Why Hire a Buyer's Agent?

So why hire a buyer's agent? Can't you save money going directly to the listing agent?

Not likely, since the listing agent's fiduciary responsibility is to the Seller. So what exactly does this mean? Who is representing whom in a real estate transaction? Let's check the Washington State real estate law on this topic:

RCW 18.86.030: DUTIES OF THE LICENSEE

“1(d) To disclose all existing material facts known by the licensee and not apparent or readily ascertainable to a party; provided that this subsection shall not be construed to imply any duty to investigate matters that the licensee has not agreed to investigate;

(2) Unless otherwise agreed, a licensee owes no duty to conduct an independent inspection of the property or to conduct an independent investigation of ether party’s financial condition, and owes no duty to independently verify the accuracy or completeness of any statement made by ether party or by any source reasonably believed by the licensee to be reliable.”


RCW 18.86.040: DUTIES OF THE SELLER’S AGENT

“1(a) To be loyal to the seller by taking no action that is adverse or detrimental to the seller’s interest in a transaction.”


RCW 18.86.050: DUTIES OF THE BUYER’S AGENT

“1(a) To be loyal to the buyer by taking no action that is adverse or detrimental to the buyer’s interest in a transaction;

(c) To advise the buyer to seek expert advice on matters relating to the transaction that are beyond the agent’s expertise.”


RCW 18.86.060: DUTIES OF THE DUAL AGENT

“2(a) To take no action that is adverse or detrimental to either party’s interest in a transaction;

(c) To advise both parties to seek expert advice on matters relating to the transaction that are beyond the dual agent’s expertise…”


AGENCY LAW IN RELATION TO MATERIAL FACTS…

Brokers walk a fine line when it comes to disclosing material facts. Listing and selling Brokers carry the burden of loyalty to their client; however, they also have a responsibility to be honest to all parties in the transaction. The duty of disclosure is slightly different, depending on whom the Broker represents.

For Brokers who represent the seller, there is no duty to investigate; the Listing Broker may reasonably rely on information provided by the seller. That is, assuming the information provided by the seller is reasonable knowledge and intelligence expected of a licensed real estate broker.

If a Broker has no personal knowledge of a specific property other than the information provided by the seller, the Broker must read the disclosure carefully to determine that it is accurate, based on the Broker’s own general real estate knowledge or personal knowledge of the property.


PRACTICE POINTERS FOR THE LISTING BROKER…

If a Listing Broker is or becomes aware of a material fact regarding the property, that fact must be disclosed to the buyer or any future buyer as long as the agent is personally involved in that transaction. If the seller agrees, that fact may be added to the seller disclosure statement.

Whether they agree or not, the material fact must be disclosed in writing to all buyers, as long as the broker is involved in that transaction. Listing Brokers have no obligation to encourage buyers to investigate the condition of a property.

A “material fact” is any information that substantially adversely affects the value of the property or a party’s ability to perform its obligation in a real estate transaction, or operates to materially impair or defeat the purpose of the transaction.


PRACTICE POINTERS FOR SELLING BROKERS…

For Brokers who represent the buyer, there is a duty to encourage buyers to investigate the condition of a property and to make the transaction conditional of their approval of the inspection. In addition, buyer representatives should discuss the two (2) fallacies regarding the seller disclosure statement mentioned above and repeated below:
1. Seller disclosure statements create a false sense of security for buyers;
2. The buyer will prevail in court if the seller disclosure statement proves to be inaccurate.


Like the Listing Broker, Selling Brokers must disclose the existence of the material facts regarding a property if they have knowledge of that material fact. The disclosure must be made in writing. They have no duty to investigate, but seller representatives have an absolute obligation to read the seller disclosure statement in order to determine if it is complete and if it is accurate, based on the knowledge of the buyer representative or the seller, as they could be a prior owner or a prior listing agent.


LASTLY, PRACTICE POINTERS FOR DUAL AGENTS [AKA DUAL BROKERS]

Dual agents have an obligation to favor neither party. This is “middle of the road” requirements, but the road is not straight. For instance, based on agency law, a Broker must recommend to buyers that they seek professional advice on matters that are beyond the broker’s expertise.

Therefore, the dual Broker should recommend that the buyer enlist the services of a professional inspector to evaluate the condition of the property.

However, once the inspection is complete, the dual broker may not assist the buyer or the seller in negotiating any repairs or modifications to the contract in accordance with State Form 35R. A dual broker is not allowed to help the seller limit their obligation to the buyer, or offer a negotiation strategy based on their experience and current market conditions.

The dual broker may not assist the buyer in obtaining a favorable modification to the terms of the agreement based on the inspection, nor are they able to negotiate on the buyer’s behalf to obtain a favorable agreement with the seller regarding the repair.

So know who is representing you, and make sure they are looking out for your best interests!

Happy Investing!

Guest blog courtesy of McFerran & Burn, www.mbs-shortsales.com