Columbia SC Real Estate Agency Laws – Agency Relationships

This is Part One of a past series of posts that will attempt to perform one of my legal obligations to you. Today…let’s talk about real estate laws and how they impact you.

The South Carolina Real Estate License Law requires real estate licensees (agents) to provide you with a meaningful explanation of Agency Relationships offered by their Company.

When encountering any licensee (whether you meet them at an Open House or a New Construction site such as Lake Carolina) or before you begin to work with a real estate licensee, the licensee should give you an Agency Disclosure Brochure.

It is important for you to know the difference between a Broker-in-Charge and associated licensees. This brochure begins the process of providing a meaningful explanation of agency.

The Broker-in-Charge is the person in charge of a real estate Company. Associated licensees may work only through a Broker-in-Charge. In other words, when you choose to work with any real estate licensee, your business relationship is legally with the Company and not with the associated licensee.

A real estate Company and its associated licensees can provide buyers and sellers valuable real estate services, whether in the form of basic customer services, or through client-level agency representation.

THERE IS A DIFFERENCE BETWEEEN BEING A CUSTOMER & A CLIENT!

In Part Two of this series, I’ll discuss that difference and why you should establish your business relationship with a licensee EARLY in the process.

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First Time Home Buyers Should Know About Agency Agreements

This is the final installment in my series on Columbia SC real estate agency laws.

Here's a summary of the past articles.......

Part One - Discussing agency relationships with real estate licensees (agents) and defining your business relationship with said agents.

Part Two - What's the difference between being a Customer and a Client?

Part Three - Why should all home buyers should hire a professional real estate agent?

Part Four - My fiduciary duties to you as a real estate consumer.

Part Five -What are the legal types of agency relationships in South Carolina?

Let's close this series by discussing agency agreements and summarizing your real estate representation choices.

When you choose client-level service, your written Agency Agreement or your agent should answer these questions:

• Can you work with other real estate Companies during the time of the Agreement?
• What will happen if you buy or sell on your own without the agent?
• When will your Agency Agreement expire?
• How will the real estate Company be paid for its services?
• Does the real estate Company represent both buyers and sellers as clients?
• What are the choices if two clients become involved in one transaction?
• What duties will the real estate Company continue to provide me after the transaction is completed?

If you plan to become a client of a real estate licensee (agent) and their real estate Company, the licensee should explain the agreement to you fully and should answer questions you may have about the agreement.

Remember, however, that until you enter into a representation agreement with the Company, you are considered a customer and the Company cannot be your advocate, cannot advise you on price or terms, and cannot keep your confidences.

IT'S YOUR CHOICE!!!

As a real estate consumer in South Carolina, it is your choice as to the type and nature of services you receive.

• You can choose to remain a customer and represent yourself while the Company represents the other party.
• You can choose to hire an agent and real estate Company for representation through a written agreement.
• If represented by the Company, you can decide whether to go forward under the shared services of dual agency or designated agency or to remain in single agency.

The choice of services belongs to you - the South Carolina real estate consumer.

If you ever have questions about Agency Relationships in Real Estate, please feel free to email me at blogger@davidpatterson.net

First Time Home Buyers Should Know About Agency Types

This is Part Five in my series on Columbia SC real estate agency laws.


In Part One, I expressed the importance of discussing agency relationships with real estate licensees (agents) and agreeing on your business relationship.

In Part Two, I wrote about the difference between being a Customer and a Client.

Part Three discussed the importance of some sellers and all home buyers becoming Clients.

Part Four stated my fiduciary duties to you as a real estate consumer.


This installment will discuss three types of Agency Relationships in South Carolina and how they impact you during the real estate sales process.


First, Let's discuss Single Agency. When a real estate Company and its associate licensee represents only one client in the same transaction (the seller or the buyer), the relationship between the Company and the seller/buyer is called Single Agency. Approximately 93% of my clients have entered into a Single Agency relationship with me. After reading the remaining portions of this post, you will understand the importance of that statement in reaching your real estate goals.



Let's turn our attention to the second type of agency.



