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I Bought this House- Now, Who is Going to Pay for the Pool?

Perhaps it's because I'm a partner in a real estate company; perhaps it's because I relocated.

Either way, the practice of a real estate agent showing our listings under "seller agency" has created issues. We just don't permit it, and our sellers know why. Seller permission, case by case, required.

"I've been selling real estate here for fifteen years, and THAT'S THE WAY WE DO THINGS!" was one response from a very successful local agent wanting to bring buyers to the listing.

In an effort to quickly and (hopefully) efficiently dispel the notion that changes are for the purpose of rocking a boat, the following scenario occurred with a recent showing:

A brand new agent enthusiastically presented our listing to her buyers. Mentioning that the front yard was huge, the response to her buyer's query about the possibility of a pool in the front yard was met with, "SURE! There's plenty of room!".

Coming in as a sub-agent (or, with a buyer having the "seller agency" box neatly checked on the NYDOS disclosure- same thing) creates this problem for our seller (owed fiduciary, per NYS).

New York State added to the menu of offerings "BROKER AGENCY". While somewhat difficult to decipher, it does include the following :" THE BUYER AND SELLER THEREFORE DO NOT HAVE VICARIOUS LIABILITY FOR THE ACTS OF THE BROKERS AGENT". Good for our seller.

Problematic for ourselves, as owners of a real estate company, is the last line in that agency agreement:

"THE LISTING AGENT OR BUYERS AGENT DO PROVIDE DIRECTION AND INSTRUCTION TO THE BROKERS AGENT AND THEREFORE THE LISTING AGENT OR BUYERS AGENT WILL HAVE LIABILITY FOR THE ACTS OF THE BROKERS AGENT".

I REALLY don't want to pay for a pool that was represented. Under either of the above scenarios, the possibility exists that either our seller, or ourselves, will be out with shovels after closing.

Bring your buyers- please. That we want to sell the house is in evidence with the integrity that we'll bring to the table, respecting both you, and your buyers. But, let's start the process accepting our respective responsibilities, for which your buyer is paying part of the fee that our seller is offering.

Keeping our seller "off the hook" with respect to inadvertent misrepresentations is what we agreed to do for them when we listed the house.

I've never been good at digging holes, and I don't want to learn this late in the real estate game- besides, the cute shoes that the selling agent was wearing would be ruined, when I pick her up at 1 a.m and hand her a shovel! * after dark- the town will not accept this front yard pool, due to setback requirements.

*Posted in real estate law group. Curious for responses about what goes on BEFORE a lawyer is introduced to the process in NY.

Posted by Laurie Mindnich on 09/03/2008 07:34 AM

Comments (18)

buyer agency, seller agency, southold new york, homes for sale, north fork long island

Originally posted at: : I Bought this House- Now, Who is Going to Pay for the Pool?

This post has been included in New York Information Suffolk County, NY Information Southold, NY Information
Post is included in group: ETHICS and the REALTOR
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Post is included in group: Real Estate Law

18 Comments on I Bought this House- Now, Who is Going to Pay for the Pool?

SEP

2008

Geez - a pool in the front yard. Good points:)

Laurie, Years (and years) ago I went to an agency to think about becoming a real estate agent; they didn't accept me. Reading your posts always makes me feel better about that! (I would have thought with the permits you need on Long Island you would not be allowed to build a pool in the front of the yard).

Thanks, Courtney- the agent was doing her job as it worked for her, which is fine by me...as long as the end result is a buyer agency agreement between herself and the buyer that leaves my seller out of it! :)

Hey, Carole!! You know, whether it ultimately is or not (variance?) it's pretty scary to assume liability for the "unknown"- better to simply define the lines, and protect the seller.

edit: wait a minute, Carole. "didn't accept" you???? HUH?????? THEIR HUGE LOSS!!!!!!!!!!!!!!!!!!!!!!!

Laurie, there is one area in Westchester County where the agents only offer buyer's agency co-op. No broker or sub-agency and they request the 443 for proof. In my opionion they are doing the right thing for all. I had a listing two years ago in lower Westchester County and I put it out for buyer's agency co-op only and you can't believe the calls. I was also informed by someone at ty local board tat 50% of agents won't do buyer agency because of the liability. Don't know if this has changed over the past two years, can you believe it?

