Why “Full Disclosure” is critical !
Some Real Estate Agents Can’t Provide you Full Disclosure ! There have been court cases upholding situations where the Broker and Listing Agent knew that a large portion of a homes back yard had been sold but, were not required to advise the prospective Home Buyer that this had occurred. (see Oklahoma Supreme Court). In a Real Estate Brokerage, the Broker OWNS the Listings. Under this contract the Brokerage is obligated to market and sell the property under the terms and conditions of that contract. Agents working for that Brokerage have obligations to the Seller by virtue of that contract. This is one area of “Conflict of Interest” that relates to representation or “Agency”.
A ”Buyers Agent” or “Single Agency” agent, when constrained by the Listing Contracts of the Brokerage, can not provide a Buyer fiduciary representation and must transition to a dual agent or transaction agent. In this form of representation – or lack thereof, ”Full Disclosure” is not possible. For example if the transaction agent knows what the seller’s bottom price is they would be harming the seller to divulge this information to the Buyer who may be willing to pay more. Listing Brokerages comprise 98% of all real estate Brokerages. This raises the question, If a Real Estate Brokerage is part of a national or international Real Estate corporation, doesn’t that brokerage have obligations to all the Sellers represented by that corporation ?
In North Carolina a 2008 court ruling requires agents and brokerages to disclose the compensations offered on properties shown to home Buyers. This was a result of real estate agents not showings properties with low commissions in favor of higher commissions and/or a bonus on another property.
Real estate agents in Florida are NOT required to make this disclosure. In Florida in 2008, the state dropped the standing requirement that an real estate licensee identify whom he/she was working for or represented at the very first meeting with a new client. This law was originally written to protect buyers from agents showing properties and not disclosing they were really working for the seller. Real estate buyers are supposed to “know” without disclosure that their agent is a transaction agent.
Exclusive Buyer Brokerages provide Full Disclosure to their home Buyers because they work directly for the home Buyer. They have no obligations to the seller so there is never a conflict of interest. The entire buying process is completely open including what commissions and/or bonuses are being paid.
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- Representing Buyers Exclusively
