Buying a first home is a very exciting time in a person's life. Whether you are coming from an apartment or a basement bedroom in your parent's house. the idea of venturing into owning real estate for the first time is quite an undertaking. With all the online shopping tool and real estate sites, a homebuyer can virtually tour many homes and even be pre-approved for a mortgage without setting foot outside your current residence. Many home buyers might question why a REALTOR® would even be required at all. Of course this course of action could work for you until want to see a home in person or write up an offer. But, did you realize that calling the listing agent of the property can put you at a HUGE negotiating disadvantage? It all comes down to understanding the concept of agency.
In Minnesota, real estate brokers and agents are required to disclose the type of working relationship they have with parties in a real estate transaction. Homebuyers have different types of relationships available to them. It is important to understand these before you call a real estate agent to see a home or sign a purchase agreement for a home. These relationships are called “agency” relationships and carry with them legal, fiduciary duties and responsibilities for the broker/agent as well as for buyers and sellers.
The 3 most common agency agreements are the buyer's agent, seller's agent and dual agent.
Buyer’s Agent
A Buyer’s Agent acts solely on behalf of the buyer and owes duties to the buyer including the utmost good faith, loyalty, and fidelity. The agent will negotiate on behalf of, and act as an advocate for, the buyer. The buyer is legally responsible for the actions of the agent when that agent is acting within the scope of the agency. The agent must disclose to sellers all adverse material facts concerning the buyer’s financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property. A separate written buyers’ agreement or contract is required which sets forth the duties and obligations of the parties.
Seller’s
Agent
A
Seller’s Agent acts solely on behalf of the seller and owes duties to the
seller which includes the utmost good faith, loyalty, and fidelity. The agent will negotiate on behalf of, and
act as an advocate for; the seller. The
seller is legally responsible for the actions of the agent when that agent is
acting within the scope of the agency.
The agent must disclose to buyers all adverse material facts
about the property that are known by the broker.
A separate written listing agreement or contract is required which sets forth the
duties and obligations of the parties.
In both buyer and seller agency, the following fiduciary duties are owed to the client:
In both buyer and seller agency, the following fiduciary duties are owed to the client:
FIDUCIARY
DUTIES
Loyalty
Obedience
Disclosure
Confidentiality
Reasonable
Care
Accounting
DUAL Agent
A dual agency is created when both the buyer and seller have signed representation agreements with the same broker. The parties may have two different salespersons or they may be the same person. All duties and obligations to the buyers and sellers remain the same in a dual agency.
Because it is impossible to disclose all information AND be confidential at the same time, dual agency must be disclosed and agreed to in writing. All material facts regarding the property must be disclosed regardless of agency.
Why is Agency Important to a Homebuyer?
When you look for a home, every house listed on the Multiple Listing Service (MLS) has an agreement between the seller and listing broker all ready in place. If a buyer does not sign a contract and attends an open house or calls the listing agent, the nice REALTOR(R) asking all the questions about your financial ability WILL share everything you say with their seller. They are contractually obligated to do so.
But when a buyer signs a contract with their own REALTOR® before viewing any homes, their private information stays private.
AND the best part for MY buyers is that signing a contract does not cost ANYTHING! All fees are paid at the closing and the commission is paid for from the seller so there is NO OUT of POCKET cost to have a REALTOR® in your corner.
Still have Homebuying Questions? Email, Call or Text me...I can help! If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of Boardman Realty, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District. Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.
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