Agent could represent them as buyers.
The buyer is now able to compete on a more level playing field.
The following is a basic summary of the types of agencies, and who the Agent
represents.
SELLER AGENCY: The "default" situation. Unless disclosed to the contrary, all Agents
involved in a Real Estate transaction represent, and owe their allegiance to the seller. If
you contact an Agent who has a property listed, that Agent will receive a commission
from, and always represent the seller.
BUYER AGENCY: When an Agent represents the buyer, that Agent "rejects" the implicit
seller agency and thus owes loyalty to the buyer. For more information on this subject,
see the section devoted to Buyer Agency.
DUAL AGENCY: This occurs when an Agent represents a buyer and a seller in a
transaction. This situation must be disclosed to both the buyer and the seller.
Privileged information (e.g. the price that a buyer will pay or a seller will sell at) cannot
be disclosed to the other party without the permission of that party. The simplistic
explanation is: If I have a house listed, I represent the Seller. If I show you a house
listed by another real estate company, I am representing you as a Buyer. Agency
disclosure should take place at the first meeting when we begin to work together.
If I have your house listed, I represent you, the seller. I sell your house and you decide
to buy a house I have listed. I still represent you on the sale of your house and I have
been representing you on the purchase of another house. I now have a conflict of
interest when you decide to buy one of my listings, because I represent you as a buyer
and the seller in the sale of their house that you wish to buy.
Are you still with me? In this situation, I am limited in what I can do for you as a Buyer
and I am limited as to what I can do for the Seller. That is the origin of the term limited
agent or limited agency. Conflicts of interest are allowed in real estate as long as all
parties are informed of the conflict and agree to proceed.
Not understanding agency can cost you big money
You decide to purchase a house from a listing agent who represents the seller of the
home. You do not realize or do not pay attention, and believe the agent is representing
you as the Buyer. You say to the seller's agent: "I will offer $100,000 for this home. The
most I will give is $115,000." That Seller's agent is bound to disclose that you will give
$115,000. On the reverse end, if you made that statement to a Buyer's agent
representing you, the agent would be bound not to disclose your top price and not to
damage your negotiating power in any way. As you can see, it makes a huge difference
who the agent represents.
If you leave the agency question "as-is", your Agent will automatically represent the
seller in the transaction. To sum it up, if you want full representation, consider using the
services of a Buyer’s Agent.
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