Q: I am a Seller in contract with Licensee. I have signed approval of ?Neutral? status of Licensee. This means the person can perform the Licensee role for both Buyer and Seller. In such a case, I would incur a small savings by paying slightly less in commission.
I have been forthcoming with this Licensee about my interests, needs, wants, and desires regarding the sale of this property. I have done so without fully realizing the vulnerabilities that may arise if or when the Licensee would be involved with both Seller and Buyer during negotiations and beyond.
The Licensee has told me how the property is perfect for his/her parents. He/she has demonstrated motivation to inspect the finite details of the property and taken action to research many other details, including how to finance the property for his/her parents.
I am both appreciative and concerned about the potential forthcoming offer. At the same time, I wonder about the appropriateness of any Licensee?s role in such a transaction and how I can protect myself.
Please do not just refer me to the simple response of seek an attorney?s advice.
I would much rather read about ethical standards in the field and any conflicts of interests with similar fact patterns. Thank you.
?Anonymous, Fairbanks, AK
A: I personally would cringe as a listing agent, even though my seller had signed dual agency or neutral agency, bring in a personal family member and represent both parties in this transaction. Dual Agency is a fine line in itself. For a listing agent in such a situation not only to bring in a buyer but the buyer being their parents would have me question whether or not my rights as a seller could be compromised. You would need to check with the local board as to what options you might have in this situation . Did you accept and sign a purchase agreement with the listing agents parents? If not, before the listing agent goes any further, discuss your concerns with the listing agent and see if in this instance either another agent can be temporarily brought into represent you and/or the listing agent hands the reins over to another agent re: his parents. The other item you want to look at is whether the offer presented meets your expectations or would compromise your original intent. Personally, in a dual agency relationship I would NOT represent my seller and a family member as a buyer. That is my personal opinion and definitely see as a conflict of interest. Whether or not you want to hear about seeing an attorney?? this would be a good time to seek advice IF after speaking with listing agent you find that agent resistant to bringing in another agent to represent their parents or another agent to represent you in this one deal. The fact you even brought up this question states you have great concerns as to where this might lead. I am not an attorney and the opinions thereof above represent entirely how I would handle this type of situation.
Terry Osburn is a Realtor? with Windermere Bay Area Properties in Walnut Creek, CA.
A: Well you have a signed agreement to obligate this. I would say ethically its probably a little wrong since it is his parent and of course he may be a little biased. But business is business. This person has their reputation on the line not only for his parent, but to you as well. It just so happens that this house is a good fit for his family. Its not something that happens often, but it happens. If you are really concerned, speak with the managing broker of the firm and tell them you want someone else to represent either his parents or you in the transaction.
Matt Laricy is a Realtor? with Americorp Real Estate in Chicago, IL.
A: In California, representing both buyer and seller is called ?dual agency? and is permitted with consent of all parties. Any confidential information pertaining to one party cannot be transmitted to the other party, and vice versa. It can be to the advantage of all involved, since the effort of the Realtor is to bring everyone together in harmony, rather than one party trying to take advantage of the other party.
Your situation is different, since the Licensee is representing close family members as the buyers. In a situation where such a purchase occurs, our standard of practice is to purchase the property at full list price, as-is, with no concessions by the seller to the buyer; that is the only way for the seller to be assured that their interests are being protected, while the buyers are purchasing not ?to get a good deal? but because this is a particular property which they want to own and are willing to ?go the extra mile? for the purchase to be ?above reproach?.
With financing being involved, the lender will require the property to be appraised and will not finance above the loan-to-value rate of the resulting appraisal; appraisers are independently selected.
Sometimes such a purchase was sparked by a desire to get the property sold for the seller and eventually realizing that it was possible for the family member to purchase, resulting in a win-win situation.
Real estate transactions should strive for win-win results, as both parties achieve their goals; this is not a conflict-of-interest, as each has a separate goal (one the sale of a home, the other the purchase of a home). Conflict of interest is much more easily seen when an agent represents two different buyers, both wishing to purchase the same home.
Debra Kroon is a Realtor? with Yosemite West Real Estate in Yosemite, CA.
A: Dear Alaska Seller -
I am a licensed Realtor and Broker in California, not Alaska, but I?m happy to share my experience and advice.
First, if you prefer NOT to have dual representation, you can still tell your Realtor in writing that you prefer exclusive seller representation, specifically stating that you prefer he/she not represent any buyers so you are confident your best interests are your agent?s primary concern. It may be worth paying an extra 1% commission (for example) to have the peace of mind that your Realtor is representing only you.
Although Neutral Status (dual agency) is legal in many states, including California, I strongly advise clients to insist on exclusive representation. My practice is to never represent both parties in a contract, as ethically I find it to be a conflict of interest.
Having said that, it sounds like you communicate clearly and probably selected your real estate agent carefully. Additionally, when an agent likes your house enough to suggest it to his/her family to purchase, it is a big compliment. As Realtors, we see many homes and know the difference between a well cared for home and one with deferred maintenance. Your agent must really like your home and the neighborhood to be preparing an offer for a family member.
Your agent should know exactly what you expect to get for your home and what terms will likely be acceptable to you. Likewise, the agent should know exactly what his/her parents need and can afford. Your agent is in a unique position to write a perfect offer that can be easily accepted by you and the buyers.
Your agent, as a dual agent, knows he/she will make more money if he/she brings the buyer to the transaction. That?s big motivation! He/she should be doing his/her best to meet or exceed your expectations so you accept the offer.
I can imagine why you might feel vulnerable knowing you?ve shared your financial expectations with the same person who will be representing the buyer. However, remember, you do not have to accept any offer. Your agent should have given you a Comparative Market Analysis when you hired him/her to list your home. That report gives you excellent information about the market value of your home. You and your agent know how much similar homes have sold for. The offer your agent presents should be inline with those recent sale prices.
It is common to experience doubt or vulnerability, but it sounds like you need to give your agent a chance to present the offer. It could be the quickest, smoothest transaction because his/her parents trust him/her about the value of your home!
After reading your question again, it?s not clear to me what your specific objection is, nor is it clear to me what resolution you seek, other than advice. I hope I?ve help with some of your concerns.
It may give you additional comfort if your agent is a Realtor, which is a voluntary affiliation. Agents & brokers are not required to become Realtors. It is a voluntary decision to be held to a higher standard of ethics. Hopefully your agent is a Realtor!
There are more than 2 million people nationwide who have licenses to sell real estate, of which about half belong to the National Association of Realtors (NAR). Only NAR members are entitled to use the term ?REALTOR?.?
NAR members must adhere to a strict Code of Ethics. By joining NAR, individuals have access to a wide range of classes, seminars and certification opportunities. Local REALTOR? groups are active in community matters, and individual members are routinely involved in other neighborhood organizations.
Here?s to a full price offer and a smooth transaction!
Denise
Denise Shur is a Realtor? with 1:1 Realty in San Jose, CA.
A: Representing both sides is always a fine line, but to me when one side is also the agents family member it would be concerning and you do seem to have concerns even though you seem happy with your agents performance.
If it were me, I would have my manager or another agent represent one side and me the other to avoid any conflicts or feelings of distrust.
I will of course have to advise seeking an attorney?s input if you have legal or contractual concerns.
Teri Andrews Murch is a Realtor? with Lyon Real Estate in Auburn, CA.
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