The Star Tribune recently ran an interesting article from the Washington Post (Some agents failing to make key disclosures) on a lawsuit in Washington where real estate agents failed to disclose whom they represent in transactions.
Agents frequently represent the property seller exclusively. But under "buyer agent" arrangements, they may represent the purchaser exclusively. It is the responsibility of the agent to tell a buyer immediately who they represent. Unfortunately that often does not happen.
At Buyers Real Estate Group our goal is to let people know that they have an option. Real estate agents can most effectively represent the buyer or the seller not both. Buyer agents exclusively represent the buyer – as buyer agents we always have the buyer’s needs in mind.
The advice in the article and our advice is always ask and make sure that the real estate agent you meet represents you before you disclose information on what you want or are prepared to spend.
Some Agents Failing to Make Key Disclosures - Before signing a contract for real estate agent representation, make sure you know which side the agent actually represents.
The Nation's Housing Kenneth Harney, Washington Post Writers GroupLast update: March 18, 2006 – 11:32 AM
A pending suit in suburban Washington is focusing fresh light on a growing problem: real estate agents failing to disclose whom they represent in transactions -- even where state laws require it in writing at their first substantive client meeting.
Research by the National Association of Realtors shows that just 30 percent of all buyers last year received disclosures about representation from their agents at their first meeting. Nearly half of all first-time buyers either received no disclosures anytime during the sales transaction or were unaware of whether they did or did not.
To the association's top lawyer, general counsel Laurie Janik, this is very bad news. "I was so extremely disappointed" at the latest low disclosure percentages, she said. "Our eye is not on the ball anymore.
"Most states require agents to inform potential sellers or buyers in writing about who will be representing whom.
Agents frequently represent the property seller exclusively. But under "buyer agent" arrangements, they may represent the purchaser exclusively.
In Minnesota, an agency disclosure statement -- explaining the five types of representation -- must be shown to potential buyers or sellers at their first substantive meeting with a real estate agent.
The consumer is supposed to sign an acknowledgment of seeing it.
Clarity about representation is crucial because sellers and buyers often divulge confidential information to agents about their finances, personal lives or bargaining strategies that can dramatically affect pricing and negotiations.
If a buyer mistakenly confides key information to an agent representing the seller, that agent is highly likely to pass it along for the advantage of the seller.
When agents don't provide the written disclosures required by most states, clients might be misled into paying too much, forgoing contractual protections such as contingency clauses, and generally end up dissatisfied with the outcome of the transaction.
Some buyers or sellers end up angry enough to sue. That's what Joel Stern of Silver Spring, Md., did after dealing with two agents affiliated with Weichert Realtors, one of the nation's largest independent brokerages.
Though the specific factual allegations are complicated, the bottom line is this: Stern believed he was induced to sign a contract on a house with an excessive price because the agent he thought represented him as a buyer's agent was in fact functioning as an agent for the seller.
The agent did not disclose her representation until the contract signing, according to the suit. Maryland law requires written disclosure much earlier. Meanwhile, the agent's partner allegedly convinced Stern to list his current home for sale with Weichert through her.
The first agent also persuaded Stern not to include a contingency clause that would have required his home to be sold before the new purchase could close.
The agents "defrauded [Stern] into overpaying" on the new house "because they assured him he could quickly sell his house," according to the complaint. Working together, the agents "were intent on making the highest commission" off Stern's purchase and in profiting further from the listing of his current home.
Stern had put a $34,000 deposit on the home he sought to buy. He backed out of the contract when he learned that his agent represented the seller, not him as he assumed, and suspected that he had agreed to an excessive price.
A county circuit court ruled recently that Stern's agent's failure to disclose her representation was not sufficient to cancel the purchase contract outright. Stern is appealing that decision and seeking $300,000 in punitive damages and the return of his $34,000 if the contract is deemed valid.
Lawyers representing the agents and Weichert declined to discuss the case, citing a company policy of never commenting on ongoing litigation. Stern's lawyer, Francis Koh, said the court's ruling essentially means that agents "can violate the law and not be held responsible.
Mr. Stern believed [his agent] to be representing him. If he had known that she was working for the seller, he would not have gone ahead" with the transaction, Koh said. What's the significance for you? Putting aside the allegations in the Stern case, the statistical reality is that agents nationwide are neglecting to provide the up-front disclosures regarding representation that their own trade association says they should.
Under the circumstances, you as a buyer or seller must be alert. Demand a formal disclosure of representation before beginning any substantive discussions with an agent. Do not assume that you are working with a buyer's agent whose sole loyalty is to you. "If it's not in writing, it doesn't exist. "
Distributed by the Washington Post Writers Group. Kenneth Harney is a nationally syndicated real estate columnist. He can be reached at the Washington Post Writers Group, 1150 15th St. NW., Washington, DC 20071-9200 or by e-mail at kenharney@earthlink.net.
