Brokers forced to disclose who they represent

February 02, 1992|By James M. Woodard | James M. Woodard,Copley News Service

When you work with a real estate broker in a home-selling or home-buying transaction, who is that broker really representing?

That buyer may think the broker he contacted will represent his [the buyer's] best interests. But in many cases the broker has a legal and fiduciary obligation to represent the interests of the property's owner-seller, not the buyer.

When a broker lists a home,he signs a listing contract that obligates him to represent the best interests of the seller. When he shows or sells a home listed by another broker, he works as a subagent under the broker who has the listing -- still, indirectly, representing the interests of the seller.

However, there are "buyer brokers" who work for and represent the buyer. They may be found at specialized firms, or even PTC among traditional real estate brokerage firms.

In these cases, the buyer signs an agency agreement with the broker and pays a fee for his services. But these contracts are relatively few in number. The "buyer broker" concept has been around for years but has never gained much momentum.

About three years ago, NAR added the following section to their association's Code of Ethics: "The Realtor, acting as agent of the seller or as subagent of the listing broker, shall disclose that relationship to buyers as soon as practicable."

When a broker discloses the nature of his agency representation he "clears the air" on this sometimes sensitive subject. He also enhances his credibility with the buyer and reduces the risk of

encountering a future legal liability problem.

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