"Would you try to win a lawsuit without an attorney?" If you answered no- like most of us with common sense and enough humility to know when we could use some help from someone who specializes in a particular field- then read on.
In Texas there are three forms of representation.
- The broker represents the seller (owner)
- The broker represent the buyer
- The broker acts as an intermediary
Explanations coming in just a minute.
Texas law requires all real estate licensees to give prospective buyers and sellers the Information About Brokerage Services at the first substantive dialog. This information helps explain the duties of the broker and who the broker represents.
Today, we are keeping it simple. If you are a seller and sign a listing agreement to list your home for sale you are then represented by the broker that you signed a listing agreement with. If you are a buyer and you sign a buyer representation agreement you are represented by the broker you signed the representation agreement with. In the third scenario, called intermediary, the broker represents the seller of a home and the buyer of the home. To act on behalf of both parties the broker must obtain written consent of each party.
So, how does it benefit you to be represented?
Before you enter into a representation agreement with a real estate agent, you are a customer. The following three duties are owed to customers:
- They must be treated honestly.
- They must be treated fairly.
- All material facts about a property must be disclosed.
Once you find a real estate professional you are comfortable with and enter into an agreement to be represented, you become a client. The relationship created becomes one of trust and confidence. Your agent can start to give you their advice and opinions. Benefits that a customer would not receive.
There are six duties owed to clients:
- reasonable care and due diligence
We won't explain those terms today. But they do give you some distinct advantages over someone who doesn't chose to be represented by a real estate professional. If you are thinking of buying a home, wouldn't you like to know if your real estate agent thinks the house is priced high, low or just right? Well, that information can be told to a client but not a customer. Do you want to be able to confide things in your agent that should be kept confidential? For example: how much you are willing to pay for a home if your first offer isn't accepted. This information can be confided by a client and the agent is bound to keep it confidential.
I could go on with examples of how it benefits you to be represented, but this post would go on too long. Hopefully, this brief explanation made it a little more clear. All I know is when I invest my money I talk to my financial adviser. When it comes to legal matters I'd consult an attorney. And, if I'm buying or selling a home I'd enter into a representation agreement with a local real estate professional.