Agency: Critical When Buying or Selling Real Estate
Author: Kitty Bartell
It’s Saturday morning. The sun is shining; the coffee has brewed, and the day ahead seems filled with unlimited possibilities. You and your significant other spent Friday evening enjoying a bottle of wine while perusing real estate on the Internet. Renting has been a pretty good gig; the care and keeping of your abode was the landlord’s job, renter’s insurance was cheap, and footloose and flexible was your mantra. However, the siren call of home and hearth have touched your heart, and now feels like an excellent time to put your savings to good use and invest in real estate, invest in your future, invest in a home all your own.
Your Friday night research garnered some excellent prospects in your search for home sweet home. Step one, call the Realtor® who is listing the home you love the most. A noon meeting is scheduled at her office, surely leaving plenty of time to see all your favorites before the sun sets. Clutching the printouts for your prospects—you see, you’re already well-invested in owning one of these gems—you meet the agent and are ushered into a nicely appointed conference room where comfortable seating is situated in front of a big screen TV.
This looks like serious business. Wait, you just wanted to have some fun looking at the darling homes you brought to the table. You quickly learn that three of the four homes are under contract or have been sold. (Real estate Internet searches tend to disappoint in this way.) The agent assures you that there are nice homes on the market waiting for you and that she is going to preview each property with you so that your new game plan is focused on more accurate and realistic information.
That all sounds great. You imagine it won’t be long before you’re shuttling from house to house, looking for the perfect fit. And that is when the agent, the woman with whom you have shared your real estate hopes and dreams and have bonded with while chit chatting over a Diet Coke, pulls out a little one-page, two-sided brochure titled “Agency Disclosure Brochure” (ADB) and says, “We need to have a little talk.”
Allow me to stop right here and say, if you are meeting with a Realtor® to discuss buying or selling a home and it is the first substantive contact with this Realtor® (substantive = real estate speak for your first conversation, no matter how brief), by South Carolina law you must be presented with this brochure, and you must discuss the contents of this brochure until you understand it fully. If you are not given said brochure, ask for it. Let me repeat, ask for it. The information it contains will impact your entire home search or sale.
The ADB answers the following question: When buying or selling real estate, are you a customer or a client? Customer? Client? Six of one, half dozen of another, right? No! In the state of South Carolina, there is a significant difference between a customer and a client when it comes to real estate transactions, and understanding the nuances between the two is critical to creating a winning strategy that leads to a successful transaction. This is called agency.
“In South Carolina, an agent must represent somebody in the transaction, and if the agent doesn’t have this discussion [regarding agency] with the buyer on the front end, the buyer assumes that the agent is representing them, when maybe they are not,” said Sarah O’Leary Takacs, who served four years on the South Carolina real estate commission, is now on their investigative review committee, and is a Realtor® with Keller Williams Realty on Hilton Head Island.
South Carolina state statute 40-57-139 (G) states that all agency agreements must be in writing, meaning the only way to be certain your agent is working on your behalf is to sign a Buyer’s Representative Agreement if you are looking for home, or a Listing Agreement if you are selling your home.
By law, buyers and sellers who do not sign an agency agreement are customers and may only expect a basic level of service from the agent, specifically, presenting offers, responsible accounting, fair and honest treatment, and disclosure of any adverse material facts about the property or the transaction. However, signing an agreement provides all of these benefits to you, now the client, as well as loyalty and obedience, confidentiality, full disclosure of anything known by the agent, reasonable care, as well as advice, counsel, and assistance in negotiation.
Example: You have a signed agency agreement with your Realtor® and she learns that the sellers are highly motivated, because they have purchased another home and can no longer afford two mortgages. She may disclose this information to you and use it in negotiating a purchase price on your behalf. However, if you have not signed an agency agreement, she is actually working on behalf of the seller and may not share this intel with you or assist in helping negotiate the best price.
Remember, by state law, she must represent someone in the transaction; if it is not you, it will be the sellers. So actually, the sellers now have two agents working on their behalf, and you are on your own.
Understanding that you are not required to enter into an agency agreement to buy a home; you are, however, a serious buyer and you take your investment seriously. It seems like a no-brainer to take your relationship with your real estate professional just as seriously. You decide to sign the Buyer’s Representative Agreement.
Booting up the computer in the conference room, the big screen TV comes to life and your Realtor® says it is now time to begin your real search. The mood in the conference room is a little less frenetic, and you are not as anxious to dash out the door with such abandon. The homes you will see will be thoughtfully selected, actually for sale, and you will be in the care and keeping of your real estate representative, who is working for you, and you alone. She is no longer the agent, she is your agent.