Since Massachusetts Real Estate Agency has changed significantly, we will be keeping the information you need for legal implementation of agency regulations at your fingertips. In addition to the most recent news and information on Agency in Massachusetts, you can also find links to the Massachusetts Agency and Non-Agency disclosure form and information on the types of agency relationships now defined by law.
Mandatory Licensee-Consumer Disclosure | Consumer Guide To Representation
Types of Representation in Massachusetts
SELLER’S AGENT: Massachusetts law requires that each real estate broker or salesperson who is an agent of a buyer or seller act in the client’s best interest. Client Fiduciary Duties Note: Regardless of the agency relationship, the licensee must disclose to a prospective buyer all known material defects in real estate. Additional Duties of a seller’s agent BUYER’S AGENT: Massachusetts law requires that each real estate broker or salesperson who is an agent of a buyer or seller act in the client’s best interest. Client Fiduciary Duties Note: Regardless of the agency relationship, the licensee must disclose to a prospective buyer all known material defects in real estate. (NON-AGENT) FACILITATOR Fiduciary Duties DUAL AGENT DESIGNATED SELLER’S AND BUYER’S AGENT Q1. I represent a buyer who is interested in seeing a property. Another buyer whom I represent also wants to see the same property. Is it a violation of my agency duties to show it to both of them? A. No. To make sure each buyer understands your right to do so, you may want to include language in your buyer agency agreement disclosing that you could potentially represent other buyers interested in the same property. Such a provision should explain that you will keep the confidential information of each client in confidence and not disclose it to the other party. Q2. What is the best way for me to obtain permission from the seller to offer buyer agency, subagency, and facilitation compensation? A. The easiest way is to include a provision in your listing contract in which the seller gives consent. The seller’s consent to subagency must specifically include a disclosure regarding the risk of vicarious liability for acts and omissions of the subagent. Q3. Should I include a provision in my written buyer agency agreement to explain that I may receive compensation from the listing broker or seller? A. Yes. If, however you will be requesting that the buyer pay any part of your fee, the buyer agency agreement should also spell that out. Q4. If the listing broker or seller is offering a bonus to the selling agent, am I required to tell the buyer this? A. Yes, you should make your client aware of anything of value that you receive from the other party to the transaction. It is recommended that you document that disclosure in your files. The license laws require that that all compensation be paid to the broker of record, not directly to a licensee who is associated with that broker. Q5. I know I must present all offers forthwith, but what is forthwith? A. Forthwith is generally defined as soon as possible under the circumstances. Q6. Do I have an obligation to present verbal offers to my client? A: Generally a contract to purchase real estate in Massachusetts must be in writing. Technically a verbal offer cannot be accepted to form an enforceable contract. There is nothing that precludes you from presenting a verbal offer, but a written agreement signed by each party is generally required by the Statute of Frauds. Q7. When an agent finds out that a buyer has a signed Exclusive Buyer Agency Agreement with an agent with another office, what is the protocol? A. The Code of Ethics provides a couple Standards of Practice that REALTORS® must follow in these circumstances. Standard of Practice 16-9 requires that the agent must use “reasonable efforts” to determine whether the buyer is subject to an existing, exclusive agreement with another agent. Whenever a buyer enters into an agency agreement, the agent should ask that buyer whether they have an existing exclusive agreement with another agent. Standard of Practice 16-13 requires that, before providing a substantive service such as writing a purchase offer, an agent ask a prospect whether they have an exclusive agreement with another agent. Q8. If I show a home that I previously had listed to my current buyer clients, am I a dual agent for that property? A. No. When the listing expires or is withdrawn, most of your agency obligations end. The two agency obligations that continue after termination of an agency relationship are the duties of accounting and confidentiality. Although you are not a dual agent, you do have the continuing obligation to keep information of the seller confidential. It is recommended to tell your current buyer client that you previously had the property listed and that you have a duty of confidentiality to the seller. Brought to you by the Massachusetts Association of REALTORS®. This feature is a service to members of the Massachusetts Association of REALTORS® and is intended for educational use only. Opinion or suggestions in this publication do not necessarily represent the official policies or positions of the Massachusetts Association of REALTORS®. The Massachusetts Association of REALTORS® does not accept responsibility for any misinterpretation or misapplication by the reader of the information contained in this article. The publishing of this material does not constitute the practice of law nor does it attempt to provide legal advice concerning any specific factual situation. FOR ADVICE ON SPECIFIC LEGAL PROBLEMS CONSULT LEGAL COUNSEL.
Other Agency News:
MAR Successfully Defends Buyer Agency
The MAR Legal Hotline is Now Available to All of Our Members
Notes from the Legal Hotline: Designated Agency Question!
Written Disclosure of Agency Representation Due When Submitting Purchase and Sale Agreement
Notes from Legal: Dual Agency & Wire Fraud
Window to the Law: Safety Best Practices for Real Estate Professionals
Brokerage Relations CE Class
What to say, and when to say it…. Register Here for June 18 @ 9 a.m. to attend an online CE class – 2 credits. Do you ever wonder if you are performing the lawful duties you owe to your clients when in the middle of a transaction? Do you feel confused when a conflict in your loyalty occurs? Do you wonder how the other agents in your office can affect your relationship and duties? Did you know sometimes not saying something to your client to “keep the peace” could be a violation of law? Peter West and Sandy Carroll have debated and discussed agency in Massachusetts since it changed in 2007 and hope to share their wisdom and frank conversation – and hope to get a lot of interactive questions from you too. Please join us online!
