My Real Estate Agent? Just Who Does the Real Estate Agent Represent?

Disclaimer: This article is not intended to be legal advice. Legal advice depends on each and every person’s particular circumstance. If you have a related issue, you should consult with your lawyer who practices law in your state regarding your particular circumstance. This article is for informational purposes only.

Whoosh… SLAM!

He marched into my office after he slammed the door shut behind him.

His face was grim and his fists were balled up. He plopped down in the chair across from my desk, and he took several deep breaths and exhaled slowly. After he calmed down, he looked at me and flashed an apologetic smile.

After a few seconds, he then demanded: “Just who did he represent?! I thought he was representing ME!

I smiled at him cautiously. Then, I carefully asked him: “Who? Who did you think was representing you?” “The Realtor!” he bellowed. “I was the buyer-and he called himself the buyer’s agent-but he was not representing me! He was supposed to be representing me!”

“What made you believe that he was representing you?” I asked.

“He’s a real estate agent. He was the agent for the buyer-and I was the buyer. That means he was representing me, right? He had to protect my interests over everyone else’s right?”

“It’s… not… that…. simple….” I replied slowly, attempting not to anger him further. “Let me see your contract with your real estate agent and all the disclosures your real estate gave to you.”

After reviewing his paperwork, I replied “No, your real estate agent was a transactional broker-he did not owe you a duty of loyalty. In other words, he did not have to put your interests ahead of his own.”

“You’ve got to be kidding!”

“No. I’m not….”

WHAT IS THE PROBLEM?

Many potential buyers and sellers work with real estate agents. These buyers and sellers hire realtors with the thought that these professionals “represent” them. These buyers and sellers believe that these professionals must protect their best interests over everyone else’s in the transaction.

However, this is simply not the law in states like Florida. In Florida, Florida Statutes §475.278 clearly provides that the presumption is that a realtor acts as a “transaction broker”-and does not owe a fiduciary duty to its client.

Just what is a fiduciary duty?

A fiduciary duty is the highest standard of care at either equity or law. A fiduciary (abbreviationfid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. Wikipedia, http://en.wikipedia.org/wiki/Fiduciary

Therefore, generally, since a realtor is not a fiduciary in states like Florida, a Florida realtor (1) is not legally required to be loyal to its customers, (2) can legally put its own interests ahead of its customers, and (3) can legally profit at the expense of its customers.

As we witnessed in the above scenario, since most of the public believes otherwise, a real property transaction can go unexpectedly wrong at the expense of the buyer and/or seller.

WHAT IS THE SOLUTION?

Don’t walk into the transaction confused or misinformed! Often, buyers and sellers believe that have something that they don’t actually have. This mistake in expectation can cause substantial problems in real property transactions. Therefore, know where you stand before deciding on a particular realtor:

  1. Before working with a real estate agent, understand what the law in your jurisdiction provides about the type of relationship you will enjoy with your real estate agent. In states like Florida, unless you require your realtor to agree otherwise in writing, your real estate may only represent the transaction–and not your best interests.
  2. Ask your realtor what the applicable state law provides about the potential relationship with him or her. If you don’t understand the real estate agent’s response, consider posing a few hypothetical questions to the real estate agent to attempt to gain an understanding.
  3. Decide what type of relationship you want to have with the realtor. In many instances, you may want your real estate agent to be loyal to you. However, sometimes, you may not. Your particular circumstances will dictate whether you may want a duty of loyalty from your real estate agent or not.
  4. Be prepared to negotiate exactly the type of relationship you want with the real estate agent. However, be forewarned: if you want a stronger relationship with your real estate agent, he or she may ask for more compensation. Therefore, be prepared to negotiate all of the terms of your relationship!
  5. Make sure that your agreement with your real estate agent is in writing. If you negotiate a specific relationship, it is probably a good idea to put it in writing.
  6. If you are unsure about your relationship and/or contract with your real estate agent, consider consulting with an attorney in your particular jurisdiction regarding the matter. Many attorneys in my jurisdiction charge less than $250 (the cost of a consultation) to review standard real estate contracts and to discuss a party’s rights in such transaction.
  7. Just because a realtor (1) is not legally required to be loyal to its customers, (2) can legally put its own interests ahead of its customers, and (3) can legally profit at the expense of its customers–doesn’t mean that he or she will! I have worked with many real estate professionals who have put their clients interests ahead of their own interests. Therefore, work hard to find a professional that you can trust one of largest assets with: your home!

Real Estate Agent 101 – How to Become a Real Estate Agent

The Great Recession has been over for several years and although many people still are feeling the strains of that protracted economic debacle, the housing market is improving.

Ask some estate agents and brokers if there is a bad time to be in real estate and they will tell you, “No.” The estate industry fluctuates with agents entering and exiting the business. The housing market is up, down, or stable. Those agents who are truly committed to helping people solve their property selling and buying concerns will ride with the ups and downs.

If you are a people person with dedication, ability, business-building time and a desire to be of service to your clients, now IS the time to become an estate agent. And now is the time to learn about how to become an agent.

Get a real estate education

To be an estate agent, you must study the business of real estate. Each state has basic requirements for licensure although the actual requirements vary from state to state. (Be sure to check your state’s real estate commission website for course and licensing requirements.) Courses can be completed at some community colleges and universities, online, or real estate schools. Some major realty firms have their own real estate training schools.

