Recently I was contacted by someone from out of state who was in the process of relocating to Montgomery County. After spending some time understanding their objectives, I explained to them how real estate agency works in Texas and e-mailed them an “Information About Brokerage Services” pamphlet and a “Buyer’s Representation Agreement” for their review and signature. After a couple of days, they replied that they appreciated the information but would proceed with their home search without formal representation. So we amicably parted ways. Such is the nature of being a Realtor.
Realtors are often called Real Estate Agents. As you probably know, an agent is someone who is representing someone else in a particular activity or event. There are all kinds of agents; insurance agents, talent agents, press agents and secret agents to name just a few. The one thing all agents have in common is that they are acting on behalf of someone else, i.e. the principal. This relationship creates a fiduciary responsibility on the realtor. In other words, the interests of the principal come before the interests of the realtor, or any other person.
So is your Realtor always your agent? Not necessarily. In Texas real estate law, there is a concept called sub-agency. That means, unless an agreement is in place between the realtor and potential buyer, an agent showing a home is, by default, a sub-agent of the listing agent. In other words, the Realtor helping you find a home could technically be working for the seller, even if they are not the listing agent.
So how do you get someone to work on your behalf when you are the buyer? That is very easy to do. You enter into an agreement, typically a Buyer’s Representation Agreement, with your Realtor. This agreement enables the Realtor to put your interests first, not the seller’s. If you do not want to obligate yourself long-term to a certain agent, the Buyer’s Representation Agreement can be set for any time period, for specific houses, or for a specific area.
I should note that the Buyer’s Representation Agreement protects the agent as well. There are few experienced agents who have not been taken advantage of by a buyer with a hidden agenda. It is not unusual to spend an inordinate amount of time and travel with an unrepresented buyer, only to find out that they intend Aunt Suzy from Amarillo to write the contract and collect the commission once the right home is found. Once a Realtor has spent some time as a volunteer chauffeur and tour guide, the mutual benefit of a Buyer’s Rep Agreements becomes apparent.
What if you approach a listing agent to show you a home that they have listed? Agents can work for both parties as an intermediary. With written consent by all parties involved, an agent can essentially be the listing agent and the buyer’s agent. The agent cannot disclose confidential information of either party and must treat all parties honestly and fairly.
For anyone looking for additional information, this is all spelled out in a publication of the Texas Real Estate Commission titled Information About Brokerage Services (IABS). The IABS pamphlet should be presented to both buyers and sellers as soon as a relationship exists to ensure that there is no confusion about who’s working for whom.