Who is working for me as the Buyer?
Agency Disclosure: In the State of California, the Agency Disclosure Law became effective 1/1/1988. This law requires that all licensees disclose the agency relationship of all parties to a transaction as soon as practical. The Agent is actually the Broker, represented by the individual agent. They can represent a Seller (Listing or Selling Agent), a Buyer (Buyer’s Agent) or both (Dual Agent) as long as there is full disclosure. The tricky part to understand is that if an Agent (ie the company or Broker) has a listing and so is the agent of the Seller, then if any other agent in that entire company represents a Buyer, there is Dual Agency.
Why this law was adopted...
Buyer’s Agent: In the past, it didn't matter if a Buyer spent days driving around with an agent, going to lunch, calling them twice a day, telling them all their innermost thoughts about buying a home, discussing how to pay for it………. the agent was working for the Seller. The State thought this situation rather misleading to the buyer, who very often forgot that the friendly agent was really working for the Seller. So in 1988, the State passed a law requiring all agents to explain exactly what agency means to both the buyers and the sellers. To help in this process and to insure that everyone received the same explanation, the State published a form, the use of which is MANDATORY for all licensed real estate salespeople and brokers. You will be required to read and then sign your acknowledgment. This agency disclosure will then be confirmed on the Residential Purchase Agreement.
Seller’s Agent: the listing agent always represents The Seller. A listing agreement is an employment contract for personal service between the Principal Broker, represented by the agent, and a Principal. This agreement establishes a fiduciary relationship. Because of this relationship, the agent of the seller may not tell the buyer certain facts about the seller. For example, if the seller is insolvent or going through a divorce, this may not be revealed unless the seller gives written notice to do so. However the agent must inform the buyer of any material facts that might affect the value of the property. For example, if the property backs up to a school or freeway or has easements. Death within three years is a mandatory disclosure. A listing may be given for any length of time up to one year. It is effective the date the listing is signed unless otherwise specified. To be binding, an exclusive listing must have a definite start and end date.
In SIMPLE TERMS... The LISTING AGENT always represents the SELLER!
The BUYER has a choice!
If the buyer chooses, the agent can represent the buyer and is then a BUYER'S AGENT. Or if the buyer chooses, the agent can represent the seller and is then a SELLER'S AGENT. In the event that a buyer wants to be represented by a LISTING AGENT, the Broker is then a DUAL AGENT. Both Buyer and Seller must agree to this arrangement.
In any case, all agents must treat all parties fairly and honestly.
Relocation and Transferees: For people unfamiliar with an area, Buyer Agency is most appropriate. Transferees are much more dependent on an agent for information regarding the area, not just a list of homes to see. They want to be able to talk about the concerns they have for themselves and their families, including the fears and problems associated with relocating to a strange area. The buyer’s agent directs them to sources where they can obtain information that will help them in their decision-making process.
TRUE BUYER REPRESENTATION necessitates commitment on the part of both the buyer and the agent. Just signing a Disclosure and checking the box doesn't do it. Our local Real Estate Boards and Multiple Listing Services advocate the use of a Buyer Broker Agreement, similar to a listing agreement. It clarifies the agent’s role in working on behalf of the buyer and defines the areas, price range and time frame involved.
NEW HOMES & SUBDIVISIONS: Here clearly Buyer Representation is needed. Builders often have sales reps on site. It is important to remember that these salespeople represent the builder. Builders are very happy to cooperate with agents, especially when the inventory is plentiful and the market slow. Having an agent represent the buyer is a good thing for everyone. The Builder gets an informed consumer who has been educated about the market. No builder’s rep shows buyers competitive new construction or resale listings. Not all builders are created equal. It's important to know exactly what you are getting. There's a tremendous amount of negotiating with a new home. Those little extras can really add up! If you don't think about them, the builder will probably not mention them! So use a neutral agent to guide you along. All the agent wants in return is your loyalty. If you're cruising around on weekends, feel free to window shop. If asked to register, just say that you're working with an agent and give them that agent’s name or card. That way you preserve your anonymity too!