Know your Real Estate Consumer Rights
Know Your Real Estate Consumer Rights
You want to be clear about what your real estate consumer rights are and who a real estate agent represents. In fact, Minnesota state law requires that early in any relationship real estate brokers or salespersons must discuss with consumers what type of agency representation have or desire. Upon the ‘first substantive contact’, that’s the language we ‘Realtors’ use, and it is important you understand the four types of agency representation and what ‘Fiduciary Duties’ are owed in each relationship.
I like to think of the Agency Relationships in Real Estate Transactions disclosure as a great way to get an overview of your real estate consumer rights. I go over this disclosure with all of my clients prior to entering into a representation agreement with them. Until you choose to enter into a written agreement for representation, according to Minnesota law you
will be treated as a customer and will not receive any representation. Whether you are selling or purchasing a home, as a consumer you have a right to representation and if you are interacting with a Realtor you need to know who they represent and in what capacity. If you would like to talk more about what representation looks like please fill out the information below and I’ll be happy to discuss with you personally.
First, not all of these fiduciary duties or what I call your ‘real estate consumer rights’ are included in every agency relationship I’m about to talk about but they are:
Loyalty – the salesperson must act only in the client’s best interest
Obedience – must carry out all client’s lawful instructions
Disclosure – disclose all material facts to the best of the agent’s knowledge
Confidentiality- keep client’s confidences unless required by law to disclose such as ‘material facts’
Reasonable Care- such as when performing real estate duties
and Accounting- taking care of all client’s money and property received
An agent representing a Seller owes all of these fiduciary duties to the Seller and must act in that seller’s best interest. Now different agents offer different philosophies, services, and marketing strategies in the ways in which they help their clients optimize their real estate ambitions but at the end of the day they must look out for their clients.
Often times I see consumers reach out directly to the agent that has the home listed and you need to know that that agent represents the sellers and owes all of those real estate consumer rights to the Seller’s not you as a prospective Buyer. If an agent working with a buyer as a customer is representing the Seller that agent must represent the Seller’s best interest and must tell the seller any information disclosed. In this case the Buyer will not be represented and will not receive any advice or counsel from the agent.
Likewise, an agent representing a buyer must act on the buyer’s best interest. Most commonly buyers don’t even pay their agent as listing brokerages often offer to pay the buyer’s agent a coop commission. If it could cost you nothing it makes sense to have an agent who represents you exclusively. A buyer’s agent who owes your real estate consumer rights can help you get into 2-4 home showings in an hour as opposed to contacting several listing agents who represent the seller.
Again, different agents can represent in different ways so make sure you check their availability for showings, local knowledge, and ability to explain the process and connect you with other competent professionals like lenders, inspectors, insurance, and title agents but at the end of the day they must represent the buyer.
Dual Agency would be a situation where the agent or the agent’s brokerage represents both the buyer and seller in the transaction. In this situation, the agent must keep information about price, terms, and motivation confidential and cannot work to the detriment of either party. Even with these limitations, dual agents owe fiduciary duties to both parties in the transaction. If a consumer is not open to a dual agency relationship then they could give up the opportunity purchase properties listed under that brokerage name.
Lastly, a facilitator is a salesperson who can perform services for a buyer, seller, or both but does not owe any fiduciary duties to either other than confidentiality unless otherwise specified in writing, however if a facilitator working with a buyer shows a property listed by that agent’s brokerage than the agent must represent the seller.
You have real estate consumer rights, you should know what those are, and who an agent could represent in a transaction. You have the right to representation and it is important that in whichever agency representation you are looking for that you are working with an agent whose specific skills, experience, and methodology fit your needs as a consumer. This is Alex Mayer with Counselor Realty Buy and Sell Strategically.