Excellence with a Smile

 

 

AGENCY AND THE CONSUMER

 


Professional real estate agents know what the consumer doesn't:  having an agent on your side can save you money, lessen stress, and prevent mistakes when buying or selling a home.  Regrettably, experience shows that most customers don't understand the importance of agency until something goes wrong with their transaction!  Informed choice of representation by a licensed real estate agent can make a HUGE difference in your purchase or sale.  Let's explore why.

AGENT or SALESPERSON

Although real estate agents are called salespeople in Minnesota, agency is actually very different from sales.  A traditional salesperson's job is to convince you to buy a product whether you need/want it or not.  Real estate agents perform a contrasting role.  They are legally required to negotiate for the best price and terms for their clients, keep their clients' welfare as priority, and use their expertise and training to expedite as smooth and beneficial a transaction as possible.  Their primary function is to work in their CLIENTS' best interests, NOT to sell houses.

 

AGENCY DEFINED

Agency is a LEGALLY defined agreement made in writing between two parties (the agent and the client) which forms a FIDUCIARY RELATIONSHIP.  A fiduciary relationship is a special legal affiliation in which one person (the agent) acts FOR or ON BEHALF OF another person (the client) in dealing with a third party (the buyer for your house or the seller of the house you want to buy).  The agency relationship is created by a contract for representation signed by you and your agent (on behalf of his/her whole company).  With the formation of the agency contract, your agent works on YOUR BEHALF in the real estate transaction.

As your representative, your agent is legally mandated to give you the following fiduciary duties:

  • Loyalty - act only in your best interest
  • Obedience - carry out all of your lawful instructions
  • Disclosure - tell you about all material facts of which s/he has knowledge and which might impact your use and enjoyment of the property
  • Confidentiality - keep all of your confidential information private unless it is a material fact that must legally be disclosed
  • Reasonable care - use all of his/her skills, knowledge, training, and experience to carefully perform duties on your behalf
  • Accounting - account for any property or money received as an agent

Until a contract for representation is signed, you are only a customer and will only receive confidentiality from the agent.  To receive full representation with all the fiduciary duties listed above, you and your agent must sign a contract for representation.

 

THE SHIFT IN AGENCY

The mid-1980's was a pivotal time in real estate.  Before this time, ALL real estate agents represented THE SELLER.  Even the agents who worked with buyers, and didn't know the sellers, were representing the sellers!  When buyers realized they had no representation, law suits were filed for non-disclosure of the agency relationship with the seller.  This litigation precipitated changes in how agency was disclosed to the consumer and made representation for the buyer possible.  Explanation of how an agent can represent a client now has to be disclosed BEFORE a contract is signed.  Now both buyers and sellers can make informed choices about how they want an agent to represent them.

 

 

In Minnesota, all agents are required to review the form "Agency Relationships in Real Estate Transactions" with prospective clients early in the relationship and BEFORE a contract for representaion is signed.  An agent can represent their client as

  • Seller's Broker:  The broker or salesperson who lists the property and acts in the seller's best interests.
  • Subagent:  An agent in the listing company who is working with a buyer as a customer instead of a client.  In this case, the agent must represent the seller and act in the seller's best interest and disclose any information he knows about the buyer to the seller!
  • Buyer's Broker:  The broker or salesperson who acts on behalf of the buyer.
  • Dual Agent:  This role occurs when one or two agents from the same company represent both the buyer and the seller of the same house.  Both buyer and seller must agree to accept dual agency once the limitations are understood.  The Minnesota agency disclosure states:  "This role limits the level of representation the broker and salesperson can provide, and prohibits them from acting exclusively for either party . . . Dual agents may not advocate for one party to the detriment of the other."  (Minnesota Association of Realtors' form:  Agency Relationships in Real Estate Transactions, 8/04).  Before agreeing to dual agency, explore how it will impact your transaction.  Ask your agent if s/he will be able to advise you on price and terms; convey information known about the other client which might help you in your negotiation; give advice after the closing if something goes wrong; etc.  The answers to these questions can help you decide if dual agency is okay for you!
  • Facilitator:  When there is no contract for representation, the agent is acting as a facilitator and does not owe the customer any fiduciary duties except confidentiality.  In this capacity, the agent can provide services for you, but no representation.

 

BUYER REPRESENTATION

DID YOU KNOW:

  • Companies listing homes on the Multiple Listing Service (MLS) agree to share a portion of their commission with the buyers' agent and company?
  • Whether you have a buyer's agent or not, the purchase price includes the commission that would be paid to the buyer's agent?
  • Buying a home without a buyer's agent will NOT reduce the amount of commission the seller has to pay or the amount paid for the house?
  • The real estate agent hosting an open house (new construction OR existing homes) is working on behalf of the seller?  That means the agent conducting the open house is LEGALLY committed to get the highest price FOR THE SELLER; negotiate the best terms FOR THE SELLER; obey all lawful instructions OF THE SELLER; be loyal TO THE SELLER; and use all his/her experience, training, and talent to BENEFIT THE SELLER!  If you visit an open house without an agent on YOUR side, you may disclose information that benefits the seller's negotiation!
  • Buyers who have agents representing them usually get better terms and conditions in the purchase than those who do not?  The agent's experience and training help the buyer to know if price is commensurate with condition of the home and location; whether to ask for items to be included in the purchase; what typically is expected for possession date, payment of taxes, payment of assessments, inspection timing and requests, etc.

