A coming trend in the real estate industry, already widely accepted
outside of New York, is the employment of Real Estate Agents by
home buyers.
A Little History
In 1983 the Federal Trade Commission conducted a survey revealing
that most buyers believed they had professional representation in the
purchase of their home (i.e., they assumed the Real Estate Agent or
Broker with whom they were working was “their� agent) when
in fact ONLY THE SELLER was being represented. In practice, the
seller often has the representation of two agents: the one that listed
the house and the one working with the customer.
As a result of the FTC’s survey, various state governments
enacted Disclosure Laws to protect consumers. The 1990’s
ushered in another boon for consumers, the rise of Buyer Brokerage.
How It Works
Typically, a potential home purchaser contacts one or more real estate
agencies in response to advertisements in Real Estate Books,
newspaper classifieds, and other marketing promotions. These ads
are placed by the agent of the home seller, the “Listing� Broker.
When contacted, the broker has fiduciary responsibilities to the
homeowners; these responsibilities include keeping certain information
confidential – information such as the homeowners’ motivation
and financial health. For instance, if the homeowners have already
purchased their next house, they may be willing to take less than
asking price in order to close quickly and not be stuck carrying two
mortgages.
Conversely, any and all information about the buyer that becomes
known to the agent MUST be disclosed to the seller. For instance, if
the potential buyer has made an offer of $400,000 for a property, but
has stated to the agent, “we can go to $425,000 if we have to,�
that agent is bound BY LAW to inform the seller of that statement.
Terry Woods is a former Real Estate Professional.
These articles are for informational purposes only.
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