Category Archives: Agency

Real Estate Agency Relationships

To Syndicate or To Not Syndicate

A local San Diego brokerage, ARG has announced they are the first broker in San Diego to pull out of listing syndication.

I am not going to go into great detail on this site which is consumer orientated.  If you want to know more please visit an excellent article by Lily Leung with the San Diego Union Tribune.  She has also posted some consumer reaction to the announcement here.

Fred Glick makes several important points in the video below about ARG’s announcement which focus on Zillow, Trulia, and Realtor.com.

First, that the underlying message is to call the listing agent, no one else will know more about the property or represent you better.  Sounds like dual agency to me.

Second, that the seller should be concerned and not allow his or her listing to be syndicated on Zillow Trulia, or Realtor.com, the three largest consumer real estate sites on the Internet.

What are your thoughts?

Know Your Advocate, Whom Do They Owe Duty To?

Part Two: Who does your REALTOR® Represent?

Yesterday I started a series of 9 posts regarding what to look for in a REALTOR®.  The #1 trait in my opinion is Honesty while the 2nd is Fiduciary Duty and Single Agent Agency.

In essence picking out someone to be your advocate in the transaction and to watch out over your interests on probably the largest financial decision of your life.

Why is a clear position of agency so important?  Can’t someone serve two masters with out conflicting goals?  After all it is legal in California and practiced widely.

Let’s step out of the real estate arena for a moment and consider the following scenario from another profession which does not allow conflicting agency.

You have hired an attorney to represent your interests in a patent infringement case.  Years ago you invented a clever gadget that was brought to market and has become a significant source of income for you and your family.  Things are going great until a huge established Company comes along and markets a very similar item but with the added advantage of name recognition and a large advertising budget.

You hire an Attorney to represent your interests with the expectation of getting the major company to halt production.

Would you hire the opposing sides Attorney because it would be easier and cheaper? Of course NOT – both sides have conflicting interests.  You would want your own advocate to fight for your rights and look after your best interests.

I have written a great deal on real estate agency and invite you to visit that category should you wish to learn more.

Photo courtesy of Flickr

Disclosure Regarding Real Estate Agency Realtionships

Disclosure Regarding Real Estate Agency Relationships Revised.

Updated July 2011.

sharp-edges-signOne of the first forms that you should see when working with a real estate agent is a Disclosure Regarding Real Estate Agency Relationship produced by the California Association of REALTORS® (CAR).  This form has been revised in November 2009 making the process of proper delivery easier to understand.

The Disclosure Regarding Real Estate Agency Relationships basically outlines the 3 types of agency relationships that you can have with a real estate agent in California.  This agency relationship is then confirmed in the listing agreement or purchase contract when a property is listed for sale or an offer is written to purchase real estate.  You will want to know what obligations the agent you are working with has to you and other parties in the transaction.

Most notable among the forms being released is a revised Disclosure Regarding Real Estate Agency Relationships (Form AD). The revised AD form aims at ending the confusion surrounding the form by allowing a buyer’s agent to use just one form for both the seller and buyer to sign. REALTORS® may now handle the delivery of the AD form in either of two ways:

Alternative A: Agents may continue the existing practice of generating three AD forms in a typical transaction. The first AD form is generally signed by the listing agent and seller before entering into a listing agreement. Absent dual agency, the second AD form is generally signed by a buyer’s agent and buyer before writing an offer. The third AD form is generally signed by the buyer’s agent and seller. An AD form signed by the buyer’s agent and seller does not create an agency relationship between the buyer’s agent and seller because the AD form is merely an information sheet. The actual confirmation of agency is stated separately in paragraph 27C of the C.A.R. Residential Purchase Agreement (RPA).

Alternative B: The procedure for Alternative B is stated in the explanation box at the bottom of the newly revised AD (revised 11/09). Agents will still prepare the first and second AD forms stated in Alternative A. The buyer’s agent, however, may now deliver to the seller the second AD form signed by the buyer’s agent and buyer. The seller may sign acknowledgement of receipt of that AD form on the signature line in the explanation box. No third AD form is needed under Alternative B.

