“My Realtor Told Me . . . .”

24 Sep “My Realtor Told Me . . . .”

As a Builder and Consultant every time I hear someone use that phrase it sends chills up my spine.  Not because the information a realtor provides cannot be trusted but because the realtor does not work for the buyer.

Legally with only one very rare exception a realtor ALWAYS represents the seller.   The legal term is they have a ‘Fiduciary Duty” to the Seller which is defined as when someone has a fiduciary duty to someone else, the person with the duty must act in a way that will benefit someone else.  Remember this in most typical transactions the seller pays the realtors commission BECAUSE they work for the seller. 

Fiduciary duty is often mis-understood because a buyer walks into a real estate office and selects a realtor, thinking they hired them.  BUT they have not, that realtor, even if they do not know the seller is bound by law to represent that seller.  The exception I mentioned above is when a true “Buyers Realtor” is hired, but it is a very rare situation.  First the buyer must pay the commission in a buyer realtor transaction and to be a true buyer realtor the realtor must meet some very specific legal requirements.   

So always keep in mind the realtor does not work for the buyer and therefore they can only tell you things about the property that are disclosed by the seller, they are not supposed to give you their opinion of the property.  In other words, if the seller does not tell them the appliances need replacing the realtor is not supposed to tell you they think the appliances need replacing.  They however can tell you the appliances are 15 years old and caution you they are near the end of their life cycle, or they can tell you it is a 3-cycle dish washer, and you were looking for a 5- cycle top of the line dishwasher.

This brings me to my next point, property inspections.  Never, let me say that again NEVER use a home inspector recommended by a realtor.  That is not to say the realtor or inspector is intentionally hiding something but understand the realtor works for the seller and they would rather use an inspector that is a “deal maker and not a deal breaker” who may not be as diligent or detailed oriented as another inspector.  Also don’t get overly impressed by the number of pages in an inspection report or the presentation of the report.  A fancy well prepared report is not necessarily an indication of a thorough inspection.  My recommendation is to have a contractor review the inspection report, they can sniff out the smoke and mirrors in the report and give you a good assessment of the condition of the home based upon the report.

My last point is to NEVER take a realtor’s word on what you can do with a property you are purchasing, seek professionals trained in zoning and / or construction, most realtors just don’t have the proper knowledge and experience in these areas.  Here are a few examples I have been involved with over the years that took the buyer by surprise after they closed on the property:

You may want to add a pool and it appears there is enough room in the backyard.  But there may be an easement on the property you cannot build over, or the water table is excessively high, or the property setback won’t allow the pool to fit, the HOA will not allow it or you simply cannot get equipment in. 

If it’s vacant land and you want to build a house, there could be utility or school currency issues restricting a home on that lot or possibly there is a home on the lot and it is served by a dirt road but the city will not issue a building permit if the road is not paved.

The property has a guest suite on it, and you want to rent it out but the property is not zoned to allow multi-family use so it cannot be rented, or you cannot move you parents into it full time. 

Commercial land or buildings are in a different league and require very specialized review and confirmation of intended uses, parking, utilities, and fire safety.  Even if the property is being used for the same purpose you intend to use it for.  Just because it is currently being used in a specific way does not mean it was approved for that use or if the approved use carries forward with a sale. Very often a zoning code or building code will change after a property is approved for a specific use and the property is “grandfathered-in” for that use under that ownership.  A change in ownership means it must be reviewed and approved allover again under the new requirements.

The bottom line is, in all real estate transactions “Buyer Be Aware” the realtor even if it’s your best friend from high school, is legally not you friend in a real estate transaction, they are legally bound to represent the best interest of the seller.  Now that you understand this does it make sense to ask them what price you should offer on the property when you make your offer???????  THINK ABOUT THAT!