Miriam, it's such a tough (yet profoundly simple, and profoundly legal) element to NY agency, yet it is taken as an insult to simply go by the book, and provide what is in the best interest of the seller AND the buyer... AND I GOTTA TELL YA, I LOVE THE USE OF THE WORD "CO-OP"! You're speaking my language. Where did co-broke come from, anyway? :))))

I just have no idea how to convey the simplicity without sounding insulting- yet, there it is: you are subjecting your seller to potential lawsuits by offering sub agency. You decrease substantially that possibility under a buyer agency co-op (while at the same time, offering the buyer their own protection). You are in likely violation of "fiduciary" by offering sub agency; if liability is an issue, it works both ways. I know that you understand- THANK YOU, MIRIAM!

*except, email me re. this forward (or, just thinking) location, in case I ever relocate from the east end! :)

Laurie, I can't believe they still practice subagency in NY!!! I completely agree with you that ain't no subagent getting any where near my seller.

BB, the catalyst for this post was a conversation with a new agent that I really like, who told me that his sale (!) recently accomplished was done under sub agency. My heart sank- his reasoning was that, "It's what they all do." The sad part, for me, is that he's very bright, and would be right on board were the facts relayed to him adequately. (he works at a different company)

When we used to have sub-agency here, we started not offering a commission to sub-agents. It was the only way to keep us out of liability for another agents actions. It wasn't well liked in the beginning but now that Idaho's laws are "no agency unless in writing" it no longer is an issue. Now, someone can be an agent or a non-agent (akin to a transaction agent I guess) but they can not be a sub-agent.

Christina, the mlsli here sometimes indicates: "buyer agency (BA) approved by the sellers." NEVER sub agency approval required. You own a business; I can't imagine your being OK with the risk! Good to "see" you-

Hi Laurie, never gave it a thought that an agent would blurt out "sure" without knowing zoning guidelines. Your state makes the whole process a bit more complicated and sticky too. We have many agents that do not understand the sub-agency thing. That is where we can get in trouble. Nice post. What time was the pool party?

Gary, since the seller would also be doing much of the digging, I don't think that I'd be invited...

Hi Laurie!

I read your posts with interest, but I must admit that I don't always understand all of the terminology....

My first reaction to this quandary was that the agent was REALLY anxious to make that sale - regardless of what he or she had to promise in order to do so! Even I know that there is a word for that..MISREPRESENTATION!

Hope your listing sells quickly and without 'fanfare'!

Val

HEY, VAL!!! Your reaction was completely appropriate.

http://activerain.com/blogsview/672464/The-Agent-Said-What

Miriam explained it very succinctly. The second we have a house to stage, you'll be included in that second!

Thanks Laurie, and I look forward to working with you and Sean again in the future, but that's not why I read your posts and comment...it's because you're knowledgeable, interesting and from Long Island! You've got my support all the way!

Val

Thanks, Val- it's mutual! You provided a staging plan to the seller of a house that, had it not sold last fall, would be worth less now- all components have to fit together...

SEP

2008

Hi Laurie,

I'm not too versed in the agency terminology but this sounds pretty scary. I guess as a Broker owner it's tough enough to have to worry about and be responsible for your own agent's actions, but sub-agents too! Gheez! I can understand why you wouldn't deal with sub-agents.

p.s. Are there any front yards with a pool in LI....?

SEP

2008

Hi, Eugene! This was one of a few incidents that served to bolster the need to eliminate sub agency (never mind the damage, as mentioned on other blogs, that is does to consumers). Dual agency (designated or otherwise) serves up the same complications. I don't pity us, or any other broker, "stuck" in this situation, because we aren't- choices that benefit our seller, and your buyer, are available. That the "new" broker agency in NY is essentially (interpretation) the same from a liability standpoint is not good. Worse are the real estate salespeople who don't KNOW this. It's VERY difficult to gain a measure of satisfaction when real estate is practiced this way!

I haven't seen a front yard pool, but have no doubt that they exist here- the privacy afforded on many of the more secluded locations might make it possible, but most prefer the traditional back yard pool area! The thing is, to demonstrate a casual "go for it!" response to a query like this creates potentially huge issues for MY SELLER- if "your" buyer has chosen you as an agent, stand behind what is relayed to them by accepting the liability (through buyer agency) that they deserve, in the event that a mistruth- intentional or not- is relayed. It is MOST DEFINITELY not my sellers problem!

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