A homebuyer's first contact in buying real estate is usually a real estate agent. Real estate agents are designated as either buyer agents, seller agents, dual agents, or non-designated agents. Real estate agents are licensed professionals who earn a commission based on a percentage of the sale or lease price. Understanding who employs the real estate agent and to whom the agent owes a fiduciary duty is critical.
If the agent is employed by the seller, you, as a buyer, must be cautious about disclosing anything that you would not want the seller to know since the agent would have the obligation to tell his/her client (the seller). Further, the seller's broker must advise the seller of any knowledge or advice that best serves his/her client, obtain the best terms and price for the seller/client, and keep the seller fully informed of all material facts known to the agent. It is important to understand that the seller's broker owes no duty of good faith or loyalty to the buyer.
Dual agents may work with both parties serving as a 'middle-man' throughout negotiations however, buyers should again use caution about disclosing anything that might weaken their negotiating position. While dual agency is permissible under some circumstances, some states outlaw dual agency.
For example, one firm having multiple agents who represent both buyer and seller separately in the sell of one of it's listings. You should ask the agent to explain the agency relationship and review a blank contract before discussing any details about a transaction.
Property Representations: Potential homebuyers may sometimes encounter problems concerning the seller or broker's oral representations about some condition of the property which later turns out to be untrue or misleading. As a general rule, when a broker or seller is asked about a specific condition, they must answer truthfully and may be held liable for misrepresentation if a reported fact later turns out to be false. An example would be telling a potential buyer that the furnace or septic field work properly when, in fact, they do not.
Some states require the seller to complete a written property condition disclosure form that tells of defects. However, in most cases, the seller or broker ordinarily have no obligation to disclose defects affecting the property unless asked. The buyer should therefore meticulously inspect the property, ask a lot of questions concerning condition, and consider hiring a reputable, independent home inspection service to inspect the property in addition to hiring an independent appraiser.
During the inspection , buyers should separate fact from opinion. A buyer has no cause of action against a seller or broker who merely offers his/her opinion or engages in 'sales talk' which could be considered misleading. A seller or agent who tells the buyer that the furnace is 'in good condition' cannot be sued if the furnace later malfunctions. However, if specifically asked about the condition of the furnace and the seller or broker does not reveal a 'known' cracked heating chamber, an action may be brought for fraud or deceit. In separating fact from opinion, a court will generally look at all circumstances including the sophistication of the parties involved.
Information provided by PropEx.com