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Real Estate News and Advice |
July 3, 2009 |
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 CAR Takes Steps to Clarify Buyer's Agency with New Forms
by Blanche Evans
Due to rising consumer demand, buyer agency is becoming a more popular concept. California is leading the way with buyer representation companies such as San Francisco-based Soma Living, which uses on-site computer kiosks and the Internet to assist its buyers. California may be breaking new ground in other areas, as the California Association of REALTORS® (CAR) introduces new forms to clarify buyer agency to consumers - as well as to the industry professionals who use them. June Barlow, vice president and counsel for the CAR explains why she believes the new forms are necessary. She says, "The biggest problem comes when people are surprised. If you know what your professional will do and not do, you know what to expect. "We think it is very important that the buyer and broker know what their responsibilities are so there is less surprise, disappointment, ...anger." The CAR publishes an extensive property transaction booklet for agents as well as buyers and sellers. The book is written in a no-nonsense but user-friendly Q & A style so everyone is literally on the same page. The hidden agenda of the book is that it is a brilliant risk management initiative for agents and brokers because it explains the role of other service providers, including inspectors, pest control companies, and escrow agents to name a few. "The agents knew what they are supposed to do, but the buyers and sellers don't. They don't know that they have to disclose a defect and the buyer doesn't know that a seller doesn't have to correct all the problems on the property. If you really want something, you have to negotiate for it. When escrow closes, that's it. You have what you have." Buyers and sellers also need to understand that some things are more appropriately left in the hands of other professionals. In California, plumbing and geological reports, environmental tests are performed by professionals, not by Realtors. "We supply a 12-step buyers' inspection advisory which lists the most common problems about the general condition of a property," explains Barlow. "The agent doesn't inspect the septic tank. But the Realtor can help the client decides whether or not to take the extra step to have such an inspection. The important thing is if you can identify the red flags, you can fix the problems." Buyers can also determine from where information is coming? Is it reliable? "If there is a fence on your property, that doesn't mean it is on your property line. You need to get a survey done and get it verified," advises Barlow. "If a buyer doesn't want to spend the cost, then they have to understand there is a risk involved." But the book, as agent-friendly as it is, doesn't go far enough in the area of buyer's representation, believes Barlow. She admits some controversy surrounds the topic; some agents don't want the buyer to be "confused" about such things as dual agency and interoffice agency, concepts that could pose an ethical dilemma for some buyer's agents. But Barlow is undaunted. For that reason, she has spearheaded three new buyer's agency contract forms:
According to CAR spokesperson Mark Giberson, the CAR forms are "an inn ovative way of explaining the scope of the agency and will assist REALTORS® in taking additional steps -- over and above those required by the law -- to clarify relationships." The advantage to the Realtor is that the forms do not tie down the relation ship the buyer and the agent will have, the correct form can clarify the relationship. The first form accomplishes such objectives as identifying the authority of the broker, the scope of what the broker is hired to do, and the time frame within which a buyer must bring legal claims, if any. The second form is for use by Realtors who "represent the buyer for a fee." The form includes the "agency parameters." The third form creates an agreement in which the broker is entitled to compensation only if s/he "had presented the property to the buyer or had otherwise acted on behalf of the buyer on the property being purchased." "I think it will start to define the relationship and the scope of the tasks so that everyone will understand it and be on the same page. Everybody will have a starting baseline," explains Barlow. "Brokers will be free to add more or subtract from the forms. For example, there could be a reduced level of service that should be reflected in the contract. Once everyone knows what the services are, people can choose to do more or less." Compensation agreements have been around a long time, but the CAR may be the first organization to clarify different types of buyer's agency for the consumer. "I haven't heard of anyone else approaching it this way. We have gotten real specific," says Barlow. "Not only is it important to state what the agent will do, it is just as important to state what they will not do. Then they can suggest an appropriate service provider." "As a consumer, I would much rather have my Realtor tell me who is the best pest control rather than go to the Yellow Pages," suggests Barlow. "Before escrow, the agent has an incentive to give the buyer as much information as possible. After escrow, the agent is liable. And the buyer is going to find out - sooner or later." The new forms should also solve the semantics war between some agents. "This way, everyone is using the same terms," says Barlow. " We (CAR) have no problem with any way of marketing - we just don't want it done with smoke and mirrors." Still undergoing review, the new forms will be released by the CAR in April. Published: February 25, 1999 Use of this article without permission is a violation of federal copyright laws. 
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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
