By: Marla Lewis, President, HBREA
The last thing you want during a real estate transaction is a replay of the famous Abbott and Costello Who’s on First? routine. Not only is it helpful to understand all the players’ roles during the process, but this knowledge can help you determine what information to share with which parties. Here are the basics.
Customer or client?
If you are working with a real estate agent to buy property, you are that agent’s client, right? Not necessarily. You might be a client or you could be a customer. While these terms sound similar, don’t think they are interchangeable. They connote different responsibilities on behalf of the agent.
You are a client only when you hire an agent to represent you. Buyers often sign a written agreement when hiring a buyer’s agent. Your buyer’s agent can help you search for properties, give you information about financing, assist you in preparing offers and other related matters.
However, an agent can also help you with these matters even if you don’t hire that person to represent you. In this case, you are a customer rather than a client. For example, you might work with the selling agent (also called a listing agent) of a home. Typically, the listing agent will provide you information and assist you without offering opinions and advice. Keep in mind there’s a big difference between giving information and giving advice.
The listing agent owes his or her primary loyalty to the seller. As such, you don’t want to share any information that you wouldn’t want the seller to know. For example, if you make an offer of $200,000 but are willing to go as high as $225,000, you should not tell the listing agent. The listing agent would be obligated to pass this information on to his or her client.
You also might work with what’s called a sub-agent. A sub-agent also represents the property owner in cooperation with the listing agent. You also are considered a customer when working with a sub-agent, so don’t lose sight that the sub-agent represents the seller.
On the other hand, if you hire a buyer’s agent, that person must put your interests above all others. So if your buyer’s agent finds out that the seller is moving to another state this month and has received no offers thus far, you can expect your agent to share that information with you.
Regardless of whether you are a client or a customer, all agents must treat you honestly.
How can you be sure who’s who?
Real estate law in Texas requires a broker to provide you with a form, Information About Brokerage Services, at the first substantive meeting between the two of you. This form spells out the differences between listing agents, sub-agents, and buyer’s agents. The form also outlines their duties to you. If you have any doubt about what your relationship is with an agent, be sure to clarify this before proceeding.
It is possible for one broker to serve as an intermediary between the buyer and seller on the same transaction, as long as that broker complies with certain legal provisions. An intermediary acts in a manner that does not favor one side over the other. The parties must give written consent to such an agreement.
The intermediary may not disclose certain information to the other party, such as confidential details or anything one of the parties tells the broker not to disclose. The broker also must not disclose whether the seller will accept less than his asking price or whether the buyer is willing to pay more than the amount written in his offer, unless this obligation is waived by the seller or buyer in writing.
Regardless of the choice you make about agency representation, I recommend you work with agents and brokers who are Realtors. Realtors go beyond the legal requirements by adhering to a code of professional conduct. To find a Realtor and to check out real estate listings across the entire state of Texas, be sure to visit HAR.com.