You've spent the last few months surfing from website to website looking for a home, you make notes and finally find one you like. You call the agent listed on the site to schedule an appointment. The agent asks you a few questions and confirms your appointment to meet at the home. When you arrive, they introduce themselves and begin the tour. While walking through the home, the agent begins asking more questions only now it's about your finances and your housing situation. At this time you need to know who the agent is representing if they have not discussed agency disclosure with you?
A look back at agency disclosure
In 1983 the Federal Trade Commission did a study and found that 72% of the buyers thought their REALTOR® was representing them. The problem was at that time REALTORS® worked as sub-agents and represented the seller. So basically anything "your" agent knew about you including how much you would pay for the home was then passed along to the seller. The study was a huge concern for the National Association of REALTORS®, so in 1985 they put a task force together and asked that laws be set up regarding agency disclosure. Little by little states adopted laws, and by the end of the 90's, it was common across the country.
Agency Disclosure in Michigan 23 years later
In Michigan, the agency disclosure law went into effect in 1994 and created quite a stir. Real estate agents now had to explain the different types of agencies available, the duties of each relationship and have buyers and/or sellers sign the agency disclosure form. Now buyers and sellers acknowledged in writing who would be representing them in the transaction. Real estate agents were now able to represent the buyers via a buyers contract, similar to how they did with sellers.
How has agency disclosure changed in the past 24 years? According to the National Association of REALTORS® 2017 research department, roughly 29% of buyers signed an agency disclosure form at their first meeting. Another interesting fact from the profile is 21% of the buyers didn't sign the agency disclosure agreement until an offer to purchase a home was prepared. The sad thing is many times the agency disclosure, and the buyer agency contract is included in the offer without the buyer's knowledge.
What does this mean to you?
If you're a buyer or seller in Michigan, you should know that the law requires real estate licensees who are acting as agents of buyers and sellers of real property to advise the potential buyer or seller with whom they work of the nature of their agency relationship. The law states that it shall be in writing. So you do need to sign the form.
What's the best way to protect yourself as a buyer? When you're ready to buy a home, don't call around from office to office meeting agents at various properties all over town. Start by interviewing real estate agents like you would a seller. Meet them at their office like you would any other professional. Have them explain the buying process, the current market trends, the various types of agencies available and how they plan to represent you.
Buying a home is a huge investment so make sure you have someone on your side Before you view homes.