Does your agent have a duty to you – or their pocketbook during an open house?

by Dan Krell © 2011
www.DanKrell.com

I received an email from my local association indicating that there is a revised disclosure form. This is not unusual, as forms are often revised for various reasons. Often times, new forms or revisions to existing forms are often made when there are changes to real estate laws and practice thereof; or when issues arise in specific practice areas (either because of a significant lawsuit or someone received too many complaints). This time, however, the Maryland Real Estate Commission (MREC) most likely updated and clarified the agency relationship form “Understanding Whom Real Estate Agents Represent” because of complaints of agents’ behaviors (regarding their agency relationship) while conducting open houses.

The purpose of these “agency” forms are to protect consumers as well as inform of an agent’s and broker’s duty to their client. I’m not an attorney, however, I believe that the agency disclosure also provides the agent a reminder of their duty. To be fair, many brokers and agents understand their duties and their commitment to their clients. However, there are some that do not; and unfortunately, I cannot say that they know who they are.

An “agency relationship” is defined by COMAR (Title 17 – Real Estate Brokers) §17-528 as a “relationship in which a licensee acts for or represents another person with the person’s authority in a residential real estate transaction.” Further, §17-530 states; “A licensee who participates in a residential real estate transaction as a seller’s agent, buyer’s agent, or as a cooperating agent shall disclose in writing that the licensee represents the seller or lessor or the buyer or lessee.”

It appears that there are reports of agents who conduct open houses for the purpose of steering buyers their way by making disparaging remarks about the home, as well as exhibiting other subtle behaviors that may be construed as inappropriate. An explanatory letter from the MREC describes such behaviors and clarifies how agents should conduct themselves during an open house. Besides reports of agents sitting with their laptops at the ready to show buyers other homes; according to the letter, some agents have openly admitted that their goal was to recruit home buyers while sitting an open house for a listing agent. According to the MREC, this can be a violation of the agent’s duty of loyalty to the seller; “any agent affiliated with the listing broker who holds an open house is there exclusively as the seller’s agent.”

To further clarify the agency relationship, the revised “Understand Whom Agents Represent” form states “If you are viewing a property listed by the company with whom the agent accompanying you is affiliated, and you have not signed a ‘Consent for Dual Agency’ form, that agent is representing the seller.” To attempt to circumvent this issue, some agents have had their seller clients sign a waiver of agency for open houses. However, the MREC makes it clear that an “agency waiver” is prohibited under Maryland law.

The MREC states that although it is improper to solicit a buyer while sitting in an open house, it is acceptable for agents who conducted the open house for a listing agent to contact those unrepresented home buyers another time and place. The MREC website (www.dllr.state.md.us/license/mrec) provides additional consumer real estate related information, including agency relationships.

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Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of February 7, 2011. Using this article without permission is a violation of copyright laws. Copyright © 2011 Dan Krell.