Erie Real Estate

Understand Agency Relationships

It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. Ask what type of agency relationship your agent has with you:

Seller's representative (also known as a listing agent or seller's agent)
A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.

Buyer's representative (also known as a buyer’s agent)
A buyer’s agent is hired by prospective buyers to represent them in a real estate transaction. The buyer's agent works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's agent may be paid by the seller or through a commission split with the seller’s agent.

Subagent
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.

Disclosed dual agent
Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in Pennsylvania and is clearly noted in the Agreement of Sale.

Designated agent
This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.

Confused? Do you want more information?  Just let me know.  Have you been involved in a dual or designated agency realationship?

What is a Home Warranty

A home warranty is a service contract, normally for one year, which helps protect home owners against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear. Coverage is for systems and appliances in good working order at the start of the contract.

Check your home warranty policy to see which of the following items are covered. Also find out if the policy covers the full replacement cost of an item. 

• Plumbing
• Electrical systems
• Furnace
• Water heater
• Heating ducts
• Water pump
• Dishwasher
• Garbage disposal
• Stove/cooktop/ovens
• Microwave
• Refrigerator
• Washer/dryer
• Swimming pool (may be optional)

Home Warranties are becoming more and more common in the marketplace.  Home sellers are offering them as part of the sale.  Where they are not offered most buyers are including them in the sales agreement that they present to the seller.

Your home is most likely one of your biggest investments. Unexpected repair or replacement costs can easily strain your budget. Plus, finding an approved and insured contractor to solve your problem can be stressful and inconvenient. A home warranty cannot prevent systems or appliances from breaking down, but it can help make covered repairs or replacement easier and less costly.

When a covered item breaks down, request service by calling the warranty provider.  Typically, after a service request is received, an approved and insured contractor will contact you to schedule a time to diagnose your problem. A low Trade Service Call Fee (deductible), per trade, is due when the contractor arrives to diagnose the problem. 

 

Multiple Offers - Part 2 of 2

Perhaps no situation facing buyers or sellers is more potentially frustrating or fraught with potential for misunderstanding and for missed opportunity than presenting and negotiating multiple, competing offers to purchase the same property.  Consider the following issues and dynamics:

• Sellers want to get the highest price and best terms for their property.
• Buyers want to buy at the lowest price and on the most favorable terms.
• Listing brokers - acting on behalf of sellers - represent seller's interests.
• Will a seller disclosing information about one buyer's offer make a second buyer more likely to make a full price offer?  Or will that second buyer pursue a different property?
• Will telling several buyers that each is being given a chance to make their "best offer" result in spirited competition for the seller's property?  Or will it result in the buyers looking elsewhere?
• What's fair?  What's honest?  Why isn't there a single, simple way to deal with multiple competing offers?

Frequently frustration and misunderstanding results from cooperating brokers being unaware of the status of offers they have presented on behalf of their buyer-clients.  Listing brokers should make reasonable efforts to keep buyer-brokers up to date on the status of offers.

Finally, buyers and sellers need to appreciate that in multiple offer situations only one offer will result in a sale.

In a Multiple Offer Situation?

Here are a few things to consider.  Knowledgeable buyers and sellers realize there are rarely simple answers to complex situations.  But some fundamental principles can make negotiating multiple offers a little simpler.

In some situations sellers will have several competing purchase offers to consider.  Sellers have several ways to deal with multiple offers.  They can accept the "best" offer; they can inform all purchasers that other offers are "on the table"; they can "counter" one offer while putting the other offers to the side awaiting a decision on the counter-offer; they can "counter" one offer and reject the others.

While the listing broker can offer suggestions and advice, decisions about how offers will be presented - and dealt with - are made by the seller - not by the listing broker.

There are advantages and disadvantages to the various negotiating strategies you can employ in multiple offer negotiations.  Your buyer agent should explain the pros and cons of these negotiating strategies.  The decisions, however, are yours to make.

Purchase offers generally aren't confidential.  In some cases sellers may make other buyers aware that your offer is in hand, or even disclose details about your offer to another buyer in the hope of convincing that buyer to make a "better" offer.

Listings brokers are required to follow lawful, ethical instructions from their clients in the same way that buyer-representatives must follow lawful, ethical instructions from their buyer-clients.

If you want to make your offer confidential, discuss with your buyer agent a confidentiality agreement between you and the seller prior to commencing negotiations.

You should know that your broker likely has other buyer-clients, some of whom may be interested in the same properties you are.  Ask your broker how offers and counter-offers will be presented and negotiated if more than one of their buyer-clients are trying to buy the same property.

Appreciate that your buyer agent's advice is based on past experience and is no guarantee as to how any particular seller will act (or react) in a specific situation.

Part 1 of 2