Weather you are visiting an open house, interviewing a potential listing agent or buyer agent think before you speak. You are maybe surrendering valuable negotiating power and confidential information to the opposition.
No One knows your property and situation like you do before you divulge confidential information you need to understand how real estate agency relationships work.
Basicly put, an agent works for the client and with the customer. The agents responsibilities are vastly different.
The State of Maryland Real Estate Commission, Understanding Whom Real Estate Agents Represent is a clear explanation of how real estate agents work. The entire document should be read and understood before moving forward with any real estate interaction with agents.
Here are two excerpts from the State of Maryland Real Estate Commission, Understanding Whom Real Estate Agents Represent form that I believe are especially important.
“Real estate agents are obligated by law to treat all parties in a real estate transaction honestly and fairly. They must exercise reasonable care and diligence and maintain the confidentiality of clients.”
“Real Estate agents must disclose all material facts that they know or should have known relating to the property. An agents duty to maintain confidentiality does not apply to the disclosure of material facts about the property.”
What are Material facts? A material fact in real estate is well-defined as a fact that, if known, might have caused a buyer or seller of real estate to make a different decision with regards to remaining in a contract or to the price paid or received.
Latent defects are fault in the property, a hidden flaw in materials used or workmanship of the property that can put the occupants in dangerous or a potentially dangerous situation. A latent defect can not have be discovered by a reasonably thorough inspection before the sale.
What does that mean? Think about this scenario. You walk into an open house. In conversation, share that you have $500K at your disposal for the purchase of your next home. You’d prefer to be conservative and only spend $400K keeping the $100K remaining for improvements, a possible pool or better yet an emergency fund. You leave the open house and get back to your normal routine. House hunting will have to wait. You realize you need an agent to represent you.
Fast forward a few weeks, you have a buyers agent. Together you find your dream home. It’s listed by the agent you chatted with at the open house. Do you think the listing agent is going to keep your conversation confidential. I would not count on it. In this scenario, the seller is the listing agent's client. You are a customer.
Fiduciary Duties to a Principal/client:
Care - Reasonable care and diligence
Obedience - within the law and code of ethics
Disclosure - Full Disclosure
Responsibilities to a customer:
Disclosure - agency and material fact
Reasonable skill and care
What’s your best plan of action? Only entrust your confidential information with one agent. The one who’s working for you. Otherwise, any information shared is fair game. Remember it’s business, not personal.
WAIT! Before You Divulge Confidential Information