Pittsburgh Pennsylvania Home Buyer FAQs...
What Types of Agency Relationships Am I Entitled To For Representation?
Traditional Seller Agency…
Historically throughout the country, real estate agents had been representing only the seller in real estate transactions. That meant that all the fiduciary duties were owed to the seller, even when the agent was working with a buyer.
This was accomplished through a system called Sub-Agency. The real estate company that lists the property is called the “Listing Broker”. The real estate company working with the buyer is called the “Sub-Agent or Co-Operating Broker” because that company actually works for the “Listing Broker”. Although the buyer is provided service by a real estate agent, the buyer in this arrangement has no true “Agency Representation”.
The agency duties are owed directly to the seller in all transactions where there is no “Buyer Agency Agreement”. This is true of most real estate companies in the United States. Buyers in this arrangement must be careful not to divulge any information that they do not want the seller to know. (I.e. the highest price they will pay for the property.)
This system of “Seller Agency” has worked for many years. However, buyers without a “Buyer Agency Agreement” should be aware that agents are representing the seller’s best interests, and they should not become reliant on the agent for assistance in determining an offering price that is other than the asking price, or for any other advice that might not be in the seller’s best interest.
Recently buyers have become aware that real estate agents have considerable knowledge that could be of great assistance in deciding which property to purchase. In many areas of the country “Buyer Agency” has become as prevalent as the traditional seller and sub-agency type of business.
When a buyer is represented by an agent, all the fiduciary duties are owed by the agent to the buyer and not the seller. The buyer has the freedom to discuss the value of properties, negotiating strategies and personal finances with the agent. The buyer can obtain the opinion of the agent concerning the condition of the property, the effect of improvements, the seller’s motivation for selling, and a variety of information which a seller’s agent cannot provide.
A buyer’s agent will commit to make every reasonable effort to locate the property described by the buyer. This includes searching for all homes that may be available for sale, including those not listed with a real estate company.
Although the traditional agent will work hard to find the perfect property to meet your needs, the traditional agent has some limitations because of the duties owed to their principle, the seller.
Dual Agency With Informed Consent…
RE/MAX Realty Centre, a licensed Real Estate Broker, lists properties for sale, thereby forming an “Agency Relationship” with the seller. The seller’s agent is obligated to put the seller’s interest first.
RE/MAX Realty Centre may also form an “Agency Relationship” with a buyer. The buyer’s agent is then obligated to put the buyer’s interests first. One example of a “Buyer Agency” is an agent working with a close relative, friend or past client. It is easy to understand how such a buyer would expect the agent to give advice and put the buyer’s interest first.
When a buyer, who has formed an “Agency Relationship” with a broker, is interested in a home listed for sale by the same broker, a “Dual Agency” is created. Technically, “Dual Agency” arises when one broker has a relationship with two clients who have opposing goals (buyer & seller). When a dual agency is formed, the broker and agent are required to notify each party and receive written consent of the situation. The broker and agent must not disclose any information that would create a negotiating advantage for either party. The agent must treat the interests of the buyer and seller equally.
Pennsylvania Law Requires…
That a real estate agent must explain his/her company’s agency policy before showing you homes. The law also requires that you consent to the agency relationship in writing and receive a copy of the “Consumer Notice” disclosure.
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