If you're a buyer, don't you want someone to work on YOUR behalf?  Once a contract for buyer's repesentation is signed, the buyer's REALTOR® is legally committed to get the best price FOR THE BUYER; negotiate the best terms FOR THE BUYER; obey all lawful instructions OF THE BUYER; be loyal TO THE BUYER; and use all his/her experience, training, and talent to BENEFIT THE BUYER!  A REALTOR® on your side can protect you from mistakes, save you money, expedite the purchase of your home, and generally lessen the transaction stress.  Since the purchase price of the home already includes a commission for the buyer's agent, why not hire a REALTOR® for your side, too?

 

MY AGENCY COMMITMENT TO SELLERS

To sellers who hire me as their REALTOR®, I make the following commitment:

  • I will use all of my training, skills, knowledge, experience, and creativity on YOUR behalf.
  • I will not perform as a dual agent.  Since dual agency requires complete neutrality from the agents on both the buyer's and the seller's side, it really means the clients are getting NO representation.  As your agent, I do not want to remain neutral.  I want to work very hard to get you the best sale terms possible.
  • I will give you a comparable market analysis to help in pricing your home.
  • I will share my knowledge of current market conditions and how the market may impact your sale.
  • I will give you recommendations for professional point of sale inspectors when needed.
  • I will give you staging suggestions to help you get your maximum sale price.
  • I will discuss security procedures to protect your home during showings.
  • I will provide the correct forms and required disclosures that apply to your transaction.
  • I will keep good conversation logs and an organized file in case questions arise.
  • I will request feedback from agents who have shown your home and communicate that to you.
  • I will use my expertise to help you evaluate the terms of the purchase agreement.
  • I will help you separate the emotional from the goal of the transaction.
  • I will guide you through negotiations for any repair requests made as a result of the buyers' private inspection.
  • I will explain the sale process.
  • I will arrange for title work and a closing company to complete the transaction.
  • I will help you shop for your new home!

 

MY AGENCY COMMITMENT TO BUYERS

To buyers who hire me as their REALTOR®, I make the following commitment:

  • I will use all my training, skills, knowledge, experience and creativity on YOUR behalf.
  • I will not perform as a dual agent.  Since dual agency requires complete neutrality from the agents on both the buyers' and the sellers' side, it really means the clients are getting no representation.  As your agent, I do not want to remain neutral.  I want to work very hard to get you the best purchase terms possible.
  • I will send daily e-mails of new listings that meet your criteria.
    I will advise you on the price of your chosen home.
  • I will help you to remain focused on your needs in a home.  Occasionally decorating or something unique in a home distracts a client from a deficiency the home has (too few bedrooms, no garage, no yard, busy street, etc.).  A gentle reminder helps keep you on track or triggers an adjustment in your search criteria.
  • I will share my knowledge of current market conditions and how those conditions may impact your purchase.
  • I will provide the current purchase agreement forms and supporting addendums and fill them out according to your instructions.
  • I will give recommendations of professional private home inspectors.
  • I will help you frame any repair requests as a result of your private home inspection.
  • I will keep good conversation logs and an organized file in case questions arise.
  • I will explain the process.
  • I will arrange for title work and a closing company to complete the transaction.
  • I will help you sell your current home!

 

For

"Excellence with a Smile"

e-mail Bonnie or call 612-419-1829

Bonnie Erickson, REALTOR® in Minneapolis/St. Paul, Minnesota, provides single agency representation to buy or sell homes and rental property in the following Minnesota cities: Minneapolis, St. Paul, Andover, Anoka, Apple Valley, Arden Hills, Brooklyn Center, Brooklyn Park, Blaine, Bloomington, Burnsville, Cottage Grove, Coon Rapids, Columbia Heights, Champlin, Crystal, Eagan, Edina, Eden Prairie, Excelsior, Farmington, Falcon Heights, Fridley, Golden Valley, Hopkins, Inver Grove Heights, Lake Elmo, Lauderdale, Lilydale, Medicine Lake, Mendota, Maplewood, Mendota Heights, Mahtomedi, Maple Grove, Moundsview, New Brighton, New Hope, North Oaks, North St. Paul, Oak Grove, Osseo, Plymouth, Richfield, Rosemount, Robbinsdale, Roseville, Saint Anthony, Savage, Shakopee, St. Louis Park, Spring Lake Park, South St. Paul, Shoreview, Sunfish Lake, Vadnais Heights, White Bear Lake, White Bear Township, Woodbury, Willernie, and West St. Paul.