Buying land

SvilleKid · 03-13-2010, 10:23 PM

OK, the BIGGIE no one has touched on: You MUST be aware of the Agency Laws in the property's state as it relates to Real Estate Agents. For example, in Alabama, unless the agent is EXPRESSLY the agent for the buyer, the agent will be the seller's agent. If you go to an agent other than the one selling the property, and have that agent show you the property, but you do not have an agency agreement with the showing agent binding him only to you, the showing agent is nothing more than a sub agent for the benefit of the seller. That agent (as well as the listing agent) owe their responsibility to the seller, NOT to the buyer. That agent IS NOT in a legal position to help you to the detriment of the seller. That would result in a violation of his fiduciary duty to the seller. Anything you told such a sub-agent about your buying strategies would be passed on to the seller, but anything the seller told that agent about his selling strategies would have to stay confidential, unless the seller gave permission to disclose. That's basic principal-agency law, and probably exist in most states.

Only if the agent working for you has signed an exclusive buyer's agency agreement with you that makes him yours and only yours, he will most likely simply be another agent representing the seller. And if the agent is a buyer's agent, the fee paid to him/her will be dictated by the agent's agreement with YOU, not the seller. Which means any commission paid the buyer's agent cannot be taken from the seller's due at closing, unless that fee is written into the sales contract and agreed on by the seller (which means the seller might be paying double commissions - not very likely unless the selling agent cuts or shares his commission.

One of the biggest misconceptions in real estate transactions is thinking that that agent you contacted to show you around and help you get a good deal is working for you!! This bites both buyers and agents more than any other thing. Without a specific buyer's agency agreement with that agent, he is most likely bound by law as a seller's representative. This bites agents in the arse big time when they disclose information to a potential buyer that the seller has told them in confidence, not realizing that telling a potential buyer is a violation of the agent's duty to the seller.

Bottom line: Check your state's laws on the agency/principal relation in real estate. Most states now allow buyer agency agreements, but up until probably less than 15 years ago, almost all real estate agents in a sales transaction actually represented the seller, whether they acted like it or not. If buyer agencies are allowed, you have to have that relationship and responsibilities spelled out in writing and signed by you and the buyer's agent. Including how/when the buyer's agent will be paid.

And nope, I'm not a lawyer. But was an agent for many years, and real estate is still my profession (R.E. Appraiser).

03-13-2010, 10:23 PM	#13
SvilleKid Yes I am a Pirate Join Date: Oct 2008 Location: 33°46′08″N 86°28′16″W / 33.76895°N 86.471037°W Posts: 2,776 Trading: (52)	Re: Buying land OK, the BIGGIE no one has touched on: You MUST be aware of the Agency Laws in the property's state as it relates to Real Estate Agents. For example, in Alabama, unless the agent is EXPRESSLY the agent for the buyer, the agent will be the seller's agent. If you go to an agent other than the one selling the property, and have that agent show you the property, but you do not have an agency agreement with the showing agent binding him only to you, the showing agent is nothing more than a sub agent for the benefit of the seller. That agent (as well as the listing agent) owe their responsibility to the seller, NOT to the buyer. That agent IS NOT in a legal position to help you to the detriment of the seller. That would result in a violation of his fiduciary duty to the seller. Anything you told such a sub-agent about your buying strategies would be passed on to the seller, but anything the seller told that agent about his selling strategies would have to stay confidential, unless the seller gave permission to disclose. That's basic principal-agency law, and probably exist in most states. Only if the agent working for you has signed an exclusive buyer's agency agreement with you that makes him yours and only yours, he will most likely simply be another agent representing the seller. And if the agent is a buyer's agent, the fee paid to him/her will be dictated by the agent's agreement with YOU, not the seller. Which means any commission paid the buyer's agent cannot be taken from the seller's due at closing, unless that fee is written into the sales contract and agreed on by the seller (which means the seller might be paying double commissions - not very likely unless the selling agent cuts or shares his commission. One of the biggest misconceptions in real estate transactions is thinking that that agent you contacted to show you around and help you get a good deal is working for you!! This bites both buyers and agents more than any other thing. Without a specific buyer's agency agreement with that agent, he is most likely bound by law as a seller's representative. This bites agents in the arse big time when they disclose information to a potential buyer that the seller has told them in confidence, not realizing that telling a potential buyer is a violation of the agent's duty to the seller. Bottom line: Check your state's laws on the agency/principal relation in real estate. Most states now allow buyer agency agreements, but up until probably less than 15 years ago, almost all real estate agents in a sales transaction actually represented the seller, whether they acted like it or not. If buyer agencies are allowed, you have to have that relationship and responsibilities spelled out in writing and signed by you and the buyer's agent. Including how/when the buyer's agent will be paid. And nope, I'm not a lawyer. But was an agent for many years, and real estate is still my profession (R.E. Appraiser). __________________ Ceilin' fan it stirs the air, Cigar smoke does swirl. The fragrance on the pillow case, and he thinks about the girl. Thanks, JB, 1975.