Buyer Agency: Your Representation

rectangle18.jpgBuyer Agency and The South Carolina Agency Disclosure Form

The state of South Carolina Real Estate Commission requires that all licensed real estate agents and brokers must provide all buyers and sellers with a “meaningful explanation of agency and agency relationships in real estate transactions” and a “completed agency disclosure form prescribed by the Commission indicating whom the licensed agent shall represent.” The Commission also states that all agents must provide customers with this form and information “at first substantive contact.” Following are some additional comments regarding agency in South Carolina, and how it affects you as a buyer.

Who is a customer?

A customer is a person who seeks to buy or sell real estate, but who does not establish an agency relationship with a licensee and, therefore, is not represented by a licensee as his or her agent. In fact, if you choose to work with a real estate licensee and remain a “customer,” the licensee you are working with is actually a subagent for the seller. This agent is bound by South Carolina Law to represent the Seller, not you the buyer. This agent is not supposed to counsel you, give you advice or negotiate on your behalf. This would be in violation of his/her fiduciary relationship with the seller. This real estate licensee can only provide market information and services. A licensee is obligated by law to treat customers honestly, to disclose known material facts about property and to promptly present all offers and counteroffers. When selling or buying real estate, you may decide you don’t need your own agent. The licensee may be able to provide you, as a customer, with all the information and assistance you require to successfully complete a transaction. However, if you are a customer, the licensee’s primary loyalty is not to you. It is to his or her client (the seller).

Who is a client?

A client is a person who establishes an agency relationship with and agrees to be represented by an agent in a real estate transaction. Essentially, a client employs a licensee to become his or her agent.
A buyer (you) becomes a client of a real estate company by signing a formal buyer agency agreement with a licensee associated with the company. Prior to any transaction, this agreement must be in writing and must clearly establish the terms of the agreement and the obligations of both the buyer and the licensee/company, who becomes the agent for the buyer. In terms of our relationship, you have an agent representing you and negotiating on your behalf.

Who is an agent?

An agent is the licensee who, by mutual agreement, will act on your direction and represent your interest above all others in a real estate transaction. In South Carolina, once an agency relationship is created, the broker-in-charge of the company is considered to be the agent of the client, and all licensees with the company become sub-agents of the broker-in-charge representing that same client. Acting on your behalf, your agent will negotiate for you, the best price and terms in a real estate transaction. Your agent owes utmost loyalty to you, the client, and must pass on to you any information he or she knows which might influence your decision to buy or sell. You can rely on your agent to preserve confidential information provided by you (he is bound to do so by law). You can expect to receive timely accounting of money or property related to and received during your relationship with your agent. If you choose to remain a customer, then the agent owes these duties to the Seller.

 

rectangle20.jpgUnderstanding Buyer Agency Be aware that the state of South Carolina Real Estate Commission requires that all licensed real estate agents and brokers must provide all buyers and sellers with a “meaningful explanation of agency and agency relationships in real estate transactions” and a “completed agency disclosure form prescribed by the Commission indicating whom the licensed agent shall represent.” The Commission also states that all agents must provide customers with this form and information “at first substantive contact.” Following are some additional comments regarding agency in South Carolina, and how it affects you as a buyer.

Buyer Agency is established by a written agreement between the Buyer (or client) and the broker of a real estate company. The agent representing the Buyer is actually a subagent of the broker. By law, an agent owes his client the duties of loyalty, obedience, disclosure, confidentiality, diligence and accounting.

Additional duties of the Agent to you the Buyer are as follows:

  • To perform the terms of the written agency agreement
  • To exercise reasonable skill and care for the Buyer
  • To promote the interests of Buyer with utmost loyalty, good faith and fidelity
  • To seek a price and terms stated in the brokerage agreement or at a price and terms acceptable to Buyer
  • To present all offers to and from Buyer in a timely manner
  • To disclose to the Buyer all relevant and adverse material facts actually known by Broker
  • To advise Buyer as to material benefits or risks actually known by Broker
  • To advise Buyer to seek legal and other expert advice that are beyond the expertise of the licensee
  • To account in a timely manner for all money and property received in which the Buyer has or may have an interest
  • To exercise reasonable skill and care in discharging the buyer’s agent’s agency duties
  • To comply with all applicable local, state and federal laws, rules and ordinances
  • To preserve confidential information provided by the Buyer during the course of or following the agency relationship
  • To disclose the following information only with informed consent of the Buyer:
    • That the Buyer is willing to pay more than the purchase price
    • The Buyer’s motivation(s)
    • The financing terms the Buyer would agree to
    • Any material information about the Buyer unless required by law
    • Facts or suspicions which may psychologically impact the purchase

Termination of agency will be the earlier of the following:

  • The date of expiration agreed to by the parties.
  • Termination by the parties.
  • One year after the engagement.

Responsibilities following contract termination or performance:

Accountability for monies and properties

Confidentiality of information received during agreement unless:

  1. Required by law.
  2. Released in writing by engaging party.
  3. Information is made public by source other than Broker

Compensation:

Payment of compensation shall not be construed to establish agency.

Compensation may be paid by Buyer or Seller or third party.

The identity of source of compensation shall be disclosed to all parties.

Compensation by more than one party is permitted with the written consent of the parties.

DUAL AGENCY

DEFINITION: A Broker who has been engaged through a written agreement to act as Agent of the Buyer as well as the Seller. Typically, this happens when an agent has a client who wants to make an offer on a listing held by that agent or by that agents company.

Duties of the Agent:

Obtain written and informed consent of all parties to act as Dual Agent.

To inform Buyer and Seller that each may be vicariously liable for the acts of the dual agent when agents are acting within the scope of the dual agency relationship.

To disclose material facts gained from the other party if such information is relevant to the transaction.

To disclose any information to one party gained from the other party when information is relevant to the transaction or party.

To disclose the following only with written consent of the party:

  • That Buyer is willing to pay more than purchase price.
  • That Seller is willing to accept less than asking price.
  • What motivating factors are for either party.
  • What Seller or Buyer will accept terms other than those offered.
  • Facts or suspicions which may psychologically impact the sale or purchase.

Agent Shall Not Disclose:

  • Information made confidential by the parties.

Termination of agency will be the earlier of the following:

  • The date of expiration agreed to by the parties.
  • Termination by the parties.
  • One year after the engagement.

Responsibilities following contract termination or performance:

Accountability for monies and properties

Confidentiality of information received during agreement unless:

  1. Required by law.
  2. Released in writing by engaging party
  3. Information is made public by source other than Broker.

Compensation:

Payment of compensation shall not be construed to establish agency. Compensation may be paid by Buyer/Tenant or Seller/Landlord or third party. The identity of source of compensation shall be disclosed to all parties. Compensation by more than one party is permitted with the written consent of the parties.

What are the benefits of working with a Buyer’s Agent?

  • Get all the facts, the agent cannot withhold any information from you
  • The agent will search all properties available, including those for sale by owner
  • The agent will negotiate on your behalf
  • The agent will represent you in all aspects of the real estate transaction
  • Better negotiating possible - two heads are better than one!
  • Secrets are ok - the agent cannot disclose any information you give him without your written consent
  • You may save money - the agent will work much harder for you knowing he is your sole representation
  • Agents become investigative - will try to find out as much information as possible for YOU
  • Work with a motivated agent because they know you are loyal to them
  • Get Broker’s full attention - Brokers and Agents alike will always value a client over a customer
  • Greater chance the contract will stay together until closing