Your Agent Your Friend? Maybe Not.
Are You being Romanced, or Represented?
By the mere nature of the real estate
buying and selling process an atmosphere of potential intimacy
is commonplace. Real estate agents cannot help you find
your dream property or the right addition to your investment
portfolio unless they know what you do, how much you make,
and how much money you have to spend. Through the normal
course of events you will tell them about your family, your
lifestyle, your hopes and dreams. 90% of selling is listening
and a good salesman is a good listener and knows how to
ask just the right probing questions to get you talking.
Real estate agents work to form relationships with the buyers
they are working with, and sometimes those relationships
become lasting friendships --- I know because I have been
blessed to have a number of friendships with former buyer
clients. But a buyer and agent relationship can also go
terribly wrong, especially when a buyer shares all those
personal details with a real estate agent and then finds
out the agent has not been representing them or working
in their best interests. It was never disclosed to the consumer
who the agent was working for.
Forming a friendship is not something
that happens over night, but a business relationship with
a real estate agent by necessity forms more quickly, so
you need to be careful about how intimate that relationship
becomes before you are certain the real estate agent is
truly on your side. As of July
1, 2005, changes in Massachusetts Real Estate Agency Law
mandated all real estate licensees' to present consumers
with the "Massachusetts
Mandatory Licensee Consumer Relationship Disclosure"
form at their first face-to-face meeting to discuss a specific
property or properties. The form is based upon the idea
that real estate agents offer several levels of agency representation.
They can represent the seller, the buyer, both or no one!
You need to understand the various levels of representation,
but if you are confused after reviewing the definitions
do not despair, I think most real estate agents are also
confused. For one thing, the disclosure IS NOT A CONTRACT.
If the agent who presents you, the buyer, with the disclosure
form has checked off “Seller’s Agent”,
that means they have signed a separate fiduciary right to
represent contract with a Seller and they are not on
your side. Here is a question for you. If they check
off “Buyer’s Agent”, do they have a separate
signed fiduciary right to represent contract with you? If
your answer is no, they are not on your side. You
see, it is confusing and to make matters even more confusing
you will be informed that your agent may not represent you
exclusively as they wish to act as a Dual Agent or
a Designated Agent. I have a whole section devoted to explaining
(Disclosed) Dual Agency and Designated Agency.
CAUTION: Despite the efforts of the
Massachusetts Board of Registration of Real Estate Brokers
and Salespeople to enforce the Mandatory Agency Disclosure
law, a state investigation at the beginning of September
2010 discovered that only 6 percent of Massachusetts real
estate licensees properly disclosed to consumers whose interests
I am not the only one who thinks the
Massachusetts Mandatory License Consumer Relationship Disclosure
form is poorly constructed and does not clearly explain
the subject of "BROKER
AGENCY", thereby leading to self-serving prevarications.
In order for you to legally be represented
by an exclusive buyer agent as your fiduciary you will need
to enter into an Exclusive Right To Represent Agreement,
and that means a contract that does not include the option
for your agent to transition to dual agency or designated
agency. The second part of my answer as to how you will
know your real estate agent is on your side is somewhat
abstract, but probably easier to answer. If you feel your
agent is not knowledgeable or working as hard as you expected
them to, they are not on your side and you need to
Exclusive Buyer Agency requires a passion
for helping people and advocating for their best interests
and only on their behalf. Remember, if your agent is not
representing you exclusively they are not your advocate,
cannot advise you on a negotiating strategy, cannot advise
you on an offering price, cannot point out potential problems
to you with a home, cannot provide you with information
about the Seller or Builder (their reason for selling, price
they paid, how long the property has been on the market
or how many times the property has been for sale, or a builder's
reputation or any issues with his development). They
are not your friend. Here are some excerpts from an
article to illustrate some notions about the home buying
By NADINE BROZAN
October 4, 2004
They may come together for what seems
like a straightforward business transaction - the sale or
purchase of a home - but the relationship between broker
and client can be an emotional minefield, ripe for love
or hate, admiration or scorn, friendship or hostility.
If nothing else, it is a highly personal connection. A broker,
after all, probably knows as much about the client as any
therapist, lawyer, accountant or even spouse.
Brokers know what their clients earn and what they're worth
- they have to, in order to figure out which co-ops make
sense for them. They may know if they're planning to leave
their jobs, or their spouses. "People who are planning to
get divorced may not yet have told their friends or their
children but need an appraisal before dividing the assets,"
said Daniela Kunen, a managing director of Douglas Elliman.
"You hear very personal information."
