I recently posted a blog entitled “Whose advice should you trust?” This is the first of a follow-up series that will define and discuss the roles of each of the professionals that are available as advisors during the buying or selling process. Today, we define what an agent is and discuss the types of relationships that buyers and seller can have with them.
If you are thinking of buying or selling real estate, one of the first people that you will interact with is a real estate agent, whether you choose to employ one to represent you or not. Even if you don’t interact in person, you will probably be looking at properties online on an agent’s site.
Real estate brokers are former agents with at least a year’s experience, additional education and an additional license test. Brokers are qualified to hold escrow money, hire and oversee agents. (Attorneys are automatically qualified as brokers without having to practice as agents first.) Agents must only work under a broker’s supervision after they have taken required courses and passed an agent’s licensing exam.
Sellers usually consult with agents to get an opinion of their property’s value. Since many agents run open houses, many buyers meet those agents there first unless the buyers engage their own buyer’s agent before viewing homes. Many agents (especially rookies or those that have not developed strong referral or repeat businesses) use open houses as a way to “pick up” buyers.
The way that real estate agents work with buyers and sellers has changed dramatically over the past 15 years. In “the old days”, regardless of how nice or helpful they were to buyers, all agents worked for sellers. Even so, surveys found that buyers thought that agents worked for them.
Today’s buyers and sellers have six types of relationships with agents available to them (seller’s agency, buyer’s agency, facilitation, designated buyer agency, designated seller agency and dual agency). They also have two possible relationship with real estate agencies (exclusive agency or designated/dual agency). They are all specified on both sides of the unmodified version of the “Massachusetts Mandatory Licensee-Consumer Relationship Disclosure Form” (click here for the state’s unadulterated version of this form.) Massachusetts real estate consumers are supposed to be given this disclosure “at the first personal meeting to discuss a specific property”. (Agents don’t have to give it to prospective buyers at open houses.) The disclosure is not a contract. It defines the type relationship that the consumer and the agent have. If either party wants to change the relationship, they also need to revise the disclosure form.
Consumers should note that the disclosure form specifically does not define the entire scope of the relationship; i.e. what each party is responsible for, or what they need to do in the relationship. Expectations can vary widely about what agents are expected to know and be responsible for. That’s where we will continue next week incorporating your comments from this week.
Buyers and sellers, do you really understand what your options mean to you?
If you bought or sold in the last 15 years, were they made clear to you?
What do you expect a buyer’s or seller’s agent to be responsible for in a real estate transaction?
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