| What
is a Buyer's Agent?
... and do you want just a Buyer's Agent or Representation
with more Security?
Agency is all the buzz these days on Martha's Vineyard.
For years, the consumer has been lead to believe "My realtor
is my best friend". I feel this statement has been rather
misleading. For one thing the term REALTOR® applies
to a designation given to a real estate professional who
agrees to adhere to a strict Code of Ethics. Many times
consumers have purchased property on Martha's Vineyard only
to learn after the fact that they did not get the best deal.
This is because prior to mandatory disclosure in Massachusetts
the agent working with the buyer was the seller's fiduciary;
they did not represent the buyer.
In an attempt to correct this misconception, the National
Association of Realtors® (NAR) and the Massachusetts Board
of Registration of Real Estate Brokers and Salespersons
set out in the mid-80's to correct this misconception and
in 1990 implemented the Mandatory Agency Disclosure -
Agency Relationship Form-705 with the hope that there would
no longer be any misunderstanding.
When you select a real estate agent
to work with, at the first physical meeting to discuss or
preview a specific property, the agent you select is required
by law to inform you that he or she is either a Seller's
Agent, a Buyer's Agent (who could also work as a Disclosed
Dual Agent) or a Facilitator. What does all this mean to
the buyer of Martha's Vineyard real estate?
Let us break it down:
| SELLER'S AGENT:
When a seller engages the services of a listing agent,
the seller becomes the agent's client. This means the
agent, and his/her subagents represent the seller. They
owe the seller undivided loyalty, utmost care, disclosure,
obedience to lawful instruction, confidentiality and
accountability. They must put the seller's interest
first and negotiate for the best price for their client,
the seller. (The seller may also authorize subagents
to represent him/her in marketing the property to the
buyers.) |
Don't you want the same kind of representation as a Martha's
Vineyard real estate buyer? Well, you can have it --- or can
you?
| BUYER'S AGENT:
When a buyer engages the services of a real estate agent,
in theory, the buyer becomes that agent's client. This
means that agent represents the buyer. The agent owes
the buyer undivided loyalty, utmost care, disclosure,
obedience to lawful instruction, confidentiality and
accountability. The agent must put the buyer's interest
first and negotiate for the best price and terms for
his/her client, the buyer. (The buyer may authorize
subagents to represent him/her in locating property.)
However, unless there is
a written contractual agreement between the buyer and
the real estate agent the way there is between a seller
and their listing agent, how sincere can this relationship
be? Remember, the Mandatory Agency Disclosure is not
a contract. |
Now we come to what I consider a curious form of representation
and one that implies no representation at all and minimal
assistance --- not a good idea in a complicated and diverse
market like Martha's Vineyard.
| DISCLOSED DUAL AGENT:
A real estate agent can work for both the buyer and
the seller on the same property provided such agent
obtains the informed consent of both parties. The agent
is then considered a disclosed dual agent. The agent
owes the seller and the buyer a duty to deal with them
fairly and honestly. In this type of agency relationship
the real estate agent does not represent either the
seller or buyer and they cannot expect the agent's undivided
loyalty. Also, undisclosed dual agency is illegal. |
The agent may know personal information
about both the buyer and the seller, but as a disclosed
dual agent is bound not to reveal that information to either
party. I think that's a difficult line to follow and creates
a serious conflict of interest. The dual agent cannot provide
undivided loyalty to both clients. The duty of confidentiality
to one compromises the duty of full disclosure to the other.
It is very important that you to have a good understanding
of the (Disclosed) Dual Agency relationship, so I suggest
you read a little more to learn about Avoiding
Dual Agency.
