Recently we went over the way buyer representatives get compensated. We said that the agent's compensation was part of the seller's listing agreement, and that it is paid by the seller from the proceeds of the sale of their home, and that the listing broker compensates the buyer's broker with a part of that commission. Yesterday we addressed one issue that sometimes arises early in buyers' journey from renting to owning. We explained that it's a matter of personal preference whether you first find a loan originator or a buyer representative. Now let's discuss one of the thoughts on many new buyer's minds upon first meeting a real estate agent. Why is he/she talking about all this boring stuff? All I want to do is buy a house.
The state of Minnesota has enacted many laws that protect the interests of consumers, and that makes your purchase of a new home a little less risky. One law requires that, early in your relationship with a real estate agent (the State calls us licensees), we must provide a written agency relationship disclosure document to you. We must also explain the contents of that document and be able to prove to the State that we have done that. That's the reason why you are asked to sign a copy of the disclosure document indicating that you have seen it. The document explains the various relationships that can exist between consumers and real estate licensees. If you want a copy of the disclosure document and a detailed explanation of its contents, just give me a call.
Briefly, when you buy a home you'll deal with either a seller's representative, a buyer's representative, an agent bound to the interests of the seller's agent, or a neutral agent who represents nobody and should function with professional detachment. As a neutral the agent can assist parties in accessing the property for the purpose of viewing it, and complete the standard purchase agreement forms at the direction of one of the parties to the transaction. In any agency relationship, the State specifically requires that certain fiduciary duties are owed to either the buyer, the seller, both, or neither.
Many buyers (and sellers) find the explanation of agency relationships boring, but I suggest that you pay close attention to the agent's explanation. Not only will it help you move through the buying maze, but the quality of the agent's explanation may give you some insight into whether this is the person you want to represent you in the biggest economic commitment of your life.