Real estate agents must complete stringent coursework and pass tests to gain their licenses. As a part of this certification, they learn about ethics, professional standards, and the buying and selling process. These courses often touch on some of the legal aspects of the profession, but they don’t entirely rule out complications when buying or selling a property.
Real estate agents do everything in their power to promote their clients’ interests. Yet, this doesn’t require an inside-and-out understanding of the law. If you’re entering into a real estate transaction, it could benefit you to partner with a real estate attorney. While considering your options, you can learn about the top legal issues that your real estate agent should know and explain.
A Real Estate Agent Should Clearly Outline Their Duties
A real estate agent—or listing agent, broker, or realtor—must serve their clients’ best interests. This means not only preparing and listing the property for sale but also marketing it, ensuring the client understands what to expect, and working to close the sale for the best price possible.
Real estate agents have specific duties and obligations they must uphold when representing someone. Failing to comply with these obligations could jeopardize their license and career, in addition to opening the door for legal action against them. At the very least, this could void the sale of the property.
Real estate agents should include certain duties in their listing agreements.
These obligations could include:
- Investigating current market conditions to accurately price the property
- Listing a home for sale and showing it to potential buyers
- Marketing the home and attempting to sell it
- Communicating with the client frequently and returning calls as expected
- Answering questions about contracts, home inspections, title issues, and more
- Handling negotiations with potential buyers, including prices, terms, and other conditions
- Ensuring the home is best presented to sell for the best price
- Continuing representing the client through the sales and closing process
As an agent representing a buyer, there are also obligations that should be in their contract, as well. These also include representing the client’s best interests and following through with them through closing. There are additional duties, too. A buyer’s agent must help them find the best property at the best price, ensure they fully understand any concerns about the property, and negotiate a fair offer.
An Agent Must Properly Structure the Listing Agreement
The listing agreement is the primary contract between real estate agents and the seller. This contract creates a professional relationship, making it essential to outline the terms of that relationship. It should include the duties and responsibilities of the sellers and the agent. In addition, it must discuss the professional relationship and how it will work. Improperly structuring this agreement could cause issues with the relationship or sale.
Your listing agreement should include:
Information About Fees
Many first-time sellers do not know how real estate agents get paid. They need to see it in writing and agree to it in the listing agreement. You should ensure you understand all these details because failing to clearly outline when, how, and how much you will receive could affect your finances after the sale completes.
Ethics and procedures prevent real estate agents from taking a substantial percentage of a property’s sale. This commission is generally anywhere from three to five percent of a property’s sale, although it could be higher in some circumstances. When you partner with a real estate lawyer, they can explain whether the real estate agent charges a fair price for their services. If not, they can guide you through your next steps.
The Right to Sell the Property
Not only do you need to clarify that you have the right to sell the property, but you likely want to secure the exclusive right to sell it. Without this, other agents could step in to sell the property, or the property owner could take the opportunity to sell independently.
How Long the Relationship Will Last
The real estate agent should outline how long your working relationship will last. Generally, your relationship with the realtor ends when you buy or sell the property in question. It could also end when you decide not to move forward with a transaction.
A Real Estate Agent Must Disclose Certain Information
There are many things that property sellers—and their real estate agents—must disclose to potential buyers. This includes many defects that are not obvious to the naked eye. Sometimes, laws only require them to answer honestly and not provide the information unless prompted. For example, if the potential buyer asks about flooding issues, the agent and property owner must give them an honest answer.
This is not an excuse for buyers to avoid requesting and paying for a professional home inspection before making the purchase, but mandatory disclosures are important for sellers’ agents. If an issue occurs, and they failed to answer a related question truthfully, it could support legal action.
Some states have statutes that make certain disclosures mandatory regardless of whether a buyer asks. This is especially common in coastal areas that are hurricane-prone. Statutory disclosures often deal with condominium or homeowner’s association membership and dues, as well.
Both the selling or buying agent might be legally responsible in this type of situation, depending on the circumstances. It is important for all agents to understand the laws for mandatory disclosure in their state.
Agents Cannot Make False Representations to the Client or Others
Unfortunately, some real estate agents misrepresent properties, their values, or other factors that can take advantage of a client who is not a professional in the industry. In many cases, these agents fail to see this as fraudulent or misleading. They simply see a way to make money and put their interests ahead of their clients.