Talk about not having representation;
a facilitator is an agent that represents no one. The buyer
is in essentially a customer and in many cases the agent
does not represent the seller either.
| FACILITATOR: When
a real estate agent works as a facilitator, the agent
agrees to assist both the buyer and seller, but the
agent represents neither the buyer nor the seller in
the transaction. The facilitator and the broker with
whom the facilitator is affiliated owe the buyer and
the seller a duty to present each property honestly
and accurately by disclosing known material defects
about the property and the duty of accountability for
funds. The facilitator has no duty to keep information
received from a buyer or the seller confidential. The
role of facilitator applies only to the buyer and seller
within the specific property transaction involving that
buyer and seller. Should the buyer and seller agree,
a facilitator relationship can transition to become
an exclusive agency relationship with either the buyer
or the seller. |
If you're not totally confused by now, let's see how you
feel about Designated Agency:
| DESIGNATED AGENCY:
This is a brokerage practice used when the brokerage
is representing both the buyer and the seller. NAR has
recommended designated representation since 1992 as
an alternative to dual agency. Designated representation,
sometimes called "designated agency" or "appointed agency,"
enables a managing broker to designate, or appoint,
a buyer's representative and a seller's representative
within the same company to work on the same transaction.
The managing broker is like the line coach who holds
the playbooks for both teams --- they can control the
game. The broker has the responsibility of supervising
both licensees, but the designated agents are expected
to give their respective clients full representation.
The hope and purpose for this type of agency is that
it would avoid the problems of Dual Agency. (Are there
problems with dual agency? Hmmm.) However, the idea
that a brokerage can transfer the agency relationships
created by the contractual representation agreements
it has with consumers to licensees, who are agents of
the brokerage and not the consumer, just doesn't make
sense to me, and I don't think it will hold up in court.
Some critics say designated agency tries to reduce the
agent's liability by reducing service to the consumer,
but designated representation doesn't alter a managing
broker's responsibility for the licensees or the transaction.
I think that Designated agency is merely a disguise
for undisclosed dual agency. It is a deceptive practice
very similar to the conflicts of interest and self-dealing
recently exposed in the investment-banking and insurance-brokerage
sectors. I don't know of one Martha's Vineyard real
estate agency that practices designated agency, because
they realize how prickly this kind of representation
can be. The only hope for this practice to be successful
is in a really big real estate agency with dozens of
agents. |
So, if designated agency is too prickly,
why then are brokers willing to practice dual agency? We've
already said they're pretty much the same thing. The answer
is because they have no choice under today's new agency
law. Under all the confusing labels, what has really changed?
The only real change is that we now have 100% Exclusive
Buyer Representation, and you are also starting to see 100%
Exclusive Seller Representation. Now, that makes real sense
because each team will have their own locker room and coach.
In a recent independent survey conducted by Harris Interactive,
fifty-two percent of the nation wide respondents said that
a dual agent, who is an agent that represents both the buyer
and seller in the same real estate transaction, "cannot
effectively represent (the) financial interests of buyers
and sellers."
Even though the consumer should now
have a clear understanding as to the different types of
agency, and is able to request and get representation from
the agent they select, do all buyer's agents offer the same
level of service? The answer is, "No they cannot".
Only with an EXCLUSIVE Buyer's Agent can you be assured
that your relationship will remain intact throughout the
Martha's Vineyard real estate buying process.
What
is an EXCLUSIVE Buyer's Agent?
Exclusive Buyer Representation is a partnership in every
sense of the word. The goal of the exclusive buyer's agent
must be the same as the buyer's goal --- find the best property
at the best possible terms and advantage. The exclusive
buyer's agent must assist the buyer in each and every aspect
of purchasing a property from start to finish. The first
step in beginning a relationship is for a prospective buyer
to sit down with an exclusive buyer's agent and outline
in detail exactly what their goal is. In this way, the exclusive
buyer's agent can assess whether or not the buyer's objectives
are realistic and if the exclusive buyer's agent has the
ability to accomplish those objectives.
Any and all information that is disclosed to an exclusive
buyer's agent must always be kept in the strictest confidence,
unlike when a buyer is working with a seller's agent where
all information is fair game and will be relayed to the
seller. Not only are objectives discussed but also the compensation
and contractual policy of the firm. The responsibilities
of both the buyer and the exclusive buyer's agent are discussed
and how the entire search process works. At the end of the
meeting, a decision can be made whether the relationship
should be consummated via a simple Exclusive Buyer Representation
Agreement. By signing the Exclusive Buyer Representation
Agreement, the buyer is now the firm's client to whom the
exclusive buyer's agent owes complete fiduciary duties as
outlined in the agreement. This is not unlike the Exclusive
Listing Agreement that a seller signs with their listing
agent.