Designated Agency came on the South Carolina real estate scene on January 1, 2005. In designated agency, a broker-in-charge (which is the personification of a real estate Company) may designate an individual associated licensee to act solely on behalf of each client. These designated agents have a duty to promote the best interest of their clients, including negotiating a price.


The broker-in-charge remains a disclosed dual agent (which will be address shortly) for both clients, and ensures the assigned agents fulfill their duties to their respective clients.



At the time you sign an agency agreement, you may be asked to acknowledge whether you would consider giving written consent allowing the Company to designate a representative for you and one for the other client in a designated agency.





For example....If I am representing you on the purchase of a home that is listed by my office colleague Lisa Davey, Lisa and I would be designated agents in that transaction and our broker-in-charge Margaret-Ann Ashburn would be a disclosed dual agent.

Disclosed Dual Agency exists when the real estate Company has two clients in one transaction – a seller client and a buyer client. At the time you sign an agency agreement, you may be asked to acknowledge whether you would consider giving written consent allowing the Company to represent both you and the other client in a disclosed dual agency relationship.

In a disclosed dual agency, the Company's representation duties are limited because a buyer and seller have recognized conflicts of interest. Both clients' interests are represented by the Company.



If I became a disclosed dual agent in any real estate transaction, I could not advocate on behalf of one client over the other, and cannot disclose confidential client information concerning the price negotiations, terms or factors motivating the buyer/client to buy or the seller/client to sell.



Hence....about 93% of my clients enter into Single or Desigated Agency agreement with me. It is important for my clients to have an advocate throughout the entire real estate sales process that is committed to your best interests.



In the final installment of this series, we'll discuss what to expect in an agency agreement.

Fiduciary Duties are Important to First Time Home Buyers

This is Part 4 in my series on Columbia SC real estate agency laws.

In Part One, I expressed the importance of discussing agency relationships with real estate licensees (agents) and agreeing on your business relationship. In Part Two, I wrote about the difference between being a Customer and a Client. Part Three discussed the importance of some sellers and all home buyers becoming Clients.

This installment will discuss your expectations of a real estate agent and their fiduciary duties to you.

If you enter into a written agency agreement, as a Client, you can expect the real estate agent and her/his real estate Company to provide the following client-level services:

1. OBEDIENCE - If, and only if, you have SIGNED an agency agreement with an agent and/or real estate company, the agent is obligated to promptly and efficiently obey all of your LEGAL instructions. HOWEVER, you MUST HAVE a signed agreement to receive this level of client services.


2. LOYALTY - This fiduciary duty obligates a real estate agent to operate and negotiate in your best interest. Unless you have a SIGNED agency agreement with an agent or real estate company, the agent/real estate company is not required to be loyal to you. Therefore, when you walk on that new construction site and begin to sign documentation, remember this................

If you do not have representation with you, the on-site agent is not required to work for your best interest!


3. DISCLOSURE - An agent must disclose all known relevant and material information. For example, your agent should educate you about any factor that might affect the value or desirability of the home being considered for purchase.

By the way, NEVER ENTER INTO A CONTRACT without reviewing the Sellers Property Condition Disclosure Statement. If you are looking at new construction, this property will not be available to you for obvious reasons.

(NOTE -- Not all homes are required to have this document. For a list of exemptions, please feel free to email me at blogger@davidpatterson.net)


4. CONFIDENTIALITY - Unless you give consent, an agent is obligated to safeguard your personal information and your ability/willingness to pay more for a home than your offer price. However, if you do not have a signed agency agreement with a real estate agent or company.....

"ANYTHING YOU SAY CAN BE USED AGAINST YOU........" (Know Your Rights!)


5. ACCOUNTING - An agent and their real estate company is obligated to account for all money, deeds, documents and/or any other property given to them by you. For example, I have a client from Virginia that is moving to our area. In an effort for me to work on her behalf, she entrust me and Russell & Jeffcoat with $1250. This money is to be held in earnest and for payment of required inspections.

When hiring an agent, you must hire someone trustworthy! $1250 is not a trivial amount to being handing over to any Tom, Teresa, Dick, Denise, Harry or Harriet!