This occurs in several ways. Listing agents sometimes tell a property owner their real estate is worth much more than they thought because it encourages them to sign a listing agreement with their team. Alternatively, they could fail to present the seller with all offers, purposefully leaving out those below the listing price or others they believe are too low. This eliminates the seller’s option of choosing the contract they want.
Agents could also misrepresent a property in other ways. They could make untrue claims about the property, its history, zoning, condition, and more. This could void the sale or lead to legal action if the truth comes out later.
All Agents Must Serve Their Clients’ Goals
When a seller signs a listing agreement, it requires the real estate agent to make a reasonable effort to handle a number of duties. This includes representing the seller’s best interests throughout the process. This begins with their efforts to sell the property.
As a listing agent, they should:
- Help the seller understand what could improve the property for buyers
- Use experience and information about recent sales to price the home
- List the property using a listing service
- Advertise the property
- Host open houses or tours
The real estate agent also acts as a guide for the seller. Sellers look to their agents as experts when it comes to selling their homes. However, they must ensure they always offer advice about real estate, not law.
This is yet another reason why potential buyers and sellers choose to partner with real estate attorneys. No matter how friendly they seem, your real estate agent is financially motivated to close a deal. Your lawyer isn’t. They aim to protect your interest through the transaction, even if that means reminding your agent of their legal obligations.
Your Agent Has Obligations Even After the Sales Agreement
Real estate agents also have an obligation to their clients after there is a sales agreement.
While the title clerk and the buyer’s agent handle their work, the seller’s agent should provide additional support and guidance to their client, which could include:
- Scheduling a time for the buyer’s home inspection
- Serving as a go-between for the buyer and seller as needed
- Communicating with the buyer’s agent throughout this process
- Providing additional information to the title clerk
- Ensuring the title is clear
- Attending closing with their client
- Explaining the documents to their client at closing
- Reviewing the settlement sheet with the client
When a real estate agent does not provide the proper support, guidance, and information to their client, it can cause the client to balk when it comes time to pay their fees. This could lead to legal issues and challenges in court.
Real Estate Agents Must Understand How to Resolve Disputes
Attorneys who represent agents recommend that they have dispute resolutions outlined in their contracts. There are many options for alternative dispute resolution (ADR) that could allow you to avoid costly and time-consuming processes. You want to protect yourself if something goes wrong——especially things that are out of your control.
If you’re facing a real estate dispute, and you’re unsure whether your real estate agent can handle it, consider your legal options. A lawyer can assess the reason for the dispute and work out an arrangement that benefits both parties. They can also handle all communications with your real estate agent, so everyone’s on the same page when it comes to your goals.
Why Partner With a Lawyer During a Real Estate Matter?
Buying or selling real estate is a sensitive matter. If you’re buying property, you want to move into your new home with as few complications as possible. If you’re selling property, you want to find a seller, complete the transaction, and walk away with the money you deserve.
However, even some of the best real estate agents aren’t legal professionals. They make mistakes. Some even take advantage of first-time property owners, either by failing to disclose issues with the property or charging above-average rates for their services.
Having a lawyer offers another layer of protection while buying or selling property.
- Make sure the property’s title clears
- Review any pre-existing problems with the property, such as liens
- Ensure your real estate agent upholds their obligations
- Explain whether the property has a fair price when compared to current market values
- Review all paperwork for accuracy and completion
- Protect you from any unjust real estate practices
- Advise you on your next steps
- Determine who owns the property
- Abide by your state’s real estate laws
You don’t have to navigate the process of selling or buying a property alone. You have the right to protect your finances, future, and goals with a lawyer’s assistance. You could retain legal help at your earliest convenience.
A Lawyer Could Help You Tackle These Issues
You may consider a lawyer’s support if:
- You’re unsure whether the property has a clean title.
- You believe your real estate agent isn’t acting in good faith.
- You don’t know whether you’re paying a fair price.
- Delays keep the transaction from moving forward.
- One of the involved parties lies about the property, such as whether any repairs comply with building codes.
You might also want an attorney if you don’t feel comfortable navigating the transaction alone.
Know What to Do When You Face a Real Estate Legal Matter
When you have concerns about a legal matter as a buyer or seller, speak with an attorney who handles these cases as soon as possible. You could have a lot on the line, depending on the matter at hand. Some agents retain real estate attorneys as a resource for themselves and their clients, too. This allows them to establish a relationship before they need legal advice or representation. Reach out to a real estate lawyer.