Friday, January 19, 2007

Buyers Representation is Serious Business

Jerry Seinfeld just learned that when you sign a buyers representation form, it's serious business. A judge recently ruled that he and his wife owe a real estate agent approximately $100,000 in commission. Apparently, they worked with an agent who introduced them to several properties. They found one they liked and wanted to go take a second look at it. The agent was in church, so they went without her and bought the home directly from the seller.

We are required to get buyers sign a buyers representation form which states our responsibilities, summed up as: a fiduciary responsibility to represent the buyer’s best interests, including reasonable care, loyalty and confidentiality (use all diligence in finding property, act on buyer's behalf in all negotiations, use all professional knowledge to aid buyer throughout process, and exercise all duties owed to consumers, customer and clients as set forth by Tennessee law (more about that down below).

The buyers in turn sign that: 1) they will not contact another agent; 2) they will inform other agents that they are working with another professional should they come into contact with any (like at open houses or model homes); 3) if they purchase property without agent during the term of the agreement, they will owe their agent a commission (agreed upon in the agreement); and 4) they will inform their agent of properties they are interested in.

What do we owe to customers?
  • Disclose to each party any adverse facts that the licensee has actual notice or knowledge.
  • Maintain confidentiality for each party, except for information which the party has authorized for disclosure.
  • Provide services to each party with honesty and in good faith.
  • Disclose to each party any timely and accurate information regarding market conditions that might affect the transaction, only when such information is available through public records and when the information is requested by a party.
  • Timely account for trust fund deposits.
  • Disclosure of any referral fees through recommendation of services of another individual, organization or business (e.g. warranty).
What do we owe clients?
  • Obey all lawful instructions of the client when the instructions are within the scope of the agency agreement.
  • Be loyal to the interests of the client. Place the interests of the client before all others in negotiations of transactions.
Do I believe Jerry Seinfeld, possibly the funniest man on Earth, should have paid the agent? Absolutely. He should have done it long before it went to court.

2 Comments:

At 5:37 PM, Anonymous Jamie said...

Kathy, I found a bright light in reading your blog and I would greatly appreciate your advice. I am a buyer seeking properties other than those listed on the MLS. I researched several agencies in the Nashville area and settled on one whose website indicated that they specialized in these properties. I met with a gentleman on Tuesday of this week who I didn't realize until later was the husband of the realtor, not an actual realtor. After discussing with him what I was looking for and specifically stating several times that I wanted properties not on the MLS, I felt positive about the office and that they could provide me the listings I desired - thus I signed a Buyers Representation Agreement. I subsequently met with the Realtor this afternoon and found that her methodology is to only search the MLS. She was so blatantly against searching any further than the MLS when I questioned her on how they identified the FSBO, REO's and Foreclosures that I couldn't respond. I was clear that an MLS search only was not what I needed earlier in the week. I believe that the services of the agency were misrepresented and my initial impression is that the agent does not have my best interests in mind. I signed the Buyer Representation Agreement with the sales pitch I received earlier in the week and got a completly different service than what I thought I was buying. I have contacted the realtor and left a message asking her to contact me and I intend to clarify that I do not wish for her search to consist of only the MLS and that if she cannot or is unwilling to search any further, then I wish to immediately receive written release from the agreement so that I may find a new realtor. What do you recommend? Do I have any recourse if she refuses?

 
At 6:25 PM, Blogger Kathy T. said...

Hi Jamie,

I do believe you would have recourse because of the items named above in what we owe to customers and clients.

These that I think could specifically relate to your problem include:
1. Provide services to each party with honesty and in good faith.

2. Obey all lawful instructions of the client when the instructions are within the scope of the agency agreement. (Did she say what sources would be searched in the buyer's agreement?)

3. Be loyal to the interests of the client. Place the interests of the client before all others in negotiations of transactions.

If the agent is not able to meet your requirements, you may ask to be released from the agreement. If she doesn't release you and you are not satisfied, you can contact her managing broker, who should be able to either release you or to assign another agent to help you. If you can't get satisfaction with either the agent or managing broker, then you may lodge a complaint to the Tennessee Real Estate Commission. That's when it gets pretty serious and you may just mention that you are considering doing this to be released from the agreement. Make sure you document everything if you have to go that far because it's pretty serious business. Hopefully the agent will just buck up and do what you've asked her to do.

Good luck, Jamie.

 

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