- The Washington Times - Friday, December 8, 2000

Home buyers without recent experience in the housing market may find it confusing at first that in many real estate transactions, two Realtors are involved: one representing the buyer and one representing the seller.

Buyer agency was introduced in this area approximately a decade ago, and disclosure laws in Maryland, Virginia and the District were passed to reflect this change in the real estate industry.

"Basically, I explain buyer agency this way," says Michael Guthrie, managing broker of the Reston office of Long & Foster Real Estate. "Instead of listing a house, as you would in a listing agreement, you're listing a buyer.

"Typically real estate agents hold a listing presentation for home sellers, explaining all the steps which need to be taken to sell a house," Mr. Guthrie says. "At the end of the presentation, the sellers can decide to sign a listing agreement with that agent.

"For a buyer, a similar presentation is often given, in which the Realtor explains all the steps that need to be taken to buy a house. At the end of that presentation, the buyer can choose whether or not to sign a buyer brokerage agreement. In this office, we use a form called an 'Exclusive Right to Represent' agreement."

At the outset, buyers might decide to work with the first Realtor they contact, such as the agent sitting at an open house.

"Before buyer brokerage came about, people didn't always understand that the agent at the open house was representing the seller's interests," says Ruth Dickey, broker and manager of the Bethesda/Gateway office of Long & Foster Real Estate.

"Now agents know they need to disclose it right away. If someone comes in to an open house without an agent and they are interested in purchasing that house, the seller's agent can recommend a buyer's agent. If the buyer wants to look at other properties, the seller's agent can work with that buyer as a buyer's agent for other homes."

Regulations require that as soon as a substantive discussion on purchasing a home takes place, an agent must explain buyer and seller representation. In Maryland, Virginia and the District, a form must be signed by any seller or buyer, which discloses the brokerage relationship.

Before a written offer on a home is made or negotiation of a sale is conducted for the buyer, a written contract must be signed by the buyer and his agent.

Before that contract is signed, Realtors say, an agent can act as a "presumed buyer agent," assisting the buyer in locating properties and providing information about the home-buying process.

"While written disclosure of agency representation is required at the time a contract is written for a property, usually the written documentation takes place earlier," Miss Dickey says. "For example, when someone calls our office expressing an interest in looking for a house, the agent is acting as a buyer's representative for that person.

"Normally when a Realtor and buyer sit down to discuss in detail the steps to buying a home and the financial requirements, the buyer brokerage relationship is explained, too," she says. "Often buyers will choose to sign a disclosure agreement at that time, which states that their agent is working for them."

While some people prefer to sign as few documents as possible, a signed disclosure agreement offers protection for the Realtor, the buyer and the seller.

"The old saying goes that 'If you look like a duck and quack like a duck, you are a duck,' and that also applies to buyer agency," says Julia Kriss, managing broker of McEnearney and Associates Realtors in Arlington and chairwoman of the board of directors for the Northern Virginia Association of Realtors.

"When you are showing a buyer houses and working with them to find a house, you are presumed to be that buyer's representative. But most good agents prefer to work with a written agreement in place, because why on earth would you want to spend all that time and effort working with someone without the details spelled out?

"A written agreement spells out the financial arrangements, which both the buyer and the agent agree on in clearly defined terms," Miss Kriss says.

Once the buyer agent agreement is in place, the Realtor's loyalty belongs to the buyer. All financial and personal information provided to that agent is kept in confidence.

For example, a buyer who has told his Realtor he would be willing to offer more than the asking price to purchase a particular house needs to be confident that the Realtor won't pass on that information to a Realtor representing the seller.

Similarly, a seller needs to be able to trust that his agent will not disclose that he is considering lowering his price until that decision has been made.

Training programs and in-house seminars have been established throughout the local real estate industry to teach Realtors how to be buyer agents.

"A tremendous amount of training is given to agents, which is a good thing, because the mind-set of being a buyer's agent is totally different," Miss Dickey says. "For instance, when it comes to the home inspection, a buyer's agent can suggest to the buyer to ask for the moon when it comes to repairs or minor improvements on a home. The seller's agent must come at the home inspection from the totally opposite point of view.

"When buyer brokerage first began, buyer's agents had to learn that they were not in an antagonistic position vis-a-vis the seller's agent. It seems to have calmed down a little these days," Miss Dickey says, "but for a while agents had to be reminded that real estate negotiations are not like union negotiations. Each agent does want to get the best deal for their client, but the goal is still the same, which is to sell the house at a price which satisfies both sides.

"Ten years ago or so, buyer's agents were often met by steely determination on the part of the seller's agents, who didn't trust the buyer's agents," says Mr. Guthrie of Long & Foster in Reston. "That adversarial feeling has been defused as people began to realize that the best way for deals to work is with a win-win attitude where the buyer and seller can come to an agreement."

A potential conflict of interest can arise when a buyer and a seller are represented by separate Realtors who work for the same company.

"For all practical purposes, the laws in all three local jurisdictions allow for someone who works for a traditional real estate company to be designated as an agent for a buyer while another person in that same office is designated to be working for the seller, with the presumption that there is no conflict of interest," says Steve Israel, president of Buyer's Edge in Bethesda, a brokerage that represents buyers exclusively.

"But the broker of that office is still a 'dual agent' representing both sides in that transaction. For practical purposes, agents work for either the buyer or the seller, but from the legal point of view the broker is the responsible party," Mr. Israel says. "Therefore, the broker is put in a position of having a duty to the seller and to the buyer in one real estate deal."

According to brokers from real estate firms where transactions occur involving buyer agents and seller agents within the same company, the office broker becomes what is known as a "disclosed dual agent."

"In practice, I'm seldom involved with a conflict between a buyer's agent and a seller's agent within my office," Miss Dickey says. "But the term 'dual agent' means that I cannot disclose any confidential information from either side, and I cannot disclose any past negotiations which have taken place for a particular property."

Mr. Guthrie agrees that he, too, rarely is involved in dual transactions. When he is, he says, he maintains the strictest possible confidentiality for both sides.

"As a broker in these situations I feel as if I've come as close as I'll ever get to what a priest feels like in a confessional," Mr. Guthrie says. "I listen to and advise both sides as to what is in their best interest, but never do I share information with one side that I received from the other."

One more reason buyers may feel comfortable working with a buyer agent to buy a property listed with that agent's office is that agents are independent contractors.

"Realtors are competitors with each other even within the same office, and we have even seen situations in which two or three agents within our office are making offers on behalf of buyers for the same property," Miss Dickey says.

"There is certainly no sharing of information between Realtors about their clients. In fact, in our office, we keep our doors closed and our files locked."



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