The Well-kept Secret That Harms Home Buyers

When the buyer of Silver Spring, Maryland was ready to buy a new home he did not know about a well-kept secret in the real estate industry, a secret that can wreak financial and emotional havoc on a home buyer at the most crucial point of his real estate transaction.
The secret is that only one out of every three agents provides the mandatory disclosure form that spells out whom the agent represents in the transaction at first meeting or early in the process.
Two thirds of the agents defy their state laws, which generally require them to provide disclosure, in writing, at their first substantive meeting with a potential client. The general counsel for National Association of Realtors, Laurie Janik, said she was 'so extremely disappointed' in the findings from research the association undertook in 2005 to learn just how the agents were performing in the marketplace.
The buyer was not just 'extremely disappointed'. He was so incensed that he filed a lawsuit against the Company. and the agents who, he believes, worked, as a 'team', against his best interests.
He says that even though he had been explicitly assured by the selling agent that she was 'his' buyer's agent and that her partner, the listing agent, would list his home for sale, the selling agent stated she was really the seller's agent after writing the offer.
The lawsuit cites complaints for fraudulent inducement and negligent misrepresentation and inducement. He stated that the agents had violated the Maryland Real Estate Broker's Act but the Maryland Real Estate Commission told him that it would hold his case in a 'inactive status' until he furnishes the agency with the final decision of the Court.
He feels trapped in a Catch-22 situation where he cannot address the issue of non-disclosure of the agency relationship with the regulatory body that deals with licensing because of the lawsuit.
A nightmarish real estate transaction that included his buyer's agent advising him to bid $50K more than asking price due to the hot market, eventually paying $16K more than asking price, removing a home sale contingency and the loss of an escrow deposit of $34K all started with the simple misdeed of not disclosing whom the agent represented in the transaction. The home he lost, listed at $699K, sold later for $682K.
It may seem like an insignificant problem to many consumers but look how dangerous a situation it can be for the ﶥ home buyer:
If the agent's role is to negotiate for you, how can he get the best price on the home if his real duty is to get the highest price for the seller?
How will you keep your financial information confidential? What if the agent refers you to a mortgage lender? Will the agent convince you to reach outside your financial comfort zone?
Will you be able to use data of comparable sales data to determine an offer price? If the agent works for the seller how can he be an advocate to get you a lower price?
What if you need to sell your house first to be financially able to buy the new house? What will the agent say if you have a 'home sale contingency' in the offer contract?
And, what if you are smart enough to demand that the agent to sign a form that states he is working you as a buyer's agent but you fall in love with a house that his real estate company has listed?
the agent buyer chose to be his buyer's agent, was working for Company. which had numerous listings in the area where he wanted to buy. His odds of picking one of the company listings were high. He chose a house listed by the company and selling agent's boss,
It turns out that buyer didn't really have a buyer's agent to the end. Although he says she acted like a buyer's agent every time she showed a house, even the homes listed by the Company she never gave him an agency disclosure form while showing those homes.
He only found out two weeks after his offer was accepted that she was actually working for the seller on the home he chose to purchase. That is when his brother, a commercial real estate broker with over 40 years' experience, reviewed his purchase contract and alerted buyer to the fact that selling agent had signed the disclosure form as the seller's agent.
thought he had a buyer's agent but he then came to understand how he was initially told to bid $50k over asking price, paid $16K over asking price on a home listed by his buyer's agent boss, put a $34K deposit in escrow that he cannot get back and waived his contingency to sell his own home first which was listed by his buyer's agent boss.
For buyer, the cavalier attitude of the regulators, the industry, the media and consumer groups only aggravates his feelings about the lawsuit. He feels betrayed by what he perceives as a "wall of apathy" and thinks the real estate agents ignore or flout "rules regarding timely and accurate disclosure of their status thus depriving clients of honest and competent representation."
should not be expected to know about agency relationships and the need for an explanation of the agents' roles in his transaction. The disclosure form must be provided by the agents. That is the law. The burden is on the agents to discuss the issue with consumers. Perhaps a lawsuit could have been avoided if Joel had been provided the necessary disclosures about the agent's role in his real estate transaction.

© Copyright 2007, IRED.com, Inc.
Taken from International Real Estate Digest