What is a Real Estate Agent?
Real estate agents are licensed professionals who are educated in real estate matters and who are authorized to conduct real estate business in the state in which they are licensed. In order to become a real estate agent, an individual must pass a state board exam.
In many states, distinctions are made between different parties to the real estate transaction such as agents, salespersons, and brokers. In general, the term agent is used to refer to a salesperson rather than a broker.
Brokers generally handle higher-level real estate issues. In certain states, agents are referred to as real estate brokers.
In those states, brokers are referred to as qualifying brokers. To further the confusion, in certain states, for example, Colorado, all licensed real estate professionals are considered brokers.
Because of this, it is important for a party to a real estate transaction to understand the titles and functions of the professionals handling their purchase or sale. The tasks which a real estate agent performs are largely dependent on their:
- Education;
- Licensing; and
- Certification.
Common examples of tasks real estate agents perform include, but may not be limited to:
- Handling standard client forms and questionnaires;
- Answering basic questions from:
- buyers;
- sellers; or
- clients;
- Reviewing all real estate contracts;
- Engaging in negotiation of prices, up to the closing of a deal;
- Showcasing property by leading clients on walk-throughs and open houses; and
- Providing clients with specific information, up to a certain level of knowledge and expertise.
It is important to note that a real estate agent, or salesperson, is frequently limited in their actual work capacity. For example, they may need to obtain confirmation from a supervising broker in terms of more important decisions related to the real estate transaction.
For the majority of home buyers, this distinction does not affect them much. For more experienced investors and commercial investors, however, brokers may be more preferable over sales agents.
What Full Disclosure Requirements do Real Estate Professionals Need to Follow?
In real estate transactions, agents and brokers are key parties that help carry out the sale. Agents and brokers represent the buyer or seller as well as assist with showing properties or acting as intermediaries between the parties.
Brokers, however, typically:
- Have more education and training;
- Perform more technical tasks, such as contract drafting and negotiations;
- Are always licensed; and
- Often oversee agents that work on their behalf.
Pursuant to state and federal laws, real estate professionals have certain disclosure duties to their clients as well as the other party to the transaction. It is essential for them to fully disclose all information which is important to the sale which may affect a buyer’s decision to purchase.
Full disclosure provides the parties to the real estate transaction all of the details that are need to:
- Evaluate the property;
- Decide to move forward with or reject a sale; and
- Successfully negotiate.
A real estate professional is required to know what information they are required to disclose to their clients as well as to the other party. This information may include defects, hazards, and other various factors.
If an individual is a buyer or a seller and their agent fails to follow the principle of full disclosure, they may be able to file a lawsuit and to recover damages.
What Information Must a Real Estate Professional Disclose During a Transaction?
A real estate professional who represents a buyer is required to find out from their client any known defects or hazards on the property as well as any other factors that may affect the sale. The professional should then disclose these defects to the representative of the seller.
The seller’s agent should discuss those defects with their client in order to determine if they are still interested or if they want to negotiate. The duty to disclose any known defects and hazards is arguably the most critical duty.
State laws will vary regarding what constitutes mandatory full disclosure. Material defects a seller may be required to disclose include:
- Structural defects, like foundation issues;
- Plumbing problems;
- Presence of mold;
- Termite or pest issues; and
- Whether or not the residence is in a flood zone.
This is not an exhaustive list of requirements. It is important to review laws of the state as well as federal laws or consult with an attorney to ensure all required information is disclosed.
What is the Multiple Listing Service?
The Multiple Listing Service (MLS) is proprietary software that was developed by realtors for realtors. The MLS helps facilitate the home buying experience.
Realtors across the country pay for access to the MLS system. This allows them to list and view both residential and commercial property listings.
What is the Property Listing Process through the Multiple Listing Service?
Listing brokers contract with homeowners to sell their property. The listing broker will first obtain pricing information from a seller.
The broker will then:
- Take photographs;
- Collect catalog information; and
- Record details of the property, for example, square footage and the number of rooms.
The broker will then create a listing on the MLS using a template in the software system and upload the listing for the property into the Multiple Listing Service. Once a listing is uploaded, agents for buyers across the world will have access to it and can:
- View the photos;
- Read the descriptions; and
- Contact the listing agent and schedule a showing.
Then, the buyer’s agent will meet with the listing agent to view the home or will use a special key to open the lockbox on the home. The potential buyer will view the home and will review the specifications that are provided in the MLS listing.
If the potential buyer likes the home, they will coordinate with their agent to make an offer on the property. Most of the contact between the buyer and the seller is completed through the real estate agents.
What are Multiple Listing Service Disputes?
The Multiple Listing Service was created to streamline the electronic advertising of property. Just with the click of a button, realtors can simultaneously list and advertise a home for sale.
Moments later, buyer’s agents may call and schedule a showing. The MLS however, is not without fault.
Common disputes related to the MLS include:
- Failure to list the correct price for the property;
- Misrepresentation of certain aspects of the house, such as its location or features;
- Failure to disclose defects;
- Failure to properly coordinate showings by giving the seller advanced notice; and
- Illegal discrimination against prospective buyers.
What are Multiple Listing Service Lawsuits?
If an individual runs into an issue with a MLS listing or an agent, they may have already incurred irreparable damages, for example, purchasing a defective home based on false promises placed in an MLS listing.
For certain conflicts, the MLS requires that the parties use arbitration. For example, if a seller wants to file a lawsuit against their own MLS agent, the contract for listing the property through the MLS will typically require arbitration before a neutral hearing administrator.
Many hearing administrators are members of national arbitration organizations. If an individual is a buyer who purchased a home based on the fraud of a MLS listing agent, they may file a lawsuit against that agent and against the MLS.
Do I Need a Lawyer for a Multiple Listing Service Dispute?
If you are involved in a Multiple Listing Dispute, it may be helpful to hire a real estate lawyer. Your lawyer can advise you on how to protect your assets, represent you during arbitration, and ensure that you are compensated for your losses.
