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

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 ( provides additional consumer real estate related information, including agency relationships.

By Dan Krell
Copyright © 2011

Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

Evolution of real estate agent business models

When comparing real estate services, it is sometimes difficult to understand operational differences that could impact your transaction. Although the basics of selling real estate have not changed much over the years, the manner of delivery has changed. To understand how an agent’s business model may differ from another’s, let’s look at how several models developed.

Although real estate cycles, technology, and laws have contributed to the evolution of the real estate agent and how they deliver service, the “traditional” real estate agent is still around. The traditional real estate agent typically works solo, focusing on personal service rather than selling a high volume of homes. Since the agent is a solo practitioner, direct access to the agent is expected when issues arise in your transaction. The individual agent has their strengths and weaknesses; their experience and talent can be the difference in any transaction.

In past market surges, many agents found that their time was being stretched thin. To take advantage of the business environment, some agents felt that leveraging their time by hiring an assistant could grow their business. The idea was that the agent could spend more face to face time with clients and potential clients; while the assistant would deal with lower level functions, such as answering the phone and advertising.

Some assistants were licensed agents, so they could work directly with clients by showing homes and writing offers when it was necessary. As the market expanded, real estate assistants were spending more face-to-face time with clients as the lead agent was once again stretched for time. Agents keen on expanding their business, found that they could leverage even more time if they hired more licensed assistants to form a real estate team.

Although the “team” approach became popular about the time when buyer agency was introduced, it did not reach its peak until the boom market in the early to mid 2000’s. Initially, real estate teams were loosely comprised of a lead agent and several buyer agents (and sometimes an unlicensed assistant). The lead agent was focused on face-to-face time with home sellers, while feeding buyer leads to the buyer agents on the team (and of course retaining a part of the buyer agent’s commission). There is no coincidence that the peak of the housing market and this type of team structure coincided. As buyers became scarce, many of these teams contracted until (in many cases) the lead agent reverted once again became a solo practitioner.

To achieve an even higher volume of business, the team approach evolved further to a corporate or bureaucratic structure where licensed agents were hired to deal with specific tasks of the business or transaction (for example, one person would coordinate home inspections, another would coordinate contracts, etc). Various forms of this structure are still used today. The lead agent typically lends their name to the sale while team members conduct the day to day business of interacting with clients.

Like real estate agents, agent business models are not the same; and like individual agents, each real estate team has its own personality. Each model has pros and cons. The most touted benefit of working with a real estate team is that you have the team’s combined experience at your disposal. Conversely, a solo practitioner provides direct communication and typically excels in local real estate knowledge.

By Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.