Before Purchasing Property, Foreign Investors Should Familiarize Themselves with the Different Forms of Real Estate Agencies in the U.S.
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Buyer's Edge President, Steve Israel, says, "Before purchasing property, foreign investors should familiarize themselves with the different forms of real estate agencies in the U.S. and understand specifically what form of representation their broker or agent is actually providing. Contrary to what investors may assume, a real estate agent does not always represent their interests and their interests alone."
"It's all about clarifying who represents whom in the home buying process. We believe the best option for consumers concerned about the conflicts surrounding agency relationships is to work with an exclusive buyer's agency. Bethesda, MD (PRWEB) March 08, 2012
Both low housing prices and a weak U.S. dollar have made American real estate an enticing bargain for foreigner investors who currently own about 10% of the U.S. luxury home market. A recently introduced U.S. Senate bill that would grant residence visas to foreigners if they spend at least $500,000 on residential housing in the U.S. could increase that number substantially. Steve Israel, President of Buyers' Edge recommends foreign investors familiarize themselves with the different forms of real estate agencies in the U.S. and understand specifically what form of representation their broker or agent is actually providing prior to buying property. Contrary to what investors may assume, a real estate agent does not always represent their interests and their interests alone.
Because U.S. laws vary from state to state, confusion has arisen about the role of real estate agents, whom the agents represent, and real estate agency relationships. For example, many states allow real estate agents to “double dip,” representing both the buyer and seller in the same transaction without owing either party their undivided loyalty. This form of agency is called a ‘Dual Agency”. Other forms include a “Single Agency” where the firm agrees to represent only one side of a transaction. In some cases, a single agency may represent a seller, and in another, a buyer, but will release one of those clients to be represented by an agent in another firm if there is a conflict. A “Designated Agency” is one in which the agent agrees to represent the buyer while another agent in the same firm represents the seller. The problem with this type of agency is that the real estate broker who is the responsible party for the transaction is contractually obligated to both buyer and seller. A “Transaction Agency” in one in which the same agent for a firm works for both the buyer and seller but discloses to both that the agent is not in a fiduciary relationship with either party.
The one form of agency that represents only the buyer’s interests 100% of the time is an ‘Exclusive Buyer’s Agency’ — an important option for homebuyers and one that is rarely addressed in articles about consumer agency choices in the home buying process. As one of the thousands of Exclusive Buyer’s Agents across the U.S., Steve Israel, President of Buyer’s Edge, an Exclusive Buyer Brokerage firm serving the Metropolitan Washington DC area, said “We don’t believe the same agent or different agents affiliated with the same agency can properly represent both buyer and seller in the same transaction. Exclusive Buyer’s Brokers do not list homes for sale so there is no conflict of interest. There is no need to ever try to navigate the dual agency conflicts with an Exclusive Buyer’s Agent. We are legally obligated to our clients, which means they can trust us to advise on strategy, protect their interests, preserve their confidentiality, and negotiate hard on their behalf.”
Israel’s home state of Maryland is currently attempting to resolve some of the conflicts surrounding real estate agency relationships. A Bill (644) currently before the General Assembly would, if passed, require the Maryland Disclosure Form (given to home buyers to sign at their first appointment with an agent) to include the terms “Exclusive Buyer’s Agent” and “Exclusive Seller’s Agent” as an option for home buyers. It would also require that consumers be given the definition of what “single agency” means and how it differs from “dual agency”.
“It’s all about clarifying who represents whom in the home buying process,” said Israel commenting on the proposed bill. “The best way to find out how you will be represented is to ask the agent with whom you will be working. Ask them to define their office policies regarding agency relationships. Clearly, we believe that the best option for consumers concerned about the conflicts surrounding agency relationships is to work with an exclusive buyer’s agency or exclusive seller’s agency.”
