Real Estate can be a confusing concept for many who haven’t had much experience with it – and even more confusing for those who have had bad experiences. This is my attempt at a primer to give you a 101 on how things work. Much of this is taken from the required handout we are provided to give to any perspective clients. For an unadulterated look, please go to: https://www.dos.pa.gov/ProfessionalLicensing/BoardsCommissions/RealEstateCommission/Documents/Board%20Documents/Written%20Consumer%20Notice.pdf
Real Estate agents may enter into the following agency relationships with consumers (you).
Please click on each of the following to read more:
As a seller agent, the agent and the agent’s company works exclusively for the seller and must act in the seller’s best interest, including making a continuous and good faith effort to find a buyer except while the property is subject to an existing agreement. All confidential information relayed by the seller must be kept confidential except that an agent must reveal known material defects about the property.
As a buyer agent, the agent and the agent’s company work exclusively for the buyer even if paid by the seller. The buyer agent must act in the buyer’s best interest, including making a continuous and good faith effort to find a property for the buyer, except while the buyer is subject to an existing contract, and must keep all confidential information, other than known material defects about the property, confidential.
As a dual agent, the agent works for both the seller and the buyer. A dual agent may not take any action that is adverse or detrimental to either party but must disclose known material defects about the property. An agent must have the written consent of both parties before acting as a dual agent.
As a designated agent, the broker of the selected real estate company designates certain agents within the company to act exclusively as the seller/landlord agent and other agents within the company to act exclusively as the buyer/tenant agent in the transaction. Because the broker supervises all of the agents, the broker automatically serves as a dual agent. Each of the designated agents are required to act in the applicable capacity explained previously. Additionally, the broker has the duty to take reasonable steps to assure that confidential information is not disclosed within the company.
A transaction agent provides real estate services without having any agency relationship with a consumer. Although a transaction agent has no duty of loyalty or confidentiality, a transaction agent is prohibited from disclosing that:
• The seller will accept a price less than the
asking/listing price,
• The buyer will pay a price greater than the price
submitted in the written offer, and
• The seller or buyer will agree to financing terms other
than those offered. Like agents in agency relationships, transaction agents
must disclose known material defects about the property.
• Regardless of the business relationship selected, all
agents owe consumers the duty to:
• Exercise reasonable professional skill and care which
meets the practice standards required by the RELRA.
• Deal honestly and in good faith.
• Present, as soon as practicable, all written offers,
counteroffers, notices and communications to and from the parties. This duty
may be waived by the seller where the seller’s property is under contract and
the waiver is in writing.
• Comply with Real Estate Seller Disclosure Law.
• Account for escrow and deposit funds.
• Disclose, as soon as practicable, all conflicts of
interest and financial interests.
• Provide assistance with document preparation and advise
the consumer regarding compliance with laws pertaining to real estate
transactions.
• Advise the consumer to seek expert advice on matters
about the transaction that are beyond the agent’s expertise.
• Keep the consumer informed about the transaction and
the tasks to be completed.
• Disclose financial interest in a service, such as
financial, title transfer and preparation services, insurance, construction,
repair or inspection, at the time service is recommended or the first time the
agent learns that the service will be used.
• The following contractual terms are negotiable between
the agent and the consumer and must be addressed in an agreement/disclosure
statement:
• The duration of the agent’s employment, listing
agreement or contract.
• The agent’s fees or commission.
• The scope of the agent’s activities or practices.
• The broker’s cooperation with and sharing of fees with
other brokers.
• All sales agreements must contain the property’s zoning
classification except where the property is zoned solely or primarily to permit
single family dwellings.
Real Estate agents do not work by the hour. They receive a commission once the transaction closes. If the transaction does not close, the agent receives no income, unless otherwise agreed upon. This is why many agents require buyer’s agreements. In the US, commission is paid by the seller. While this seems unfair, it also “inflates” the sales price. The buyer pays more for a home to offset this cost. After the seller and the agent agree upon a price, and the listing agreement is signed, generally the commission is evenly split between buyer’s agent and seller’s agent. The commission is then split again between the agent and the broker that the agent works for. Lastly, the commission is split again between that agent and the local, state and federal government.
Some more terms to familiarize yourself with:
Real Estate agents do not work by the hour. They receive a commission once the transaction closes. If the transaction does not close, the agent receives no income, unless otherwise agreed upon. This is why many agents require buyer’s agreements. In the US, commission is paid by the seller. While this seems unfair, it also “inflates” the sales price. The buyer pays more for a home to offset this cost. After the seller and the agent agree upon a price, and the listing agreement is signed, generally the commission is evenly split between buyer’s agent and seller’s agent. The commission is then split again between the agent and the broker that the agent works for. Lastly, the commission is split again between that agent and the local, state and federal government.
More than 7 months of inventory
Less than 5 months of inventory
From 5 to 7 months of inventory
To calculate months of inventory, follow these steps:
- Identify the number of active listings on the market within a certain time period. For example, you might search the Multiple Listing Service to find out how many active properties were listed in a particular city for the month of February.
- Identify how many homes were sold or pending sale during that same time period.
- Divide the active listings number by the sales and pending sales to find months of supply.
(source:https://www.sapling.com/6464819/calculate-months-inventory)
Dual Agency… is it for you?: