As a consumer, you may think of a real estate agent simply as somebody who works for you to help you to buy or sell a property. However, a real estate agent is much, much more than that.

 

There are many definitions of the word “agent,” but for real estate purposes the following definition from http://www.leanlegal.com/dictionary/a.asp seems to fit: An agent is “a person authorized to act for and under the direction of another person when dealing with third parties. The person who appoints an agent is called the principal.”  Add to this the following statement from en.wikipedia.org/wiki/Agent_(law) : “The agent has a fiduciary relationship with and is under a legal duty to act in the best interests of the principal.”

 

Now this is serious business. An agent has a legal relationship of absolute trust and confidence to the principal and a duty to act primarily for principal’s benefit. If your agent believes the price you set for your house is too low, he or she must tell you so (or vice versa.) If you are a buyer and your agent sees something that suggest that the house you have just fallen in love with may have some serious defects, your agent must advise you of his or her concerns and explain the reasons. If you want to sell income property that you have owned for a long time and recently financed, your agent has an obligation to advise you that, after taxes, you may not have enough money from the sale to pay off the outstanding loan and that, before listing, you should visit your tax professional to understand completely what your tax obligations may be and to investigate the possibility of doing an exchange instead of selling outright.

 

In other words, you should look to your agent not just to “make the deal happen” but to advise you regarding the pros and cons of each step along the way. So serious is the agency relationship that agents in California are obliged to complete a refresher course in “Agency” every 4 years in order to maintain their license.

 

With that said, a real estate agent may not give legal advice or tax advice but can only advise on real estate matters. There is a fine line there sometimes, but a diligent real estate agent will advise the client to seek legal counsel or to talk to a tax professional whenever legal or tax matters arise.

 

Unfortunately there are far too many agents in the business who do not really understand the entire concept of agency. Their primary concern is to make the deal happen and to collect their commission. And they may push their clients to do this without regard to the underlying obligations imposed by agency law. It is tempting to do this because it simply does not matter how many weeks or months an agent has spent with any one client. They do not make one single penny except when an escrow closes. In the meantime, expenses are high… dues, advertising, gas, internet fees, MLS fees, etc.

 

If you are thinking of buying or selling property, you should think carefully about which agent you select to represent you. Ask a lot of questions and ask for referrals (many agents will volunteer to provide referrals without your even asking.) Then check the referrals (it is astounding the number of people who do not do this.) Ask about designations or awards the agents have earned (these reflect a level of success in the business and a commitment to excellence by staying informed and educated), some problems they may have encountered and how they resolved them, etc.  Choose a Realtor who knows your local market. Remember that almost half of all Realtors have sold NOTHING in two years. Another large percentage has sold only four transactions in two years. Make sure you are using the Realtor who stays consistent, knows your market, knows trends, laws, and the contract. Don't be their first sale in two years at your cost. It's your life savings!

 

Do not let an agent pressure you into signing a contract until you are sure you want to. However, at some point you will need to commit to the agent you choose in order for that agent to move forward to begin working on your behalf. A real estate agent may have liability for actions performed on your behalf if they perform any actions on your behalf….. contract or no contract. Hence a good agent will answer as many questions as you have to help you make your decision, but will not actually work on your behalf until you have signed the agency contract.

 

Once signed, you should expect professional behavior and diligent follow up from your agent at all times. If your agent does not perform according to your expectations, be honest and up front with him or her and try to resolve your differences. In the worst case, go to the manager and ask to be reassigned to a different agent (this is one of the advantages of working with a larger company). Buying or selling a home is one of the most important business transactions of your life. Make sure you are getting the professional assistance you deserve!

 

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