As an Exclusive Buyer Agency, SplitRock Real Estate searches
the complete Multiple Listing Service (MLS) inventory of
Martha's Vineyard real estate available on the market, including
For Sale by Owners (FSBOs) and properties that are not on
the market. At SplitRock Real Estate, we cover the entire
Island or Martha's Vineyard and work comfortably with all
traditional Martha's Vineyard real estate agencies. We have
absolutely no allegiance to any seller, serving only one
master --- the buyer. Our task
is to find the property that best suits the wants and needs
of our buyer clients at the best possible terms and advantage.
It doesn't matter how long that process takes --- 1 month,
6 months, 3 years. We will represent you 100% until your
goal is achieved.
When a property is found that best matches the buyer's criteria,
the next step is to research everything possible about the
property that may affect the buyer's enjoyment of that property.
We investigate the seller's situation, town restrictions,
neighborhood idiosyncrasies, and any concerns the buyer
may have. Research is done at the Dukes County Registry
of Deeds, the town hall, and when possible, information
from residents in the neighborhood is solicited to uncover
any problem areas. All the compiled data is studied in order
to give a clearer picture of the property being considered.
If the information gathered proves favorable, a sales evaluation
is made of comparable properties in the area. The buyer
can now make a reasonably informed decision on whether or
not to pursue the property.
We counsel the buyer on what they can expect during the
negotiation process in terms of price, and if the buyer
wishes to continue, an Offer To Purchase strategy is formulated
and an Offer To Purchase is presented to the seller. As
an Exclusive Buyer's Agent, our intent at SplitRock Real
Estate is to create the best possible advantage for the
buyer prior to creation of the Purchase And Sale Agreement
by getting as many contingencies, terms and conditions beneficial
to the buyer agreed upon during the Offer To Purchase phase
of negotiations. In this way, we are able to minimize any
expenditure for inspections and possibly legal fees. This
process deserves explanation because Massachusetts has a
two-step process; first, an Offer To Purchase Agreement
and then a Purchase and Sale Agreement. Both are legal contracts
binding both parties; however, the Offer To Purchase is
intended to outline and memorialize the major items of importance
and is then superseded by the Purchase and Sale Agreement,
cementing all the details of the previous agreement along
with any other items that may arise that the buyer or seller
wish to solidify.
The partnership between the buyer and the Exclusive Buyer's
Agent serves to make the buyer well informed and empower
their Martha's Vineyard real estate decision-making. As
a result, they become comfortable with any decision they
make, even if they decide not to buy. We recognize that
this is probably the largest investment decision you will
make and we do not take our responsibility lightly. As the
#1 Exclusive Buyer Agency on Martha's Vineyard, SplitRock
Real Estate offers complete client level services and is
your partner and ally all the way .
After the seller accepts an Offer To Purchase we enter the
next phase of the purchase process. We recommend the professional
services necessary to conduct all the various inspections
that may be necessary as well as any other contingencies
that the buyer may face. As your exclusive buyer's agent,
we will help you to interpret the details of the inspections
and counsel you on those items that require attention. We
will advocate on your behalf to the seller those items found
defective that we feel are the responsibility of the seller
to repair or replace. Subsequently, credits or price reductions
are negotiated or we may elect to terminate the contract
with no harm to either party.
Buyers want to know how an Exclusive Buyer's Agent is compensated
for the purchase of Martha's Vineyard real estate. In my
opinion, this is the classic chicken and egg debate. It
is understood that the seller pays the commission and the
simple answer is yes, that is true. In most cases, we accept
the compensation offered by the seller. Therefore, it costs
you nothing extra for the client level service you receive
from an Exclusive Buyer's Agent--- but who brings the bag
of money to the closing table? The buyer. In essence, real
estate broker commissions are just one of the many closing
costs associated with purchasing property.
Please feel free to ask any and all questions during the
initial consultation session with an Exclusive Buyer's Agent.
At SplitRock Real Estate, we do not sell, we service. We
are focused on being your partner in realizing your dream
of owning real estate on Martha's Vineyard. Our exclusive
goal is to make this the best real estate experience you
have ever had.
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