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NEW PHONE & FAX: Phone: 512 221 0121 Fax: 512 233 2559

 

 

 

REALTORS DUTIES IN SELLER'S DISCLOSURE of PROPERTY CONDITION

So what is the Realtor’s responsibility regarding disclosures? There are two types of realtors involved in most transactions:

  1. LISTING AGENT
  2. BUYER’S AGENT

The Listing Agent or Owner’s Agent is the one representing the Seller and the Buyer’s Agent allegedly works for the Buyer. There are also Subagents and Intermediaries. These are far less common but could open more areas of liability if they exist in your case. To find out what type of agency relationships the realtors are working under, go to the last page of the Earnest Money Contract and there are check boxes for the Buyers and the Sellers. See Appendix B. Once you know which kind of relationship you are dealing with you can determine what the particular duties to the transaction and your clients are owed by that realtor.

It is possible that there is a realtor assisting a buyer is acting as a SUBAGENT. This is less common today, and is defined as follows:

A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent.

Interestingly enough, this relationship doesn’t look or feel any different to the Buyers. More importantly, the INFORMATION ABOUT BROKERAGE SERVICES is fairly meaningless to the average buyer since they choose the realtor they want to help them based on their personal relationship and not their legally defined functions. Consequently, if you find a Subagency, you will almost certainly find that it looked, acted and felt exactly like a Buyer’s Agency.

The Buyers’s Agent is the realtor that works with the homebuyer. This realtor has a fiduciary duty to work solely for the buyer’s interest. This relationship is explained further in the INFORMATION ABOUT BROKERAGE SERVICES FORM as:

The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first.

That is intuitive until you consider how the Buyers’ Agent is paid. At closing, the Buyers’ Agent is paid out of the Sellers’ proceeds in the transaction. Moreover, the Buyers’ Agent makes a commission up to 3% of the total sales price. Consequently, they may hand out a form that says they put the interests of the buyer first, but in the end, they profit more from the sellers’ interests.

Realtors are responsible only for what they personally know about a property.  If the seller never tells their agent that they had previous flooding, that fact is not the responsibility of the realtor.  If however, because the realtor is familiar with the neighborhood and actually knows that all of the house on that street flooded, the realtor has her own personal knowledge she is liable for.   In trying to find out what a realtor knows, look back at what activity they have had in the area and it is imperative that you show the actual realtor knows and not just the office or real estate firm knows. 

 

NEW PHONE & FAX: Phone: 512 221 0121 Fax: 512 233 2559

 

 

Evin G. Dugas - Attorney at Law 512.261.0044 Evin@housedefects.com
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