What Every Buyer and Seller Must Know - Real Estate Buyers Guide

2. CONFIDENTIAL INFORMATION

The first decision regarding buying or selling is to select a REALTOR© to consult with. This decision can be based on a referral, a friend or relative in the business or an interview and selection process. You will be choosing someone to represent you whether buying or selling. During the initial contact and interview be sure not to disclose any confidential information until an agency disclosure has been read understood and signed and an agency agreement completed and signed. Do not assume anything even when dealing with a friend. The following example shows why.

One of the income earners for the Sellers family has suddenly lost their job because of a company restructuring. They are looking to either relocate or stay in the area and rent. Their friend across the street has a cousin, Mary Value, who is a very successful REALTOR©. The Sellers go to this friend and tell them about the terrible calamity that has beset them. The Sellers tell this friend that they need a quick sale of their home. This is confidential information regarding their motivation to sell that will work against them. Their friend recommends her cousin. Several other neighbors learn of the Sellers plight.
The REALTOR©, Mary Value (friend's cousin) does a neighborhood market evaluation and submits a recommended list price. This price is below their expectation. They decide to interview other REALTORS© and finally decide to sell the property as a FSBO, (for sale by owner). They advertise the property and agree to pay a buyer's agent a fee. Much to their surprise Mary Value brings an offer below the neighborhood market evaluation. The deal is cash settle in five days! With no other alternatives the Sellers take the deal for a quick settlement.

The REALTOR© had a fiduciary duty to their buyer client to submit the offer in their client's best interest. The confidential information became common knowledge through the friend and neighbors.

When a listing is signed your REALTOR© agent is legally and ethically obligated to protect confidential information such as motivation that can be detrimental to you the client. Motivation guides the agent when advising their client or potential client. In this example the REALTOR© agent gave professional advice regarding pricing their home and time on the market. This advice was ignored by the Sellers to their detriment. An agency relationship could have been created through a listing agreement with the Sellers and Mary Value. This would have put REALTOR© in their corner. Listing agreements and agency does not relieve a REALTOR© from disclosing material facts pertaining to the property. All material facts that relate to the property whether they are good or bad must be disclosed. See disclosure.

3. AGENCY RELATIONSHIPS

An agency relationship is formed when a property is listed for sale or an agreement is made for exclusive buyer representation. Your agent owes you care, obedience, loyalty, accounting and notice. As previously discussed they cannot disclose any confidential information. They work as your ally and advocate through all phases of the buying and selling process. There can also be dual agency (Broker represents the buyer and seller) when it is disclosed and agreed to by both parties. This can happen when an agent is representing you as a buyer's agent and wishes to show and sell a property listed with their own company. Maryland Law mandates that a dual agency disclosure form be given to the buyer and seller informing them of the dual agency. They can agree to dual agency or they can refuse dual agency. In this example the buyer's agent will continue to represent the buyer, the listing agent will represent the seller and the broker of the company becomes the dual agent representing both the buyer and seller. The broker can offer advice and direction to both parties but cannot disclose confidential information and allow one party to have an advantage over the other. Since many buyers are still not aware of agency the State of Maryland created presumed buyer's agency. This occurs when an individual goes to a real estate agent for assistance and no written agreement exists. They can show properties not listed by their company however they cannot prepare an offer or negotiate without a signed agency disclosure. It is best to get it in writing. The link below directs you Agency Disclosure forms required by The State of Maryland.

Maryland Agency.

Agency relationship does not relieve a REALTOR© from disclosing material facts pertaining to the property. All material facts that relate to the property whether they a re good or bad must be disclosed. See disclosure.

4. DISCLOSURE

All REALTORS© are obligated to disclose material facts about a property that they know or should know. In other words if the single family home they have listed has been subject to an industrial rezoning they cannot plead ignorance and say they knew nothing about it, even if they did not. They should know the zoning. The State of Maryland passed the Property Condition Disclosure and Disclaimer Act to enforce the importance of disclosure of material facts. Click here to view. This provides a seller with an explanation of the act and a choice of forms (disclosure or disclaimer). The disclosure form details what they know about the condition of the property. It details the sellers' knowledge of such items as water, sewer, insulation, structural, etc. The disclaimer form states that the seller makes no warranties or representations as to the condition of the property and that the property is being sold "as is" and may contain defects. This disclosure must be presented to the purchaser on or before entering into a contract of sale. They are required to sign the notice and include it in a contract of sale. The purchaser does not have a right to rescind the contract of sale if it is presented on or before the contract of sale is executed. The contract may be rescinded under certain provisions if it is not presented on or before execution of the contract. The disclosure statement information is not to be misconstrued as a warranty by the seller. All purchasers have the right to a professional property inspection. This assures all parties that every possible aspect as to the condition and material facts have been explored and researched. Sellers may also do a pre-sale inspection and disclosure through the use of a home inspection professional and can offer a home warranty through the professional warranty service. It is more often however that the buyer hires a professional inspection. The buyer can also purchase a home warranty plan for their peace of mind. Professional home inspections are a method to accurately determine and represent the condition of a property. All State of Maryland forms regarding Property Disclosure and Disclaimer are available through this link(LINK)

Did you know that knot all licensed real estate agents are REALTORS©? A REALTOR© is a member of the National Association of REALTORS and only those who are may identify themselves as REALTORS©. A REALTOR© must conduct their business to a higher set of standards and ethics to be a member of the world's largest trade organization. The Code of Ethics contains specific obligations to the public, their customers, their clients and other REALTORS©. Because of the many resources available to them through the association they are the most successful and highly educated in the real estate industry. Nationwide networking, marketing and information sharing is available through the thousands of regional multiple listing services and REALTOR.COM©. Buying real estate involves some of the largest financial investment/s an individual will make. A highly trained professional is your asset and ally whether buying or selling. Remember every REALTOR© is licensed but not every licensee is a REALTOR©.