Who Represents You?
Many years ago a study was done, in which buyers were asked if they thought the real estate salesperson they were working with represented them. At the time, the only legal option most agents across the country had was to represent the seller, EVEN if they were working with the buyer, yet a substantial majority of the buyers surveyed said that they thought their agent was representing them.
Buyers and their agents now have many more options as to how they can work with each other, but a great deal of confusion still remains when it comes to recognizing whether or not you are being represented. How this is handled varies considerably from state to state, but there are some key things that you should know no matter where you are.
The first thing that every buyer (and seller) should know is that the listing agent on a property MUST represent the seller and look out for the seller's best interest while they are the listing agent. This means that the listing agent cannot help a buyer get the best possible deal on that property. Many buyers go to the listing agent deliberately, using the logic that the listing agent knows more about the property, but an agent representing the buyer can get that same information from the listing agent while simultaneously looking out for the buyer's best interest.
Buyers and sellers should also know that the salesperson must disclose the options each party has concerning representation, whether or not a party is being represented and who is being represented. MAKE SURE YOUR SALESPERSON DOES THIS! Don't let your salesperson "save you time" by skipping over this explanation. This is something a buyer or seller needs to know before they do anything with that salesperson. If a consumer says the wrong thing in front of a salesperson that is representing the other party, they may lose a key advantage in their negotiations. Not knowing who represents you could cost you thousands of dollars!
If the agent is considered to be representing the seller, they will be required to disclose any information about the buyer that affects negotiations. This means that everything an un-represented buyer says can and will be used against them! Once a buyer starts to feel comfortable around an agent, they will say all kinds of things that could hurt them in negotiations. If the buyer has to buy quickly, if they always try a low offer to see if the seller will take it or if the buyer could afford to pay a lot more would all be pieces of information that the agent would have to pass on to the seller.
Buyers should not be afraid to sign a disclosure form. In most states, the agent is required by law to have buyers sign this type of document. Not everything requiring a signature is a contract. The important thing for a buyer to do is to read and make sure they understand a document before they sign it. If a document does not say anything that obligates the buyer to work with an agent, and if the document says that it is a disclosure, then it's not a contract.
In addition to the disclosure of who is being represented, agents must also disclose to any buyer the condition of the property that they are purchasing. This is true even if the agent is considered to be representing the seller. The seller must disclose any hidden defect on the property. In many states this disclosure must be made in writing, or the sellers may be given the option of signing a disclaimer, which says that they are not going to put the information in writing.
Representation is a complicated issue which should not be taken lightly. All consumers should make sure they fully understand whether an agent is looking out for their best interest, or is legally obligated to look out for the other party. Anyone who does not understand should ask the agent to explain it to them again, so they are clear as to what they can do or say with the agent. Failure to fully understand can be very costly.