6. Reasonable Care and Skill - This is the most ignored duty by first time home buyers! Just because you have a friend or acquaintance that has their real estate license, that does not equate to possessing the skill necessary to fulfill this and the aforementioned fiduciary duties.

An agent is obligated to use reasonable care and diligence when representing you. You should expect a standard of care that only a COMPETENT real estate PROFESSIONAL can exhibit.

You should hire someone with superior skill and knowledge of the real estate market. No agent can possess superior skill AND knowledge by having closed only 1-4 transactions in their career.

You need to hire professionals such as an Accredited Buyer Representative, a Certified Residential Specialist or a real estate professional that has closed at least 25 transactions.

In my opinion, I would not want to be in the courtroom with an attorney that has never represented someone on trial for their freedom. That same mindset should be used in hiring a real estate agent.

In Part Five of this series, we will discuss Columbia SC Real Estate Types of Agency.

First Time Home Buyers Should Be Clients

This is Part 3 in my series on Columbia South Carolina real estate agency laws.

In Part One, I expressed the importance of discussing agency relationships with real estate licensees (agents) and agreeing on your business relationship. In Part Two, I wrote about the difference between being a Customer and a Client.

This installment will discuss the importance of some sellers and all home buyers becoming Clients. Clients receive more services from real estate licensees than customers.

If you are a first time home buyer, I STRONGLY ENCOURAGE YOU to hire an Accredited Buyer Representative (ABR). There are ABR's that will work with you for FREE*! How can you beat that?

A seller becomes a client of a real estate company by signing a formal listing agreement with the Company. For a seller to become a client, this agreement must be in writing and must clearly establish the terms of the agreement and the obligations of both the seller and the Company which becomes the agent for the seller.

A buyer becomes a client of a real estate Company by signing a formal buyer agency agreement with the Company. For a buyer to become a client, this agreement must be in writing and must clearly establish the terms of the agreement and the obligations of both the buyer and the Company which becomes the agent for the buyer.

Let me take a moment and place emphasis on the previous paragraph. If you do not have a signed agreement from a real estate company or associated licensee, they are not required to work in your best interests!

For example, if you visit a new construction site and meet the on-site agent, they are talking to you with the best interest of the builder/seller in mind. Why do I know this? It's their Fiduciary Responsibility to represent the best interests of the builder/seller.

If you give that on-site agent information about yourself without representation, that agent has a legal duty to share it with the builder/seller. What you don't know about how they use your information could hurt you!

There are several examples of current homeowners that would never buy a new home again without the help of an Accredited Buyer Representative or Certified Residential Specialist. The ABR and CRS Designee is trained on representing and negotiating for your best interests!

Let me say this again...............If you are looking to buy a home, GET REPRESENTATION! Bad things can happen to you that could take years and thousands of dollars to correct.


In Part Four, we will discuss the fiduciary services that Clients should receive from their licensee (agent) and the real estate Company.



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You Are A Customer - Columbia SC Real Estate Agency Laws

This is Part Two in my series on Columbia South Carolina real estate agency laws.

In Part One, I expressed the importance of discussing agency relationships with real estate licensees (agents) and agreeing on your business relationship.

Unless you have signed an Agency Agreement with a real estate licensee, you are a Customer.

South Carolina license law defines customers as buyers or sellers who choose NOT to establish an agency relationship. The law requires real estate licensees to perform the following basic duties when dealing with any real estate buyer or seller as Customers:

• Present all offers in a timely manner
• Account for money or other property received on your behalf
• Provide an explanation of the scope of services to be provided
• Be fair and honest and provide accurate information
• Disclose "adverse material facts" about the property or the transaction which are within the licensee's knowledge

Unless or until you enter into a written agreement with a real estate Company for agency representation, you are considered a "Customer" and a real estate Company or a licensee will not act as your agent!

As a Customer, you should NOT expect the Company or its licensees to promote your best interest, or to keep your bargaining information confidential.

In Part Three of this series, I'll discuss the importance of establishing a client relationship with a licensee EARLY in the process.




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