The 2011 spring market is upon us! I have received 3 calls in the last
week from people who may be putting their homes on the market in the
In this article I
thought I would speak about Agency and how it has changed through the years, and how
Buyers and Sellers have been affected by the change.
It wasn’t long ago that the majority of Agents
represented the Seller (s). Whether they or the Buyers they were working with at the time
knew it that was the case. Whomever was paying the commission was who the Agent was
representing and in almost all cases the person paying the commission to the Agent, both
listing and selling, were the Sellers of the home. If you explained this to the Buyers you
were working with they always had a hard time understanding it, and for good reason.
Let me setup the
situation. An agent would be sitting at his or her desk at the office and in would come a
call from a buyer looking for a home, or calling to see a specific home. As an agent you
were glad to setup an appointment to show them property. In most cases you drove them
around for days, weeks, and sometimes months on end until they finally found what they
were looking for. But, if you asked them who the person they were being shown houses by
was representing, 10 out of 10, (unless they were another agent or an attorney) would
answer, ME. Of course; they were spending a great deal of time with this potential buyer.
The agent would be explaining information that seemed was in the best interests of the
buyer (s), and for an uneducated agent sometimes they were in fact doing just that which
was actually against the law and surely unethical. And most times the agent had a personal
relationship with the potential buyer (s) from spending a great deal of time with them
e.g. driving around looking at homes, possibly going out to eat and discussing making
offers and explaining closing costs, meeting other family members, and sometimes
socializing outside the real estate relationship. But, it was in almost all cases the
Seller (s) who would be paying the commission to both the listing agent (the person who
put the home on the market/multi-list) and their prospective company, and the selling
agent (the agent who would bring the offer of the buyer that they have been working with),
and their prospective company! Agency!
I remember many years
ago one new agent at the end of a closing saying to me within earshot of the Seller,
“My buyer told me before they got on the plane after we wrote up the offer, if you
need to go full price that is fine with me.” The agent had brought an offer of
$30,000 less than the asking price and never mentioned that the buyer would go any higher!
We took that offer. Hearing her words after the closing made my seller furious. I had
explained as I always did and continue to do who represents who and my Seller knew that
that agent was to be representing my sellers’ best interests. A fiduciary
relationship.
Fiduciary definition- A fiduciary
has a duty to act primarily for the client's benefit in matters connected with the
undertaking and not for the fiduciary's own personal interest. Scrupulous good faith
and candor are always required.
In
this case if the seller is the client and they were, this agent was surely doing the exact
opposite. Knowing that the buyer would go to the full asking price and withholding that
information from the agents client-the seller, was in direct contradiction of her agency
duties.
Now agency has acknowledged
the relationship of the selling agent and the buyer (s). Agents today must disclose whom
they are working for. Today the term “buyers’ agent” has become common. The
buyers’ agent now, although in most cases is still paid by the Sellers’ but is
allowed to represent the buyer (s), but it must be disclosed in writing at the beginning
of the agent/buyer relationship, and disclosed to the seller (s) of the home at the
presentation of the buyer (s) offer.
It is a very
different world we live in now compared to not more than 20 years ago when most buyer (s)
assumed incorrectly that the agent answering their questions, driving them from place to
place, eating out and discussing real estate with them in fact represented the Owners of
the home they were going to buy.
I expect that spring 2011 will be a better market than last year. I believe that prices will go up a bit from the previous years of decline and new buyers wanting to live in wonderful neighborhood with a meriad of great assests will bring a breath of fresh air to our Real Estate market! JMO.
If you are thinking of selling or buying a home or know of someone who may please feel free to give me a call or shoot me an email at fred@regentsquare.com
The
information of this article has been obtained from sources believed to be reliable, and
although every effort has been made to be accurate, it is not necessarily all-inclusive
and is not guaranteed as to the accuracy and the writing shall not be held liable for any
accidental errors.