Not every real eastate broker or salesman is a Realtor. Only those brokers or sales men who are members of the Association of Realtors and have voluntarily pledged to adhere to the National Association of Realtors' Code of Ethics are Realtors. The Realtor organization is a national, state and local trade association of real estate professionals. Membership in the Reatlor Association offers services NOT available to every real estate broker.
What is a buyer's broker?
A buyer may retain a broker to help him purchase real estate and to represent him. The buyer who hires a buyer's broker becomes the client of the buyer broker. The buyer broker may consult with and advise the buyer of the market, available properties, financing, property values and other matters. The buyer broker may also advise the buyer as to suggested offering prices as well as positions to take in negotiations. How a buyer broker is to be paid is negotiable between the buyer and the buyer's broker. The buyer broker may be compensated by the buyer or may be able to negotiate the transaction so that such fees are not paid by the buyer but by the listing broker or sellor or some combination of those sources. A seller or a seller's broker who meets a buyer broker in a transaction must not disclose any information the seller would not want the buyer to know as the buyer broker must disclose such information to the buyer.
What is a listing broker or subagent?
A seller may retain a broker, usually known as a listing broker, to help the seller market and sell real estate. A listing broker's primary loyalty is to the seller. He may advise the seller about poperty values, positions to take in negotiations and marketing strategies.
A subagent is a real estate broker or salesman who works with a buyer, but does not represent the buyer. Instead, the subagent represents the seller through cooperation with the listing broker.
Even though a listing broker and subagent work for the seller, they can still assist the buyer by:
- providing market or financing information for the buyer
- locating suitable property
- preparing an offer.
If a buyer works with a listing borker or subagent, the buyer is not the broker's client but is his customer. Buying property through the listing broker or subagent is similar to purchasing a product from a salesperson (i.e. without representation). The listing broker or subagent can provide information to a buyer, but usually will not provide opinions or advice to the buyer.
If you are not sure who the broker represents, be sure to ask whether the broker represents the buyer or is acting as a listing broker or subagent.
A buyer or buyer's broker must not disclose to the listing broker or subagent any information he would not want the seller to know, as the listing broker or subagent must notify the seller of such information.
What is an intermediary?
It is permissable under lawful restrictions and limitations for a broker to act as an intermediary between a buyer and seller in the same transaction. An intermediary is a broker employed to negotiate a transaction between the parties subject to certain limitations and for that purpose may be an agent of the parties to the transaction. The intermediary will act fairly so as not to favor one party over the other. For a broker to act as an intermediary, the broker must:
- obtain the written consent from each part, and
- disclose the expected source of the broker's compensation in the written consent
If a buyer and seller authorize a broker to act as an intermediary, the broker must not disclose to the buyer the lowest price the seller is willing to accept, if known, nor disclose to the seller the highest price the buyer is willing to pay, if known. A broker who acts as an intermediary in a transaction must not disclose any confidential information the broker knows about either party or any information a party specifically tells the broker in writing not to disclose unless required to disclose such information by the Real Estate License Act or a court order or if the information materially relates to the condition of the property. An intermediary must treat both parties honestly and must comply with the Real Estate License Act.
If a broker acts as an intermediary in a transaction, the intermediary may appoint a licensed associate to communicate with, carry out instruction of, and provide opinions and advice during negotiations to one party, and appoint another licensed associate to the other party for the same purposes. The appointed associates must also keep certain information confidential, treat all parties honestly and comply with the Real Estate License Act.
In the written listing agreements or written buyer representation agreements, the broker typically discloses and discusses the possibilities of whether the broker may act as an intermediaary in a transaction. Please discuss with your broker such possibilities.
Statutory Information About Brokerage Services:
The Real Estate License Act requires real estate brokers and salesmen to provide the following statement to the parties at their first meeting. Please read through the information carefully and retain it for your records.
Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner's agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer's agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly.
If the Broker Represents the Owner:
The broker becomes the owner's agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner's agent anything the buyer would not want the owner to know because an owner's agent must disclose to the owner any material information known to the agent.
If the Broker Represents the Buyer:
The broker becomes the buyer's agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer's agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer's agent anything the owner would not want the buyer to know because a buyer's agent must disclose to the buyer any material information known to the agent.
If the Broker Acts as an Intermediary:
A broker may act as an intermediary between the parties if the broker complies with the Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker, and, in conspicuous bold or underlined print, set forth the broker's obligtions as an intermediary. The broker is required to treat each party honestly and fairly and to comply with the Texas Real Estate License Act. A broker who acts as an intermediary in a transaction:
- Shall treat parties honestly;
- May not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner;
- May not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer;
- May not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by the Texas Real Estate License Act or a court order or if the inforamtion materially realtes to the condition of the property.
With the parties' consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under the Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licended under the Act and associated with the broker to communicate with and carry out instructions of the other party.
If You Chose to Have a Broker Represent You
You should enter into a written agreement with the broker that clearly establishes the broker's obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.
Other Issues
Consumer Notices: real estate brokers and salesmen are required by law to make properties available without regard to race, color ,religion, national origin, sex, disability or familial status. Prior to entering into a contract, a buyer may find it useful to prequalify for a mortgage loan. Loan programs, fees, interest rates and requirements vary among lenders. Brokerage fees are negotiable and are not fixed or controlled. In many transactions, including most residential sales, a seller will deliver a Seller's Disclosure Notice to a buyer on or before the effective date of a contract to purchase the property. The notice provides important information about the seller's knowledge of the property's condition. Buyers, seller, landlords, or tenants are encouraged to have a property inspected by licensed inspectors or lawfully authorized persons to determine: the condition of the property; (structural, mechanical and electrical items); (b) any environmental conditions; (c) feasability of use; (d) compliance with laws or regulations; (e) presence of termites or wood destroying insects; and (f) any other matters. Brokers are not qualified to perform such inspections. Residential service contracts are available to buyers and sellers of residential property. In a residential service contract, a residential service company agreres to, subject to the terms of the contract, repair the appliances, electrical, plumbing, heating, cooling or other systems in the property. Buyers are advised to obtain a policy of title insurance or have an abstract of title reviewed by an attorney of buyer's choise before purchasing a property. Buyers, sellers, landlords, or tenants are advised to seek the advice of an attorney of their own selection before entering into a binding agreement.