The out-of-area agent

“I have an agent,” she said.

“Do you really?” I thought.

There is a difference between having an agent and having a friend who happens to have a real estate license. Often it is not a fine line, but rather a big ol’ fat chasm – the difference between being represented or not.

The caller was inquiring about a property in San Diego. As is so often the case, the home she was calling about, one she found online and for which her search box keystrokes led her back to my website, was not my listing. I have these conversations so frequently now, that the words just spill forth without processing.

“That is not our company’s listing, but one of our agents can certainly help you – if you aren’t currently working with an agent.”

Approximately 99 percent of the time, I learn that the would-be buyer is working with an agent. Well, sort of. It’s semantics, really. And this is where my out-of-area radar goes up.

In the case of my most recent caller, I was told her agent is a friend living in San Francisco. And keep in mind that she was calling about a property located in San Diego. Sure, the two cities have some commonalities; they share a state, and they each have “San” in their name. I suppose you could even argue that each has a little water on the left side, but that’s about it.

Oh, and they have access to the Internet.

This morning I happen to be in the throes of the dreaded license renewal process. It is the bane of all agents, one we must face every four years. As such, I currently have a head full of fun facts about ethics, agency and disclosure law – so much so that I had to make additional cranial room and can no longer remember the lyrics to the theme song from Petticoat Junction.

This makes me a lot of fun at a dinner parties. “Hey, how ‘bout that Easton v. Strassburger! And don’t even get me started on the Rumford Act!”

So, let’s talk a little about agency in the real estate transaction. It will be fun. I promise!

Straight from my study materials to you, and we are talking about agency as it relates to an agent’s fiduciary duties to their client:

The agent must use reasonable care while working for the principal. This means that the agent must protect the principal from foreseeable risks of harm. It also means that in real estate matters the agent is expected to have expertise and skill superior to that of the average person. The agent is to use that expertise to the advantage of the principal… Examples may include financing issues, legal matters, or property condition issues.

As an agent representing a buyer, care and skill may include things like:

  • Locating of property meeting with the buyer’s criteria
  • Assisting the buyer in the evaluation of the property for condition and value
  • Evaluating the neighborhood
  • Financial alternatives available to the buyer
  • The terms and implications of the buyer’s offer and responses to counteroffers
  • Negotiation on behalf of the buyer
  • Diligent attention to all of the details necessary to close the transaction.

How many of these things can an agent really accomplish from a distance of ten hours, give or take?

Here we are talking about an agent’s liability, of course. And let’s not forget about old Easton v. Strassburg, out of which was born clarification on an agent’s duty to disclose.

Look at that agency disclosure that your agent had you sign. (They had you sign one of those, right?) It says that your agent has:

A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.

(Boy, we’re having some fun now. Hang in there.)

Tough to do a diligent visual inspection of a property located a plane ride away, even if you do have a really big telescope. But your friend might not be inclined to sue you if you are just filling in the blanks to help out and possibly kicking in a little something from your compensation to help with closing costs, right? The question then becomes, are your client’s interests really being served?

Forgetting some of the more mundane nuances of representing a client, like opening the door – for showings, inspections, and the final walk-through — things which is difficult at best to do from a different climate zone, there’s a bigger issue. Cliché alert: Real estate is local.

In San Diego, like in every city, we have local disclosures that are unique to our area. But disclosing local issues is more than shoveling out a boilerplate pamphlet on the potential negative impacts of freeway gridlock, airport noise or errant golf balls. And I will give you an example.

Our readers who have been frequenting these blog parts for a few years may recall that in the days of yore (“yore” meaning, roughly, the early 2000s), Steve and I purchased and then eventually sold a cabin in Lake Arrowhead. We were licensed real estate brokers, even back in “yore,” so we might have tried to grasp the brass ring of the cooperating broker’s commission in those transactions by representing ourselves, or even by enlisting the help of a licensed San Diego buddy to do us a favor. We did not.

Instead, we hired a real, live local agent to represent us each time. Why? Well, neither of us really looks good in stripes, and we kind of like our licenses and want to keep them. And, as home buyers and sellers in this foreign land, we didn’t know the first thing about the local idiosyncrasies of a little mountain community located two hours away. Local construction practices, bark beetles, tree trimming and water usage ordinances, something called “lake rights,” and a host of other neighborhood issues important to a would-be homeowner here were foreign to us, as were the local customs for writing and presenting a clean, compelling offer. And then, there is always that little conundrum of understanding and interpreting the price “comps.”

I’m just scratching the surface, of course, but the point is two-fold. Agents who attempt to “represent” a client without having the local knowledge to do so effectively, and agents who place themselves squarely in a fiduciary role without having the ability or intent to fulfill their duties to their client because, say, they aren’t going to actually be present, are putting themselves in a position of extreme liability. Simply expecting the listing agent to do the heavy lifting doesn’t ameliorate (ooh – big word!) the potential for liability. Agency is agency, and the duties owed the client cannot be assigned if the relationship exists.

Further, and more importantly, complete and unique representation is something that the client deserves. It is much more valuable than any instant rebate that a friend or second cousin once removed might offer. You – the client – deserve better.

Get your Instant Home Value…