Whatever it is, the connection is rarely tepid. Frederick
W. Peters, president of Warburg Realty Partnership, said
that he tells novice agents that they are in a business
that fosters short-term intimacy. "You are immediately plunged
into a close relationship with a buyer or seller and then
when the transaction is consummated, it is over, unless
you choose otherwise." he said.
Many people do choose otherwise, having planted the seeds
of enduring friendship in the collaboration to buy or sell
a residence, or, if they live in the same community and
run into one another in the supermarket, an ongoing acquaintanceship.
Peter Fyler Sidebar:
Most of my former Clients are friends of mine today and
they still know they can call on me 5, 10, 20 years after
I helped them purchase their home.
Strong bonds in individual cases notwithstanding, as a group
brokers and clients do not hold one another in particularly
Preliminary findings of an online survey of attitudes of
brokers and buyers who have bought properties in Manhattan
in the last three years show that 78 percent of the 51 brokers
who responded and 69 percent of 152 buyers and sellers "strongly
or somewhat strongly" agreed with the premise, "Most people
don't trust real estate brokers or expect much from them."
The survey was commissioned by Braddock & Purcell, a real
estate consultant that brings brokers and clients together,
and carried out by Penn Schoen & Berland Associates, the
market research firm.
"You can develop a close relationship with your broker,
but it is in the context of an industry for which people
do not have a high opinion," said Paul F. Purcell, a partner
in the firm.
Among the qualities considered essential for good brokers
are: discretion; trustworthiness; sensitivity; diplomacy;
serious knowledge about neighborhoods, buildings, boards,
management, and potential pitfalls; an ability to listen;
and strong intuitive instincts.
Intuition is particularly prized. "There is a creative component
to this, fitting a round peg into a square hole," said Rosette
Arons, a vice president for Stribling & Associates. "The
creative process comes in when you hear them say, `I need
a three-bedroom with such and such,' and that is not at
all what they want. I listen to what they want, even when
they may not know what that is, and I can tease it out of
Peter Fyler Sidebar: On
a number of occasions, because I am a good listener and
make it my job to understand my clients and really know
what it is they want, even before they know themselves,
I have called up my Client and said, "This is your
house and you have to buy it.", or on the other hand
when they think they want something that I know would be
wrong for them in the long run I have said, "You cannot
buy that house!". I am not shy when it comes to my
opinions and my intuition as to what is right or wrong for
my Clients. I take the time to know them and to know what
they want since doing the wrong thing would result in a
very costly mistake.
Timothy Melzer, a 27-year-old vice president for Douglas
Elliman, prides himself on turning customers into friends.
"By the time it is over, almost all of them call to say
they miss talking," he said.
One of those clients, Dr. Anthony W. Cincotta, was called
upon to show an unusual degree of trust when he decided
to buy a penthouse at Morton Square, the town house, condo
and rental complex at Morton and West Streets, about 18
months ago. "It is hard to trust anyone in New York, and
I am one of those types who asks people to take off their
shoes before walking on my carpet," he said.
Dr. Cincotta, a neuropsychiatrist and family physician at
Catholic Community Services in Newark, had been looking
for a penthouse with outdoor space, when Mr. Melzer proposed
the Morton Square penthouse. "I froze when he told me about
it and said, `This is $1 million more than I wanted to spend,'
" he recalled. "He kept arguing with me and said, `This
is where you have to be, this is where you will make money.'
I gave in."
After Dr. Cincotta agreed to buy it, Mr. Melzer went to
great lengths to cement the deal. "The developer was demanding
a check for more than 10 percent, $191,500, an hour after
it came on the market, so he needed his checkbook, which
was in Manhattan," he said. "I had to drive to Newark, get
his keys, drive to Manhattan, go to his apartment, get the
checkbook, drive to the sponsor's office, pick up the contract,
drive back to New Jersey, get the contract signed and the
check written. By the time I got back to the sponsor's office,
they had gotten another offer, but fortunately it came from
someone who didn't have their checkbook."
The property, which closed on Sept. 23, has appreciated
more than $1 million since the initial listing, and Dr.
Cincotta will rent it out, he hopes, for $19,000 a month,
Mr. Melzer said, and eventually live in it.
The two have been friends since. "Once you develop trust
and you talk on the phone everyday, the walls start coming
down," Mr. Melzer said.
There are differences between being the broker for a buyer,
whose primary goal is to find a home, and the seller, whose
goal it to reap the highest possible profit.
Peter Fyler Sidebar: Sellers
have a written contract with their fiduciary and any buyer
who enters into the market today without the same written
contractural fiduciary advantage, is foolish.