Your studies will include subjects in:

  • Sales and lease contracts
  • Valuation process, pricing properties
  • Legal issues
  • Human rights, fair housing
  • Taxes, assessments
  • Condominiums, cooperatives
  • Land use regulations
  • Law of agency
  • Commercial, investment properties
  • Client-broker relationship

Licensing

Once you have completed your basic studies, it will be time to prepare for your state licensing exam. Classroom-based and online comprehensive prep training classes are available. Some people don’t pass the licensing test the first time; the test can be re-taken as many times as you need to receive a passing grade.

When you feel ready to take the licensing exam, you must register with your local estate board and pay a fee. The computerized exam generally takes two hours, and covers 200 questions; the test is computer scored and you will receive your results immediately.

Qualified – now what?

Now that you have completed your basic coursework and passed the exam, you are required to find a “sponsoring broker of record”. This sponsor is the professional estate broker who will mentor you toward developing your own client list and referral portfolio. Working under sponsorship, you will help clients to buy, sell, or rent property. The commissions will be split between you and your mentor/sponsor.

Once you have secured sponsorship, you may apply for your estate license. You will be required to provide proof of your coursework, licensing test results, sponsorship, and pay the related licensing fee. Fingerprinting and a background check will be completed on you before your license is issued.

I am a real estate agent!

You may not complete any estate-related transactions until you receive your license. But once it arrives, you will begin developing your business, handling sales transactions and developing into the real estate agent you only imagined being a short while before.

You may eventually decide to focus on a particular area of real estate, become a real estate broker and own your own company, or develop a career with a major real estate firm. Many options and opportunities are waiting for you. Congratulations, estate agent.

Benefits of Using a Real Estate Agent

Deciding whether or not to use a real estate agent when you buy or sell your next home is a question that you might have asked yourself in the past. If you are not sure if it would be beneficial to use a Real Estate Agent, maybe this article can help.

The 2011 profile of homebuyers and sellers created and distributed by the National Association of Realtors shows that For Sale By Owners (FSBO’s) accounted for only 10% of home sales. Also the average FSBO listing sold for $150,000 while the average real estate agent assisted home sold for $215,000. While many people think that they can save time and money by selling the home on their own, this is often not the case. They also usually don’t always understand the trials that come along with selling their home FSBO. The Profile of Homebuyers and Sellers show the hardest tasks for a FSBO are:

• Understanding the housing market and listing their home at the right price.
• Understanding the paperwork involved and correctly filling everything out.
• Having enough time to devote to all aspects of the sale. This would be marketing the home, showing the home, responding to phone calls and emails about the home, etc.
• Determining whether or not they should spend extra money to prepare or fix up the home.
• Selling the home within a certain time frame.

Purchasing or selling a home is typically the largest investment most people will make in their lives. Whether you’re buying a new home or selling your existing home, a real estate agent can help protect your interests and potentially save you a substantial amount of money. We have compiled a list of benefits for both the homebuyer and seller.

Reasons To Use A Real Estate Agent When Buying A Home

1. A home buyer is usually not required to pay the real estate agent. When a real estate agent represents a home buyer on a purchase of a home, the commission earned by that agent is paid for by the seller of the home. The commission is taken out of the sales price.

2. Real estate agents have access to the Multiple Listing Service (MLS). The MLS is a serviced provide to real estate agent that gives them the most up today information on homes that are for sale in your area.
This service is not available to the general public. With the MLS an agent can find out information about the home like, taxes, how long it has been listed, price changes, special features on the home etc.

3. Agents have knowledge about the area. A real estate agent should be able to tell you about the neighborhood, schools, activities, recreational areas, etc. that are available in the areas that you are looking to purchase.

4. Agents know how to negotiate with the seller on your behalf. Negotiating the price of a home can often get very difficult. In today’s market it is not uncommon to ask for closing costs to be paid, repairs to be completed, home warranties, or inspections. Often real estate agents are able to negotiate items in the home like washers/dryers, refrigerators, or furniture into the sale of the property. Your real estate agents job is to make sure you get the best deal.

5. Agents keep the deal going. Once your offer has been accepted you will have a lot of tasks that need to be completed in a short amount of time. Your agent can help you keep track and orchestrate all the tasks required in the buying process.

Reasons To Use A Real Estate Agent When Selling A Home

1. A real estate agent is worth the commission. Once you actually consider all the things your agent will do for you from the time they list the home to the time it sells, the commission paid to that agent is usually money well spent. Often times an agent will be able to help you get your home sold much faster and for more money than you could have on your own.

2. Agents understand the current housing market. Choose an agent that lives in your area. This agent will understand the neighborhood, home values, benefits of the area, and the local competition.

3. Agents know how to sell your home. This is their job, and just like any other job if they don’t do a good job they get fired. A real estate agent is a professional and should know what they are doing. It is often a good idea to get an agents track record prior to letting them sell your home. Selling any home takes experience, dedication and knowledge in this market. Their job is to attract buyers and sell the home.

4. Agents know what will make houses sell. Your agent will be able to give you advice on what could be done to the home to get it sold quicker. Anything from staging the home to making minor repairs or upgrades.

5. Agents will put your home on the MLS. A real estate agent has access to the Multiple Listing Service (MLS). This tool is only available to real estate agents and allows them to get your home in front of thousands of other agents and buyers.

6. Agents know how to market your home. Your agent will know what to do to market your home for sale, whether that is an open house, internet exposure, flyers, caravans, etc.

7. Agents represent you to the end. Your agent will represent you from the time the home is listed to the time is closes escrow. An agent’s job is to make sure your interests are protected in the sale of the home and every thing negotiated in the contract is fulfilled. If a problem arises at or after closing your agent is there to help resolve any issues.