I was on a teleconference call last week where the topic was agency,specifically with buyers. This is because when a home is listed for sale with a realtor,typically a realtor will have the seller sign listing papers including understanding who the agent represents. I don't know a realtor who would list a house for sale without a formal listing agreement.
The challenge comes into play with buyers and buyer agency. There wasn't always buyer agency and so many realtors who have been in the business 20+ years out of habit may not explain who the agent represents and what buyer agency is/is not. There are agents today who are reluctant to explain agency to their clients.I believe there are 2 reasons for this. First, agents fear losing buyers to agents who don't have buyers sign these documents. Second, many of today's home buyers are told not to sign any agreements "tying them down". On top of that,they may have previously worked with a realtor who didn't explain to them Understanding Who the Agent Represents and the Buyer Agency Agreement.
I learned recently of a situation where the listing agent for a home in Maryland found the buyer for the home he was selling. So,the listing agent was "working both sides of the deal",if you were. In Maryland a listing agent cannot be the agent of the home buyer...the home buyer has to decline buyer agency on the home.. In Washington,DC a listing agent can be the buyer agent for the home she or he is listing.
The buyer had remorse. Apparently it was beyond fear of purchasing,but rather not wanting that specific house. I say that because shortly after settlement the buyer put the home on the market for sale with a different realtor with no home improvements and at a similar price to what it was listed at. The buyer is going to lose money in the sale but is selling it anyway because they don't want the house.
Now,not being involved in the transaction,there are ways that the buyer could have backed out of the contract. One way the buyer could have walked on the deal, and this is without seeing the contract, was on the inspection. The buyer would even get the earnest money deposit back if it was within contingency period. In a worst case scenario the buyers could have not shown up at settlement and forfeited their earnest money deposit. I take that back...in the worst case the buyers could have gone through with the sale and turned around and sold the house again without improvements to it and lost money in the deal. There are/might be other ways the buyer could have walked on the contract,but without seeing the contract, I don't wish to speculate.
The point which I wish to articulate is that in Maryland,a listing agent's fiduciary responsibility is to the seller, so if you are the buyer for the listing and your agent is also the listing agent, you aren't getting representation according to Maryland real estate law. You are getting a secretary who writes down what the buyer tells him or her,treats the buyer "fairly" and doesn't represent the buyer's interests. If the buyers had buyer reperesentation, a buyer agent,and they told the buyer agent that they wanted to get out of the deal,the buyer agent would have/should have discussed strategy on technical ways they could get out of the contract or negotiate with the seller. If the buyer wanted representation,he could have asked the listing agent to refer him to another agent,even an agent in his brokerage. Even though the agents are in the same brokerage,called "dual agency" in Maryland,the listing agent is only representing the seller's interest, and the buyer agent is representing the buyer's interest. The listing agent's job was to push the transaction and settlement through since the seller wanted the house sold and to move to the next phase of his life. The seller didn't want to lose a buyer.
In my heart of hearts, upfront the buyers/now sellers probably didn't think much of having an agent working both sides of the deal and having representation until they were in too deep. They obviously think they got taken advantage of because they listed the home with another realtor. Legally, the listing agent fulfilled his duties to the sellers,but it is an unfortunate situation that could have been resolved earlier if the listing agent (1)either did a good job explaining agency and that in this deal he could represent the buyer and the buyer was ok with that or (2)ask the buyer if he wanted another realtor to represent his interests on this transaction.
Another recent situation. I am now working with a buyer who was previously with another agent. The buyer actually almost bought a house with the other agent,but lost in a bid. During negotiations the buyer starting asking the agent questions, felt some concern regarding their interests and finally asked the agent who the agent was representing. The agent said that he was representing the seller. Agency may work differently by juristiction, and my guess is that the agent didn't go through with the buyers on Understanding Who the Agent Represents and Buyer Agency.
Is it possible for there to be real estate transactions,where both the seller and the buyer feel they get good fair deals when one realtor is working both sides of the deal? Yes,but only when both sides understand agency and no issues arise during the transaction.
A word to the wise. With what all of your friends tell you,what you read in the newspaper and on the internet and what you may have personally experienced in a real estate transaction,don't assume you understand who the agent represents and how agency currently works in your juristiction. As much as you may be skeptical about reading and signing documents,be skeptical when there isn't a discussion about Understanding Who the Agent Represents and agency agreements until a contract is written.
If you would like to talk more about agency in Maryland and Washington DC as well as discuss the market,I'd be delighted to hear from you.
Life is good!
Adam
Cell: 301-943-4370
adambashein@mris.com
www.basheinhomes.info
Adam Bashein
Licensed in MD & DC
Weichert Realtors
7821 Tuckerman Lane
Potomac, MD 20854
301-718-4100 ext. 132
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