OfflineMany real estate buyers are not up-to-date with the changes in the real estate representation laws and practices in the last 20 years. In the “good old days,” the real estate agent showing you properties actually worked for the seller as a sub-agent to the seller’s listing broker. In other words, they worked for the seller and could not tell you anything that might damage the negotiation ability of the seller. In fact, if you told them something that would help the seller cut a better deal with you, they would have to tell the seller.
In almost every state now, the agent working with you as a buyer is not a sub-agent of the seller, instead working in your best interests and on your behalf. In fact, in most states they’ll disclose to you that they are not allowed to tell the seller things like you might come up on the price or you might give up the demand for that storage building to stay. Now that this is out of the way, what MUST your real estate agent disclose to you?
First, this varies by state law, so check out your state’s statutes. Almost everywhere, the agent must disclose any personal interest in the property, such as the seller is their cousin or they hold some ownership interest in the property. Generally you should know this long before you make an offer.
Some states require that the seller’s agent disclose things like a murder in the home, local sex offenders, etc. However, this is definitely different in different states, so check your laws. While they may not be required to tell you, your buyer agent can ferret out any of this information and tell you about it unless there is some privacy law against the disclosure.
The main thing to remember is that your agent should be disclosing to you any “material” fact about the property. This would be a fact that might change your mind about buying or change the amount you would pay. An example would be that a halfway house for criminal offenders is in the next block. A home is a major purchase, so learn a little about the duties of the people involved.Doug Clark
Nice post thanks for the information
I was working for them now i work for me !
If you always put limit on everything you do, physical or anything else. It will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them.” - Bruce Lee
This is some great information Randy, thank you for providing some reference material that will be helpful for all investors.
For anyone reading in this post thread, I'd like to share a couple of points on a different aspect of your relationship with a real estate agent--that of managing the relationship.
I just finished speaking with someone who has been presented by their agent with an exclusive buyer's agent agreement. These agreements are symptomatic of a common issue that exists in the industry. So here are a few points to remember in building a relationship with an agent.
1) Your agent is a professional, that makes them a valuable resource for information and services that should be cultivated.
2) Your agent works for you. You provide the offers that make the deals that get them paid.
3) You have a responsibility to your own business to be able to use various methods of finding properties, some of which will not include an agent.
4) Since your agent works for you, you have an obligation, as their employer, to be a good supervisor, to expect good and timely work, but also to help them to have satisfactory and rewarding work--this means that you need to establish good communication with your agent.
5) Agents tend to have egos, just like investors, it is our obligation to subtly and effectively train the agent to work with us without damaging their ego. This also means letting them know when their performance or responsiveness has not met our expectation. We cannot force them to perform, but we can always offer to find other agents to help with the work if this is more than they are able to handle. That will tend to cause them to want to work harder for you.
6) You have a responsibility to find ways to streamline your processes so that your business runs efficiently, and your interactions with your agent are also efficient and effective. Some steps toward efficiency would include: a) Having a standard addendum to attach to offers; b) Providing your agent with a specific list of criteria on properties to look for and keeping them focused on only that list; c) Arranging to present offers at the same time each day, and having a quick method of doing so; d) Only inspecting a property after an offer is accepted, and calculating offers from formulas.
In managing your business relationships effectively, you have more control over the results, spend less time to get those positive results, and will have happier service providers to work with.
Dallin Wall
Real Estate Training Team
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