Agents frequently represent the property seller exclusively. But under "buyer agent" arrangements, they may represent the purchaser exclusively. It is the responsibility of the agent to tell a buyer immediately who they represent. Unfortunately that often does not happen.
At Buyers Real Estate Group our goal is to let people know that they have an option. Real estate agents can most effectively represent the buyer or the seller not both. Buyer agents exclusively represent the buyer – as buyer agents we always have the buyer’s needs in mind.
The advice in the article and our advice is always ask and make sure that the real estate agent you meet represents you before you disclose information on what you want or are prepared to spend.
Some Agents Failing to Make Key Disclosures - Before signing a contract for real estate agent representation, make sure you know which side the agent actually represents.
The Nation's Housing Kenneth Harney, Washington Post Writers GroupLast update: March 18, 2006 – 11:32 AM
A pending suit in suburban Washington is focusing fresh light on a growing problem: real estate agents failing to disclose whom they represent in transactions -- even where state laws require it in writing at their first substantive client meeting.
Research by the National Association of Realtors shows that just 30 percent of all buyers last year received disclosures about representation from their agents at their first meeting. Nearly half of all first-time buyers either received no disclosures anytime during the sales transaction or were unaware of whether they did or did not.
To the association's top lawyer, general counsel Laurie Janik, this is very bad news. "I was so extremely disappointed" at the latest low disclosure percentages, she said. "Our eye is not on the ball anymore.
"Most states require agents to inform potential sellers or buyers in writing about who will be representing whom.
Agents frequently represent the property seller exclusively. But under "buyer agent" arrangements, they may represent the purchaser exclusively.
In Minnesota, an agency disclosure statement -- explaining the five types of representation -- must be shown to potential buyers or sellers at their first substantive meeting with a real estate agent.
The consumer is supposed to sign an acknowledgment of seeing it.
Clarity about representation is crucial because sellers and buyers often divulge confidential information to agents about their finances, personal lives or bargaining strategies that can dramatically affect pricing and negotiations.
If a buyer mistakenly confides key information to an agent representing the seller, that agent is highly likely to pass it along for the advantage of the seller.
When agents don't provide the written disclosures required by most states, clients might be misled into paying too much, forgoing contractual protections such as contingency clauses, and generally end up dissatisfied with the outcome of the transaction.
Some buyers or sellers end up angry enough to sue. That's what Joel Stern of Silver Spring, Md., did after dealing with two agents affiliated with Weichert Realtors, one of the nation's largest independent brokerages.
Though the specific factual allegations are complicated, the bottom line is this: Stern believed he was induced to sign a contract on a house with an excessive price because the agent he thought represented him as a buyer's agent was in fact functioning as an agent for the seller.
The agent did not disclose her representation until the contract signing, according to the suit. Maryland law requires written disclosure much earlier. Meanwhile, the agent's partner allegedly convinced Stern to list his current home for sale with Weichert through her.
The first agent also persuaded Stern not to include a contingency clause that would have required his home to be sold before the new purchase could close.
The agents "defrauded [Stern] into overpaying" on the new house "because they assured him he could quickly sell his house," according to the complaint. Working together, the agents "were intent on making the highest commission" off Stern's purchase and in profiting further from the listing of his current home.
Stern had put a $34,000 deposit on the home he sought to buy. He backed out of the contract when he learned that his agent represented the seller, not him as he assumed, and suspected that he had agreed to an excessive price.
A county circuit court ruled recently that Stern's agent's failure to disclose her representation was not sufficient to cancel the purchase contract outright. Stern is appealing that decision and seeking $300,000 in punitive damages and the return of his $34,000 if the contract is deemed valid.
Lawyers representing the agents and Weichert declined to discuss the case, citing a company policy of never commenting on ongoing litigation. Stern's lawyer, Francis Koh, said the court's ruling essentially means that agents "can violate the law and not be held responsible.
Mr. Stern believed [his agent] to be representing him. If he had known that she was working for the seller, he would not have gone ahead" with the transaction, Koh said. What's the significance for you? Putting aside the allegations in the Stern case, the statistical reality is that agents nationwide are neglecting to provide the up-front disclosures regarding representation that their own trade association says they should.
Under the circumstances, you as a buyer or seller must be alert. Demand a formal disclosure of representation before beginning any substantive discussions with an agent. Do not assume that you are working with a buyer's agent whose sole loyalty is to you. "If it's not in writing, it doesn't exist. "
Distributed by the Washington Post Writers Group. Kenneth Harney is a nationally syndicated real estate columnist. He can be reached at the Washington Post Writers Group, 1150 15th St. NW., Washington, DC 20071-9200 or by e-mail at kenharney@earthlink.net.
posted by Ron Jensrud at 2:03 PM
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