Agency Disclosure Ensures You Know Who Represents You

For over a year real estate agents have been having a particular talk with each buyer and seller. The State of Alaska requires it.

The talk is called "agency disclosure." Afterward you sometimes sign a form to memorialize the event.

Agency is a hot topic in the industry. Every licensee took a class on agency during the last two-year license period. Discussions abound in the professional jour­nals.

There are as many opinions as there are agents. Permit me to weigh in. Feel free to respond with a letter to the Journal of Commerce if you have been a buyer or seller and have opinions that differ, or perhaps agree with, these ideas.

I suspect the public rarely cares much about who represents whom in a real estate transaction. We will see whether letters come from principals, or just attorneys and other professionals in the industry.

The law offers little to quarrel with. Simply put, it says the agent should make it known whom he or she represents. The agent should raise the issue early in the develop­ment of a working relationship. The understanding is to be in writing in any purchase agreement. Not much fuel for an incendiary debate.

The industry tradition has been for agents to represent sellers. A listing agent rep­resents a seller, without question. Traditionally the agent who helps a buyer locate prop­erty and assists with the purchase process, through closing, has worked as a sub agent of that listing agent. The ultimate loyalty of that "selling agent," therefore, has been to the seller.

Advocates of the disclosure law, which include professional groups such as the National Association of Realtors, anticipate that without disclosure these relationships might blur.

The commonly cited example is the agent who picks up an out-of-town buyer at the airport, shops all over town, has meals together, and takes him to a lender. The bond forms and includes statements like "I'll work hard to find you a good buy." The buyer can't help but think he's got an advocate in that agent and might be perplexed later on to learn this isn't true.

The law doesn't specify which party an agent represents. It only requires that prin­cipals be in the know from the beginning.

There is room for doubt whether it makes much difference in Alaska, even when the agent makes the required disclosures.

Alaska case law holds agents to a higher standard of professional conduct than any other state in the nation. Even if an agent working with a buyer represents a seller, there is little that he or she can hold back, under Alaska law.

In Alaska buyers have the right to hear everything that a seller knows about a property. Mandatory property disclosure that follows common industry practice becomes state law this summer.

Moreover, in Alaska the buyer can call the agent to account for what the agent, as a professional, should be expected to know about the property, whether the seller knew it or not.

About the only facts an agent can keep confidential are personal matters. Why is the seller selling? Did the buyer says he would "pay any price" to get the property? This sort of information, while potentially useful in a negotiation, has little bearing on intrinsic market value anyway. Value has to do with where the property fits among competitors in the marketplace.

In Alaska's more relaxed business climate, agents have the opportunity to act as mediators and peacemakers in real estate transactions. The purchase and sale of real estate typically is not an adversary proceeding requiring "representation." There is little to advo­cate in a search for agreement.

Who represents whom in a real estate transaction is a distinction without much dif­ference. There is little to be gained by having an advocate yell louder. People skills, market knowledge, training and experience, as opposed to advocacy, are the more common skills that agents try to acquire.