Local Knowledge is Critical for Maine Property Buyers

You wouldn't -- for a lot of good reasons -- go into a contested divorce proceeding without an attorney, or worse, take the advice of your spouse's attorney.

Why, then, would you buy a home -- an adversarial process regardless of how friendly everyone involved in the transaction seems -- without someone on your side? Oh, you think home buyers have always had representation? Well, think again.

As a buyer, you are not represented unless you've got a written agreement with the real estate agent who is showing you homes that you want that agent to represent you as your "buyer agent." If you haven't, "your agent" could be representing the seller.

Recently, more home buyers have been asking, "Who represents whom?" As a result, many real estate buyers are opting to be represented by a buyer's agent to take them through the process, from house hunting to closing. The greatest thing about this is it doesn't cost the buyer anything and often saves them thousands.

Until a few years ago, real estate was sold the way it always had been -- the listing agent obtained the listing from the seller and represented that seller. A second agent, the "selling agent," brought the buyer to the transaction. This second agent was, by law, acting as a sub-agent for the seller, often unbeknownst to the buyer. In this situation, even though the selling agent may have never met the seller, he or she still had a legal obligation to report to the seller any information the buyer revealed, or any information the agent found out about the buyer's situation that would help the seller's negotiating position. That makes the agents sound evil, but in fact, if they had not communicated the information to the seller, they would have been breaking the law.

Both agents had a fiduciary obligation -- a legal and moral obligation to work toward the best interests of the beneficiary (the seller). The seller was the client for whom agents were working. The buyer was merely the customer.

In 1983, a classic study started a revolution in real estate sales. The Federal Trade Commission found that 72 percent of all buyers believed the agent they worked with was representing their interests. That meant that three out of four buyers were "spilling their guts to agents who weren't representing them," as one buyer agent wrote. The report fueled a nationwide legislative agenda that forced the real estate industry to disclose whom the broker or licensee represents in every situation. By 1988, most states had disclosure laws in place. And a survey conducted in 2001 found 46 percent of home buyers used buyer representation. Consumers now know they have the right to be represented."

In some states you can still work under the old sub-agent system, or you can choose buyer representation. Many states and the National Association of Realtors, Realtor Code of Ethics, now require "disclosure of agency" by which any agent is required to disclose his or her legal relationship with a buyer or seller "at first substantive contact." That is, if you, as a prospective buyer or seller, start telling an agent information that would compromise your bargaining position in any way, the agent should immediately explain "agency" and give you a choice in how you want to move forward. Unfortunately, some don't, so it's up to you to protect yourself.

Any licensed real estate agent in the United States can legally act as a "buyer's agent," although not all have experience doing so. You can also engage what's called a " buyer's agent". or "buyer's broker" This is the purest form of buyer representation, but unfortunately, few firms are able to make a go of representing only buyers, since listings are the lifeblood of real estate, and listings are what make the phone ring.

CoastWise Realty has years of experience Representing Real Estate Buyers.