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Seller and Buyer Agency
When a home is listed for sale, the real estate professional representing the seller may be the first agent a prospective buyer meets at the beginning of a home search. Perhaps it’s at an open house, or even during an on-line contact situation, it is important to understand the “agency” of that agent/salesperson, as well as every other agent/salesperson in a real estate transaction.
In years past, a real estate broker would list a home for sale, and every real estate agent who showed the home represented the seller of the home. Buyers rarely had their own representation – someone to look out for their interests. Often, mistakenly, buyers assumed that the friendly agent who connected with them at the recent open house -- the agent who offered to drive them to see properties, bought an occasional coffee or lunch, and sent along frequent listing updates -- was working in their best interest. Instead, the home buyer was without representation in a large, complex financial purchase, while the seller had both agents in his/her corner.
In response to this imbalance, the real estate industry developed procedures whereby the prospective home buyer could also be represented in the transaction. Today, both buyers and sellers may have clearly defined representation in the sale of real estate. The purchase of a home represents one of the largest financial decisions an individual or family can make. Having a real estate professional on the team to represent the buyer’s interests is the equitable solution.
The decision to purchase or sell a home can be one of the most important events in your life. When starting this process, it is necessary for you to understand the laws of agency in Massachusetts and how these laws will affect you, regardless of your prior experiences. I want you to understand and be comfortable with this process. My commitment is to provide you with the best possible service and to assist you and your family in a smooth transition.
TYPES OF AGENCY
SELLER’S AGENT
A seller can engage the services of a real estate agent to sell his property (called the listing agent) and the real estate agent is then the agent for the seller who becomes the agent’s client. This means that the real estate agent represents the seller. The agent owes the seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the seller’s interests first and negotiate for the best price and terms for their client, the seller. (The seller may authorize sub-agents to represent him/her in marketing its property to buyers, however the seller should be aware that wrongful action by the real estate agent or sub-agents may subject the seller to legal liability for those wrongful actions.)
BUYERS AGENT
A buyer can engage the services of a real estate agent to purchase property and the real estate agent is then the agent for the buyer who becomes the agent’s client. This means that the real estate agent represents the buyer. The agent owes the seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the buyer’s interests first and negotiate for the best price and terms for their client, the buyer. (The buyer may authorize sub-agents to represent him/her in purchasing property , however the buyer should be aware that wrongful action by the real estate agent or sub-agents may subject the buyer to legal liability for those wrongful actions.)
(NON-AGENT) FACILITATOR
When a real estate agent works as a facilitator that agent assist the seller and buyer in reaching an agreement but does not represent either the seller or buyer in the transaction. The facilitator and the broker with whom the facilitator is affiliated owe the seller and buyer a duty to present each property honestly and accurately by disclosing known material defects about the property and owe a duty to account for funds. Unless otherwise agreed, the facilitator has no duty to keep information received from a seller or buyer confidential. The role of the facilitator applies only to the seller and buyer in the particular property transaction involving the seller and buyer. Should the seller and buyer expressly agree a facilitators relationship be changed to become an exclusive agency relationship with either the seller or buyer.
DESIGNATED SELLER’S AND BUYER’S AGENT
A real estate agent can be designated by another real estate agent (the appointing or designating agent) to represent either the buyer or seller, provide the buyer or seller expressly agrees to such designation. the real estate agent once so designated is them the agent for either the buyer or seller who becomes their client. The designated agent owes the buyer or seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability., provided, however, that the agent must disclose known material defects in the real estate. The agent must put their client’s interests first and negotiate for the best price and terms for their client. In situations where the appointing agent designates another agent to represent the seller and an agent to represent the buyer then the appointing agent becomes a dual agent. Consequently a dual agent cannot satisfy fully the duties of loyalty, full disclosure, obedience to lawful instructions which is required of an exclusive seller or buyer agent., The written consent for designated agency must contain the information provided for in the regulations of the Massachusetts Board of Registration of Real Estate Brokers and Salespeople (board).
DUAL AGENT
A real estate agent may act as a dual agent representing both the seller and buyer in a transaction but only with the express and informed consent of both the seller and buyer. Written consent to dual agency must be obtained by the real estate agent prior to the execution of an offer to purchase a specific property. A dual agent shall be neutral with regard to any conflicting interest of the seller and buyer. Consequently a dual agent cannot satisfy fully the duties of loyalty, full disclosure, obedience to lawful instructions which is required of an exclusive seller or buyer agent. A dual agent does, however, still owe a duty of confidentiality of material information and accounting for funds. The written consent for dual agency must contain the information provided for in the regulations of the Massachusetts Board of Registration of Real Estate Brokers and Salespeople.
SUMMARY
Massachusetts law requires that real estate agents disclose their agency relationship to prospective buyers and sellers during which the individual’s specific needs are being discussed. The buyer or seller must be notified of the agency relationship, in writing, at their first personal meeting with the agent. Once you have been informed about agency relationships and the services that can be provided, you will be asked to acknowledge your understanding, in writing, in accordance with Massachusetts law. Please note: THE STATE-MANDATED DISCLOSURE YOU WILL RECIEVE IS NOT A CONTRACT.
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