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The Typical Residential

Real Estate Sales Transaction:

An Overview for Buyers and Sellers  

NOTE:  This article is intended to be a brief summary of law only, parts of which may or MAY NOT be applicable to your situation and/or your local jurisdiction(s).  Any information you glean from this article DOES NOT constitute legal advice and should be supplemented with the advice of an attorney licensed to practice law in your locality.

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2.) Hiring a Real Estate Agent/Broker.   Once the decision has been made to sell or buy a home, in addition to hiring an attorney, a prospective Seller or Buyer of real property will typically hire a real estate agent or broker. [But some choose not to; see For Sale by Owner.]. At one time, it was difficult to sort out who was brokering, who was acting as an agent, etc. In the past few years, many states have enacted laws in an attempt to establish uniform rules governing real estate agents/brokers. Under such laws, the following is typically true:

a.   Real Estate Seller’s Agent. Anyone holding them self out to be a Seller’s Agent is deemed to work as a fiduciary solely for the Seller in a given real estate transaction. In other words, a Seller’s agent has a duty of loyalty to the Seller and is therefore tasked with obtaining the highest possible price and best possible terms for the Seller. Thus, if you are a Seller desiring to have help in finding a buyer at the highest possible price for your home, you will typically want to hire a Seller’s Agent.

b.   Real Estate Buyer’s Agent. Conversely, a real estate Buyer’s Agent works exclusively on behalf of, and holds him/her self out to represent only the interests of, a Buyer.? A real estate Buyer’s Agent is a fiduciary of the Buyer, and is thus tasked with finding a Buyer the best possible property in the best possible location for the lowest possible price. If you are a prospective real estate Buyer looking for someone to actively advocate on your behalf in finding and negotiating the purchase of a new home, you will want to make sure that you hire a Buyer’s Agent, not a Real Estate Seller’s Agent (see above) or a Real Estate Broker (see below), either of which at the least may not fully represent your interests and at the worst may really be an agent of the Seller!

c.   Real Estate Broker. Ideally, someone purporting to be a Real Estate Broker will work on behalf of both parties to a real estate transaction, acting as a go-between and owing a duty of care to both the Seller and the Buyer. In other words, if one of the parties provides confidential information to the Broker (e.g., max./min. price) the Broker must not disclose that information to the other party. Furthermore, if claiming to represent both parties, a Broker must not do anything that undermines the interests of either party, all the while conducting himself/herself in a way that benefits both parties. As you might imagine, this is a very tall order to fill, so care should be given to make sure that a prospective Broker has the independence and objectivity necessary to truly act on behalf of both parties.

As previously mentioned, many states have passed laws requiring real estate offices to provide full disclosure regarding the nature of their representation. However, if in doubt, an age-old rule of thumb should be applied: follow the money. For example, if someone claiming to be a broker wants to sell you a particular piece of real estate, try to determine what is his/her interest in the transaction. If he/she will only be showing you one particular property and will be taking a percentage of the sale price for that property, beware! That broker’s interests are firmly in line with the Seller’s, not yours. Regardless of the title used by a real estate broker with these loyalties and self interests, he/she is, in effect if not officially, an agent of the Seller.

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See Also:

Common Law Vs.
Civil Law

The Statute of Frauds

Doctrine of Equitable
Conversion

Jump
Back/Ahead
in this document:

Preliminary Matters

v

The Role
of the Attorney

v

Hiring a Real Estate

Agent/Broker

Real Estate Seller’s Agent

Real Estate Buyer’s Agent

Real Estate Broker

v

Negotiating the
Real Estate Contract

‘For Sale By Owner’

Deciding Key Terms

v

Pre-Closing Matters

Inspections

Mortgage Issues

v

The Closing

The Deed

Affidavit of Title
ALTA Statement

Business Law Home

 

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© Roger Galer, 2004

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