I’m a Buyer’s Agent…Or Am I?
A few years ago, we included a post in the Friday Recap about becoming a buyer’s agent and the steps involved. It’s more than showing up at a listing appointment and having a Mandatory Consumer-Licensee form signed. But, do you know all that it entails? Please see below the full details of that previous post, and take special heed of beginning a relationship electronically!:
Mandatory Steps in Establishing a Client Relationship with a Buyer
- Mutual Agreement between the broker and buyer
Numero uno, if you want to work for a buyer, the buyer has to want to work with you too. They should, having met you and heard what outstanding services you will provide, elect to work with your firm and have you represent their real estate interests. For a day or for a year. On a specific property or in all of their real estate needs. This can be agreed upon verbally or in writing, but you cannot represent someone who doesn’t hire you. And you don’t usually get paid either.
- Explanation of Agency Options in Massachusetts
Explaining the relationship between the parties is a great icebreaker. The licensee-consumer disclosure form is there to help you explain the roles of the agents in a transaction. You should clarify the services the buyer can expect to receive (or not receive) from the various types of agents, and what agents will/will not maintain their confidential information. And you should disclose the type of service that you are offering to provide them. Which leads to…
- Obtain Signed Consumer-Licensee Disclosure
Pièce de ré·sis·tance… the MANDATORY form needs to be signed at the first personal meeting to discuss a specific property. And did you know that the Code of Ethics takes it one further and obligates you to make sure the nature and terms of a contractual relationship are disclosed prior to being established, if handled electronically? Creating a relationship via email or text from an online lead? Yes, this means you have to explain and agree to the nature of your relationship before beginning work on their behalf.
- Advise of company policies of compensation
The Code of Ethics mandates that when entering into buyer/tenant agreements, Realtors® must advise potential clients of your company policies regarding cooperation and compensation, how fees are paid, who is responsible to pay fees, etc. Kind of important for them to know going in, right?
- Use reasonable efforts to determine if buyer is working with another agent
The Code also advises that it is your affirmative responsibility to “use reasonable efforts” to make sure the buyer isn’t already working with another agent. So that’s a great question to ask them!
Then, after you’ve done your job, established a fiduciary relationship with a buyer client, you can make appointments on their behalf – but PLEASE making sure to IDENTIFY YOURSELF as a buyer’s agent with your firm when first speaking to a listing agent.
Extra HELPFUL steps, not required
- Complete an Identification Form to secure in your office for safety purposes.
Follow your office policy if you’re required to complete a client identification form for every buyer, at a neutral location (office, coffee shop etc…). It’s imperative that you meet all prospects in a public location and obtain basic information to protect yourself. Also, it gives you a chance to meet someone face-to-face to talk about the items listed above. Experts from Universal Buyers Agents Sunshine Coast always adhere to it. If you complete an Identification Form and you are not at your office, email to it your office. This form should contain a copy (take a photo) of the buyer’s drivers license, as well as their car and contact details. If this policy exists and is applied for all new clients, it protects all agents in your office (1) from those who wish to remain anonymous / untraceable to do harm (2) allows police to follow up if there is a theft or issues arise from a showing (3) ensures there is no discriminatory behavior when applied uniformly.
- Consult with buyer on qualifications, get pre-approval from a local lender
Don’t waste your time, the co-broker’s time, or seller’s time and appear unprofessional without a basic discussion about the buyer’s financial qualifications and help in obtaining a pre-qualification letter. This is a simple step that not only protects your time, but also promotes the safety of those around you.
- Review how Buyer Clients should handle inquiries, appointment setting, open house attendance.
It’s a confusing process, and the internet has made it more so for buyers to navigate! Explain how you expect buyers to operate, outline your role in the search process, and it will go a long way to helping improve the system. (example: “If you go to an open house, here are a bunch of my business cards. Please make sure to give one to the agent showing the home…” OR, “if you want more information about a home, don’t click a button on Zillow to get more information but instead go to the MLS Portal I created for you”, etc…) It’s an easy way to establish ‘good practices’ and show yourself off as the professional you are!
- Obtain a dual/designated agency consent form if your office offers both seller/buyer agency
If your office offers more than one form of agency, it’s good to have a discussion up front on how your office handles conflicting fiduciary duties. You can also get the buyer to agree, in advance, on how those situations will be handled. You don’t want to wait until the buyer falls in love with an in-house listing to discover they want a FULL buyer’s representative and won’t agree to dual agency.
- Have a signed Buyer Agency agreement that outlines the above terms of agreement.
We love a buyer’s agency agreement to firmly set the obligations and expectations in writing, but if nothing else, those items should be verbally discussed and agreed. Are you exclusive? How will you be paid? Are you representing them on this house or many? Do they want client services such as MLS portal access, email updates, etc…A buyer’s agency agreement is a beautiful thing – it establishes everything in writing so there are no questions later about how the relationship will go and aligns expectations. Pretty please won’t you consider it?
Special thanks the MAR Legal Team for helping to make sure the information was accurate and clearly presented. You rock!
Does Commercial real estate require an agency disclosure?
