It’s finally happened. A ‘For Sale’ sign just popped up on the lawn of a house on your street which you have always thought would be perfect for you and your family. You jot down the name and number of the listing real estate agent, and hurry home to tell your wife about it.
Your wife is as excited as you are, and so you phone the listing REALTOR™ . He’s not in the office, so you have him paged.
Within minutes the listing REALTOR™ returns your call. You tell him you saw his sign, ask for the asking price, and tell him you would like to see the house. You arrange to meet the REALTOR™ there 45 minutes from now.
The REALTOR™ is at the house when you and your wife arrive. After introductions all around, the REALTOR™ takes you through the house, pointing out various features as you go. You love the house, and in your enthusiasm you blurt out that you’ve been eying this house since you moved in up the street five years ago, just waiting for it to come on the market.
You add that you want it so badly that you would pay full price for it, but you want to write a ‘low bal’ offer to see whether it flies.
What do you expect the real estate agent to do at that point? He might suggest that:
1. he help you to prepare an offer to purchase
2. he can’t help you
3. you should see another real estate agent in his office
4. you should see a real estate agent in another office
5. you review a brochure called Working With A REALTOR after which he will review it with you
Well, quite frankly it doesn’t matter what he suggests because the damage has likely already been done.
What damage?
The listing agent has no choice: he is duty bound to tell the owner – his client – that you told him you would be prepared to offer full price for the home! Whether he ‘represents’ you to make your offer, or whether you make the offer without assistance, or whether you use the services of another totally unrelated real estate agent, none of that matters.
How can this be so? Simple.
The listing real estate agent is the owner’s agent, and the relationship between them is that of agency. The owner is the ‘principal’ in this relationship, and the overriding duty of an ‘agent’ acting for a ‘principal’ is one of undivided loyalty, including the duty of full disclosure of all known facts that may affect or influence the principal’s decision.
Do you suppose the fact that you would be willing to pay full purchase price would be a fact that may affect or influence the owner’s decision? Yes, I think it would!
And at this point, there is simply nothing you or the listing real estate agent can do to change that obligation. It’s too late.
It’s really unfortunate, because it didn’t have to be that way. Two things could have prevented it.
One possibility is that you could have kept your enthusiasm to yourself. But of course you didn’t know you had to, and no one would expect you to. So really, that’s not a great option.
The other way is one which puts the onus on the listing real estate agent to take steps to protect you from that situation. How?
In British Columbia – by taking a few minutes with you before you actually viewed the house to introduce you to the concept of agency in the context of residential real estate. The process could be as simple as giving you a little brochure called Working With A REALTOR, pointing to the part called ‘The Agency Relationship’, informing you he she has an agency relationship with the owner, and giving you the opportunity to ask any questions.
Had that process been followed, the odds are that you never would have volunteered your willingness to pay full price!
Will every listing real estate agent take this preliminary step? I don’t know – but in my view, not likely.
So what’s the lesson in this?
If you’re going to an open house, or viewing a home with the listing agent, remember, loose lips sink ships. Don’t volunteer any information that you wouldn’t want the owner to know about.
Watch for Part II – it’s going to discuss the strange creature that in British Columbia is known as ‘limited dual agency’, and what it means to buyers and sellers.
Bye for now,
...Victoria's blogging real estate professional.
