As soon as you BEGIN DISCUSSIONS with a real estate agent in Maryland, you should understand what type of agency relationship or representation exists between you and the agent. There are four kinds of agency relationships in Maryland: Seller Agency, Buyer Agency, Dual Agency, and Intra-Company Agency.
SELLER AGENCY:
Seller Agency is the "traditional" agency relationship. Simply put, the listing and cooperating ("selling") agents are agents of the seller. THEIR DUTIES OF REASONABLE CARE ARE TO THE SELLER!
SELLER AGENTS, AS WITH ALL AGENTS, ARE OBLIGATED BY A CODE OF ETHICS:
- To respond HONESTLY to questions about the property from the buyer.
- To DISCLOSE material adverse facts about the property to the buyer.
- To present ALL offers to the seller PROMPTLY.
HOW SELLER AGENCY AFFECTS THE BUYER:
The seller's agent can be helpful to the buyer in a variety of ways. The seller's agent can show the buyer properties, describe the attributes and amenities of properties, provide information about sources of financing, and submit the buyer's offer to purchase. These are called "MINISTERIAL ACTS." They do NOT bring about an agency relationship between the buyer and the sales agent.
BUYER AGENCY:
Just as a written Listing Agreement is required to represent the seller, a WRITTEN Buyer Representation Agreement is required to represent a buyer, referred to as Buyer Agency. The buyer agent owes the buyer LOYALTY, DISCLOSURE, CONFIDENTIALITY, ACCURATE ACCOUNTING, REASONABLE CARE AND DILIGENCE. Amoung several "duties" owed to a buyer client, are that the buyer agent should DISCLOSE any MATERIAL FACTS or information about the property which are reasonably known to the buyer agent.
PRESUMED BUYER AGENCY:
UNDER MARYLAND LAW, the real estate agent is a presumed buyer's agent unless you or the agent determine otherwise. When you BEGIN DISCUSSIONS with a real estate agent, you should understand what type of agency relationship exists between you and the agent. WRITTEN Agency Disclosure of the relationship is required under Maryland Law. If the agent is representing you as a presumed buyer's agent, a buyer representation agreement MUST BE SIGNED when you decide to write an Offer to Purchase Contract.
BUYERS AGENTS ARE OBLIGATED TO REVEAL TO BUYERS
(to the extent reasonably known to the Buyer Agent):
- Any known willingness of the seller to accept a LOWER PRICE.
- Facts relating to the urgency of the seller's need to dispose of the property.
- The agent's relationships to the seller or interest in the property for sale.
- Facts affecting the value of the property.
- The length of time the property has been on the market and all other offers or counteroffers.
- Information that would affect the buyer's ability to obtain the property at the LOWEST PRICE and on the MOST FAVORABLE TERMS.
DUAL AGENCY:
When a buyer or tenant CLIENT of a real estate company becomes interested in property listed by that company, the real estate company, or broker, becomes the dual agent (Dual Agency). Because the company has a legal obligation to represent both parties, and may know confidential information about one party that would be helpful to the other party in negotiation, this is a limited agency relationship.
INTRA COMPANY AGENCY:
When both seller and buyer (or landlord and tenant) agree to Dual Agency by signing a Consent for Dual Agency form, the real estate company ("dual agent") will assign one agent to represent the seller or landlord (the seller's "intra-company agent"), and another agent to represent the buyer or tenant (the buyer's "intra-company agent"). Intra-company agents can provide the same services to their clients as exclusive seller's or buyer's agents, including advising their clients as to price and negotiation strategy.
DISCLOSURE IN MARYLAND:
Agency Disclosure law requires real estate agents to provide written disclosures to both seller and buyer, explaining who the agent is representing and what the agent's responsibilities are. These written disclosures are prepared by the Maryland Real Estate Commission. The duties of the agent in a real estate transaction do not relieve the buyers or sellers from the responsibility to protect their own interests. All agreements should be read carefully to ensure that they adequately express your understanding of the transaction.
Please note that a real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, you should consult an appropriate advisor.
*Information obtained for this post was obtained from Long & Foster's Form - LF1192
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I hope you all are enjoying your XMAS Day with your families and wish each of you a joyful holiday season. May renewed prosperity, good health, and happiness be yours in the NEW YEAR! Take this time to relax, have fun, and RECHARGE for the crazy 2009 year that I think it is going to be.
