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Buyers Be Aware
Perhaps, it sounds a bit ominous but it is not as strong as BUYER BEWARE, but there is a new law in the Commonwealth of Massachusetts and all real estate buyers should really understand what it means and how it affects your home buying process.
Until fairly recently all cooperating offices (Co-brokerages) represented the sellers as sub agents with the exception of a very limited amount of Buyer Representative offices. That all changed with new legislation that requires disclosure of representation and sets types of representation offered. As in any law there were a lot of compromises made. It’s these compromises that all should be aware of.
Current Massachusetts law allows a traditional real estate firm to represent both sellers and buyers. Take a moment and let that sink in. Have you ever hired a lawyer to represent you? Has your lawyer also represented the other party? Well in rare cases a lawyer may do just that but it requires disclosure. In practice almost every lawyer we know will NOT represent both parties in a legal matter.
Well a traditional real estate firm can offer “exclusive buyer representation” even though they represent sellers. All they have to do is have all parties sign disclosure forms, which provide for “duel agency” or “designated duel agency”. These are exceptions to the rules and as you know every time you make an exception there are some tradeoffs.
It really sounds innocent. BUT Be Aware...
Before we go further representation requires that we follow “Fiduciary Duties” with our clients. These duties are founded in basic principals of law. They are as follows:
- Obedience: to your Lawful Instruction
- Loyalty: Your interests above ALL OTHERS including our own
- Disclosure: What I know, You know
- Confidentiality: What you say to us stays with us.
- Accountability: for your money and paperwork
- Reasonable Skill and Care
These principals work fine in a single agency relationship, but they have to be “adjusted” for dual or designated agency with special disclosure. It all sounds fine until you really look into how it works in practice.
example: Jimmy Sales works for a traditional real estate office and has just signed a exclusive representation contract with you to assist you in purchasing a new home. After your meeting Jimmy goes to his cubicle, picks up the phone and says something like the following to the other party. “ What a great day, I just met a great young couple looking for a home in our area. I have some listings that they might be interested in. I’m going to show them first. The best part is they have plenty of cash and are qualified to for a $600,000 mortgage.”
At first glance the only thing that seems wrong is that Jimmy is going to “steer” the client to listings that would benefit Jimmy financially. BUT....
Janie Lister and the rest of the sales force just overheard the entire conversation and now they have knowledge about the buyers financial capabilities. They will be able to work AGAINST the buyers interest when presenting offers to the sellers because of this information. IT”S THEIR DUTY... (What I know, You Know) They are not bound by any agreement to the buyer.
We are not fabricating a fairy tale with this example. We have seen it happen mostly innocently and out of excitement, but it happens and in some cases it will hurt the Buyer Client.
It’s almost impossible to stop human nature and it’s very difficult to establish office policies and filing systems to protect confidentiality.
This is a flaw in our system
In an office that ONLY represents Buyers those dangers are eliminated. All our clients are buyers. All our associates clients are buyers. If your buyer representative is not available when you call or come in you are free to discuss any issue with any representative available if you desire because they do not have a potential to represent the “other side” tomorrow.
Sullivan Footer Real Estate is proud to be an office that was founded on the principal of Buyer Client Representation EXCLUSIVELY.
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