Hopefully this will help real estate agents that don’t understand the importance of Agency Disclosure.  My guess is problems will continue to exist with Agency Disclosures and Agency Confirmation delivered much later in the transaction.  I recently wrote an article on how many lawsuits are a result of disclosure not being done early enough in the relationship.

Visit our real estate agency category for more information.

Download Disclosure Regarding Real Estate Agency

Photo courtesy Flicker

Real Estate Agency Issues Continue to be Biggest Source of Lawsuits

RealtorMag_Disclosure_BewareAccording to the article Beware Legal Danger Zones published in the September 2009 edition of REALTOR® magazine, real estate agency issues continue to lead in the biggest source of lawsuits.  These include breach of fiduciary duty, dual agency, agency disclosure, and buyer representation.  The article goes on to state that they expect these issue to be more prevalent in the courts in the next two years.

On agency matters, breach of fiduciary duty is one of the biggest sources of disputes. The main problem, according to the Legal Scan, is that many practitioners are unclear about the breadth of responsibility owed to clients. “It is easy to underestimate or fail to appreciate the level of duty that is required,” one survey respondent wrote.

The report also cited problems with disclosure of agency relationship. Practitioners are supposed to disclose agency relationships at their first substantive contact with customers, but the disclosure is “often overlooked and not sufficiently explained to prospects,” one respondent said.

If you want to learn more regarding this important topic please visit our Agency category.

Image source: REALTOR® magazine.

Buyer Non-Agency Agreement

Image of BNA header.

Buyer Non-Agency

Updated July 2011.

Anyone that is a regular reader of this blog knows that I feel strongly about single agent dual real estate agency, and you can find lots of material in our Agency Category regarding the perils of dual agency.

One of the biggest arguments that agents use to advocate the use of dual agency, is it will save my seller money.  Some listing agents may have a listing clause that reduces the amount of commission due if the Agent represents both the homeowner and purchaser in a resulting transaction. Usually, this is a gimmick given to the Seller to appease a request for a reduction in commission.  The vast majority of real estate transactions are not single agency – dual agency, therefore does not entitle the seller any commission discount.

In dual agency, the Listing Agent has duties to get the highest and best price for their Seller, but is now also trying to represent the purchaser to get them the best deal.  Kind of like having an attorney represent both spouses in a complicated divorce.

I  think that having an single agent represent the homeowner, and another represent the purchaser is in the best interests of all parties.  However, sometimes a savvy Client comes along and does not wish representation. In those cases my suggestion is for them to use a Buyer Non Agency Agreement.  This is a standard California Association of REALTORS® (CAR) form also known as BNA.

Since I don’t practice single agent dual ageny, this would be the only way that I would complete a transaction for my Seller if purchaser agent was not involved – and I would only consent to this at the insistence of the purchaser, and the agreement of the homeowner.

The form is pretty clear in paragraph 2 of who represents who:

2. NO REPRESENTATION OF BUYER BY LISTING BROKER: Buyer understands and agrees to the following:

Listing Broker does NOT represent Buyer and Listing Broker will NOT be Buyer’s agent during any negotiation or transaction that results between Buyer and Seller regarding the Property. All acts of Listing Broker, even those that assist Buyer in entering into a transaction or performing or completing any of Buyer’s contractual or legal obligations, are for the benefit of Seller exclusively. Any information that Buyer reveals to Listing Broker may be conveyed to Seller.

B. Listing Broker does NOT represent Buyer and Listing Broker will NOT be Buyer’s agent even though Listing Broker may provide Buyer forms describing agency relationships as required by law or otherwise.

The form goes on to say the following:

4. REPRESENTATION OF SELLER BY LISTING BROKER: Listing Broker will act as the agent of Seller exclusively during any negotiation or transaction regarding the Property.

If explained properly, many purchasers will decide they don’t want to go at it alone.  They don’t really have the expertise to prepare the purchase agreement to protect their interests.  Having a your own Agent that can advise them how to structure the purchase agreement is a wise investment.

Coming up soon, we will look at the Seller Non-Agency agreement used for the purchaser that has agent representation and the Seller that does not.

Download Disclosure Regarding Real Estate Agency