This is the second in a follow-up series to “Whose advice can you trust?” The series defines and discusses the roles of Massachusetts professionals that are available as advisors to home buyers and sellers.
If you read last week’s blog, I hope that you read the unadulterated version of the disclosure that agents are required to give buyers or sellers at the first personal meeting with them to discuss a specific property.
There is also a “consumer fact sheet” worth reading although it doesn’t address “designated agency” which occurs when the agents for the buyer and seller within the same agency are designated by the manager or another agent (i.e. an agent that was holding an open house). Those agents represent their individual clients and the agency (typically represented by the broker or manager) acts as a dual agent.
On their disclosure forms, agencies that practice dual and designated agency indicate; “only the real estate agent listed below represents the consumer named in this form (designated seller or buyer agency). In this situation any firm or business listed above and other agents affiliated with the firm or business do not represent you and may represent another party in your real estate transaction.”
Less than one percent of Massachusetts’ agencies practice either “exclusive agency” or “single agency”. “Exclusive buyer agencies” represent only buyers or only sellers ALL of the time. “Single party agencies” represent only one party (either the buyer(s) or seller(s) but never both in the same transaction. Their disclosures indicate “the real estate agent listed below, the real estate firm or business listed above and all other affiliated agents have the same relationship with the consumer named herein (seller or buyer agency, not designated agency).”
OK, enough technicalities, although they are important. Now that we know who agents can represent, the question becomes; what do they actually do? Past comments indicate that there’s confusion about the role(s) of agent(s) and what they should know.
In Massachusetts, if you engage an agent to represent your interests, that agent must provide you with:
undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability. The agent must put their buyer or seller client’s interests first and negotiate for the best price and terms for their client. Despite that, agents must still disclose “known material defects” in the real estate.
Consider that a seller’s agent that must be loyal to the client and keep the seller’s business confidential unless the seller permits disclosure. On the other hand, the agent must disclose “known material defects in the real estate”.
What do agents do when required to be loyal to their seller-clients and still disclose “material defects” that might hurt their seller-client? There are two schools of thought. The first is “when in doubt, disclose everything” to avoid a potential lawsuit later (not to mention being fair to buyers). The second is that “what you don’t know can’t hurt you”, so agents don’t ask, sellers don’t tell and buyers must get their own answers from inspections or their own research.
Some agents make it a point not to know and not to tell. Some avoid the issue by never being present. (They don’t come to showings, inspections or closings. Whether that’s to avoid potential disclosures, liability, or just laziness, I don’t know. It made discussing inspection issues that the agent had not seen very difficult and my clients almost walked away in frustration.) Some agents disclose everything and their sellers provide disclosure forms for their buyer’s signature.
What do you think the listing agent’s responsibilities are?
How do you think that “material defects” should be dealt with?
Do you think that there is a minimum threshold of responsibility, knowledge and disclosure that should be required of listing agents or should everything be handled on a case-by-case basis?
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