It’s Time To Hire An Agent…

When a homeowner decides it is time to sell their home, they typically interview 2 – 4 REALTORS® from several different companies to hire an agent. They are looking for an agent to represent them and someone that will do an effective job with marketing their home and negotiating an offer.

What I see often is when someone is looking to buy a home, why is it they end up with a REALTOR® by total accident?  The question begs to ask, why don’t buyers search the same way as if they were selling their home like sellers do?

Home buyers typically end up with a REALTOR® after calling off an advertisement that will give a brief summary of a home, price and of course no details about the REALTOR® or Broker.

Does that matter or make a difference?

There is a difference between Listing Agents and Selling Agents. In fact there is a lot of controversy about whether it’s wise to work with a listing agent when buying the house you called on or stopped into the open house. I have personally represented both parties before in a dual agency situation and even though there is a fine line you walk, it can be done.  The agent owes certain duties to both parties such as care, confidentiality, full disclosure and accurate accounting to both parties.  Is it tough, yes, I won’t deny that. Can it be done, yes it can. Can there be benefits for an agent acting as a dual agent, some. However, we can go into that at another time.

First and foremost, it’s important to know that before a Seller/Landlord (“Seller”) or a Buyer/Tenant (“Buyer”) enters into a discussion with a real estate broker or licensee affiliated with a broker, the Seller and the Buyer should understand what type of agency relationship or representation they will have with the broker in the transaction.

If you are being representing by the listing agent and buying the house you stopped in at an open house, chances are you will end up signing a ‘dual agency’ form known as the Agency Disclosure and Election (Arizona form).

I would bet most Brokers would lean in the direction to avoid ‘dual agency’ all together and say, ‘no’.  I can’t speak for all brokers but most would (at least in Arizona) not want the liability of dual agency. I know some brokers that do not allow it all together.

However, the laws of agency relationship differ from state to state and are continually evolving.  Your real estate professional can explain your local state agency rulings.  You do want to be sure to understand and be comfortable with the choices involved when you hire the services of an agent.

So, like a coin there are two sides and two sides to every sale.  The listing side and the selling side.  Most deals have an agent representing each side of the transaction.  The seller’s side is represented by the listing agent.  The buyer’s side is represented by the selling agent, also known as the buyer’s agent.

As agents/brokers in Arizona we can work with both buyers and sellers as long as both parties are aware of who represents who.  All buyers and sellers will be required to sign a Real Estate Agency Disclosure and Election immediately when you begin working with your agent and/or broker.

See below the description by the Arizona Association of REALTOSR® of the required Agency Disclosure by all Arizona Licensed Agents/Brokers.

This form is for use by agents with either buyers or sellers. It describes the different types of agency relationships (seller, buyer, limited dual) and offers a section for the seller or buyer to elect which type of relationship they would like to have with that agent. It is not an employment agreement. For example, an employment agreement with a seller is a listing (which AAR does not have- local associations do); an employment agreement with the buyer could be the AAR Right to (Buyer-Broker Exclusive Employment Agreement). The same form should not be signed by both a buyer and a seller. Rev. 1/06

Agents can work with both buyers and sellers, but typically they tend to focus their efforts on one or the other. Some agents exclusively work with either the buyer or seller.

Long ago, all residential real estate agents represented the home seller.  Both listing agent who listed the home and the agent who found the buyer worked for the seller.  The agent who helped the buyer find the home actually worked for the seller as a “subagent” of the listing agent.  Under that traditional system, all agents were legally bound to represent the seller and the buyer had no representation.  Now buyers have a choice.

So, what should you do?

I recommend that you take as much effort to hire the right real estate agent as you would for any other professional. Ask several questions about experience, education, marketing, their familiarity of the area in which you desire to live. Ask them if they abide by the general principles of the REALTORS® Code Of Ethics.

Buying a home is probably the most important purchase you’ll ever make.  Do you want to go it alone?  I would think it makes the most sense to find an agent by design and not by accident!

The following are examples of Agency Disclosure:

• The Company represents the seller/landlord exclusively when they are the listing agent but not the selling agent.
• The Company represents the buyer/tenant exclusively when they are the selling/leasing agent and not the listing agent.
• The Company represents both the seller/landlord and buyer/tenant as a dual agent (Limited Representation Disclosure Form required) when there is only one Sales Associate or two Sales Associates from the company. Agency is established with the Broker, not the Sales Associate.
• The Company will cooperate and co-broke with a selling/leasing agent from any other brokerage that represents the seller/landlord exclusively or represents the buyer/tenant exclusively.

Notice of Disclaimer
The requirements set forth in this post are based upon a practical application of Arizona laws, rules, and custom and are not intended to provide legal advice. From time to time, laws, rules, forms, and requirements referenced in this post may change. Neither the Real Estate Commissioner nor any division, officer, Author/Agent or employee of the Department of Real Estate warrants the accuracy, reliability or timeliness of any information in this dated post, and will not be responsible or liable for any loss, consequence, or damage resulting directly or indirectly from reliance on the accuracy, reliability, or timeliness of the information.  Any person or entity that relies on information obtained from this post does so at the person’s or entity’s own risk.