It seems that everywhere we turn the government is trying to protect us. But from what, ourselves, others? Nobody can really be sure.
Take commercials for prescription drugs like Viagra® for example. The whole commercial may last 60 seconds. In that time we are told every adverse thing that may happen to us, and what to do if something does if we use the product. If you get a rash stop using the product, get a physical to make sure you are healthy enough for the task at hand, if you have an erec…Well, you get it. We remember some of the warnings because they are humorous and end up on shows like Saturday Night Live. Others are long forgotten even before the commercial is over.
In November of 1999, Pennsylvania enacted the Agency Disclosure Law which was designed to protect Consumers. The Act requires that prospective customers about to engage in a real estate transaction read the Consumer Notice and sign it prior to entering into a meaningful discussion with any real estate sales associate.
You can read the full Consumer Notice at the following link ~ http://jeffreyhoguerealtor.com/pennsylvania-consumer-notice/
Does it really protect the consumer and if so, from who or what?
The second paragraph of the Consumer Notice states the following, “Before you disclose any information to a (real estate) licensee, be advised that unless you select an agency relationship the licensee is NOT REPRESENTING YOU. A business relationship of any kind will NOT be presumed but must be established between the consumer and the licensee.”
This implies that there are things a consumer may NOT want to tell a real estate agent until they understand what an agency and business relationship is, who is representing who and why. The implication comes from years of ambiguity relating to who represents who in a real estate transaction.
The Consumer Notice is meant to shed light on the types of agency available and what they mean. There is Seller Agency, Buyer Agency, Dual Agency, Designated Agency and Transaction Licensee. In a follow-up to this article I will further explain these agency types.
For now let’s use the following example…You visit an open house and speak to the real estate agent attending and have interest in the home. The agent tells you they are the listing, or seller’s agent but never give you the Consumer Notice. Even if they did it is likely you would have signed it without even knowing what it is. Remember the commercial.
The next day you contact the agent and ask to see the home again. You are then presented with a Consumer Notice by the agent. You proceed to read it and decide that you would like to be represented by a buyer agent. Now the fun starts.
Telling the seller’s agent you want to be represented by someone else means that they will have to split the commission with a buyer agent. The seller’s agent may state that you can get a buyer agent but you would have to pay them yourself. See, there is also a law of procuring cause in Pennsylvania. It is sometimes referred to as threshold law or the doorstep rule. This rule states that you, the consumer, showed interest in the property due to the seller’s agents marketing and actions.
Have you been disenfranchised? Are you losing your rights? The second paragraph of the Consumer Notice stated that there is no implied relationship. Is this a conflict in the law? Either way, it is a pain in the, you know what. All you want to do is buy a home and be represented properly not get caught up in all the ambiguity of agency.
Wait…The Consumer Notice was supposed to have worked all this out! Next time you may listen to the whole commercial not just the funny parts.
More to follow on this unruly subject…
Jeffrey C. Hogue
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