Two simple questions - Buyers Agents

16 years ago

The thread about the unhappy buyers suing their buyer's agent is very interesting. To me, that lawsuit brings up two very basic and elemental questions that I'd like to pose to the group:

1) Does a buyers agent have a professional responsibility to know the local real estate market well enough to tell if a particular house is significantly overpriced relative to its direct competition?

and

2) If a buyer's agent believes a house is significantly overpriced, does he have an obligation (ethical or legal) to present this opinion to the potential buyers?

I'm expect these are actually the core legal questions the suit is attempting to resolve, and for that reason, I'm very curious to the outcome.

But my personal opinions, are that:

1) I acknowledge that a custom home that is substantially different from its neighbors is hard to put a 'fair' price on, and that virtually every house is different in some way from every other house, and that those differences will affect value. BUT, for a fairly standard tract house in a typical housing development, I do feel a knowledgeable and professional agent should be able to determine the approximate market value, and should be able to tell if such a house is significantly overpriced or not. No, an agent is not an appraiser. But they do typically represent themselves as being knowledgeable about market values -- certainly on the selling side. To then hide behind the 'not an appraiser' shield is playing both sides of the fence.

2) On the issue of whether or not a buyer's agent should inform the prospective buyer if he feels a house is overpriced -- It is my opinion that anyone claiming to represent the buyer's interests has an ethical obligation to disclose that 'to most buyers, in my informed opinion' a given house would probably be worth somewhat less than the asking price. Whether that obligation is ethical or legal would depend on the state law. It's also my opinion that if the buyer's agent is really representing the seller's interests, he has an ethical duty to make that clear to the buyer.

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Comments (5)

berniek
16 years ago
"If a buyer's agent believes a house is significantly overpriced, does he have an obligation (ethical or legal) to present this opinion to the potential buyers?"

Yes, but hopefully I have educated the buyer enough by then, after looking at many homes to be able to judge for themselves.
talley_sue_nyc
16 years ago
I certainly would expect my buyer's broker to show me all the reasonable competition for the house I want to buy, and the closing prices for all the no-longer-on-the-market competition for the house I want to buy.

Should he/she be able to tell me, at the time of the first viewing, whether a house is signficantly overpriced? I'm not sure that's fair to ask of him. Though it's a question I would ASK my buyer's broker before signing on: "do you know this market well enough to tell me if a home is *significantly* overpriced before we view it? or immediately afterward?"

And DEFINITELY, once I've said, "I like this house, I think it's the one I want to put a bid in on," I expect him to provide me w/ FACTS--asking prices and DOM for the competition; closing prices and DOM for the recently-sold competition.

As Bernie says--educate me so well that I know why I am offering what I'm offering.

(and THAT is what the agent on the other thread did NOT do)

And yes, if you are my agent, I think you have an ethical obligation to give me your professional opinion. (you don't like small bathrooms, I don't care; but if you believe that small bathrooms should command a lower price, you owe it to me to tell me that)
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logic
16 years ago
All of the above...very well said.

There is something fundamentally wrong with any system that would allow an individual to offer their services for hire based upon their wealth of experience, knowledge and expertise...and then get a pass when they fail to deliver the most basic of informationÂ.ESPECIALLY when said failure results in the service provider making more money that they would have otherwise.

IMOÂ...its that simple.
mfbenson
16 years ago
"1) Does a buyers agent have a professional responsibility to know the local real estate market well enough to tell if a particular house is significantly overpriced relative to its direct competition?"

Yes, or at least he has the responsibility to tell his clients that he covers such a large area that he doesn't have the in-depth knowledge of every last little neighborhood.

"2) If a buyer's agent believes a house is significantly overpriced, does he have an obligation (ethical or legal) to present this opinion to the potential buyers?"

Ethically, yes, but legally I think his obligation would be to either keep his mouth shut or to clearly identify his opinion as being an unqualified opinion - unless, of course, the agent is also a lisenced appraiser. Like that ever happens.
berniek
16 years ago
"Ethically, yes, but legally I think his obligation would be to either keep his mouth shut or to clearly identify his opinion as being an unqualified opinion - unless, of course, the agent is also a lisenced appraiser. Like that ever happens."

This is what the COE says when giving an opinion of value:
Â Standard of Practice 11-1
When REALTORSÂ® prepare opinions of real property value or price, other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such opinions shall include the following:
1) identification of the subject property
2) date prepared
3) defined value or price
4) limiting conditions, including statements of purpose(s) and intended user(s)
5) any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants
6) basis for the opinion, including applicable market data
7) if the opinion is not an appraisal, a statement to that effect
(Amended 1/01)

Two simple questions - Buyers Agents

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berniek

talley_sue_nyc

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