What is this Agency Stuff?
Sooner or later you are going to meet a real estate agent that you want to do business with. Pennsylvania law and most other states require that the agent sit and discuss with you ” Agency”. What does that mean? It means; how is that agent going to represent you?. And before you agree to that representation you need to know about the different kinds of representation that are out there. Let’s itemize those descriptions first, and then in future blogs I will discuss each in detail.
Buyers agency Representing the Buyer
Sellers agency. Representing the Seller
Transaction agency. Representing neither party and acting as a facilitator to the transaction.
Designated agent. The Broker designates agents from the company to represent buyer and seller for a property in a particular transaction
Dual agent. Agent and Broker represent the buyer and seller for the same transaction . Client has to agree to this in writing.
Get It? Yeh, sure. If you get this on the first pass you are a better human being than I am. I have been practicing Real Estate for over 30 years and it still confuses me to the point that I have to remind myself to reread the PA Consumer Notice before explaining it to a client. By the way the Consumer Notice is a document that you have to sign and acknowledge that the agent sat down and discussed agency with you. This is supposed to occur at the first “significant meeting ” where the possibility of business is going to be discussed. Whenever that happens is sometimes anybody’s guess. But you should know that it also includes phone conversations. This has been the cause of some interesting personal situations. For example, I went to a baseball game with a buddy of mine who also invited a friend of his who I didn’t know. I was introduced as Sam in Real Estate. As many of the vets will tell you, it doesn’t take long before someone in that scene will be asking “So you”re in real estate, how’s the market?…I live over in XYZ subdivision, in a 2 story colonial, what do you think my house is worth?” Or maybe its a buyer who wants info on a house he’s seen on the internet, or maybe its your listing. What do I do? Am I required to whip out the consumer notice between balls and strikes and go from stoic business professional or crazed fan as I watch my favorite player strike out again. Or how about that phone conversation for the first time caller. We have been instructed to use certain language to that customer that makes me feel more like law school instructor than a sales person who is trying to determine what your needs are. Nobody seems to have the answer for similar real life situations. But regardless you, the customer, have to sign that piece of paper because its going into a file somewhere in case the Real Estate Commission audits that Broker’s office for compliance. The fine is substantial to the agent and the Broker if it is not there. But enough of all of this legalize. Lets discuss Buyers Agency. The definition comes right from the Consumer Notice.
“As a buyer agent, the licensee and the licensee’s company work exclusively for the buyer/tenant even if paid by the seller/landlord. The buyer agent must act in the buyer/tenant’s best interest, including making a continuous and good faith effort to find a property for the buyer/tenant, except while the buyer is subject to an existing contract, and must keep all confidential information, other than known material defects about the property, confidential.”
In other words, that agent is your agent only, exclusively. He or she and their company has to go out and work in your best interest to find a house for you, Find it at the best possible price and keep all of your information private. If you sign a buyers agency contract to seal the representation, there is usually a fee. But don’t worry, just make sure the language is in there that your agent is willing to accept the cooperating fee from the other broker as payment in full for your fee obligation. Most do, but in some cases if you agree to a percentage of the sale price and the other broker is offering less, than you are on the hook for the difference. But to be fair there are some companies that provide extra services to buyers and they want to be compensated for that. That’s a decision you make but ask the questions up front. No agent worth their salt will refuse to give you a breakdown of their services. Check the link below to get a look at the full Consumer Notice and take particular notice to the duties of the agent regardless of the type of representation.
Once the agency is established be fair with your agent. He or she is going to work very hard to help you find that dream house. But the loyalty thing is a two-way street. Yes you signed a contract. But I know agents who are working night and day for their buyer but find out later that the client is out calling other companies and going to open houses without discussing it with their agent. I would say in most cases they are not purposely dodging their agent. Its more of a lack of understanding of the agent’s duties. If you are not happy with the agent’s performance, tell them or go to their Broker.
Well that’s a beginning. Next time I’ll talk about Sellers Agency. Have a good one. Leave me a comment and let me know what you think about this explanation.