The home buying process seems complicated and confusing if you’ve never done it.
The first time I thought of buying a home, I procrastinated because –and get this– I didn’t trust realtors.
Now I am one. Go figure.
What we’ve found over the last couple decades in real estate is that it’s really important to preview the process before we get started.
Seems elementary. But we’ve talked to people whose agents might as well have thrown them out of an airplane with parts of a parachute and an Ikea assembly manual.
We do better.
Really. Not to sound superior, but we do.
When we first meet a new client (particularly new home buyers), we go through a little Powerpoint presentation on what to expect.
It puts their minds at ease and makes the process smoother.
We also encourage buyers to look over this buyer advisory or this list of tips.
This post is the beginning of an in-depth series of posts that give you a deep dive perspective of the process.
Sure, I could just publish a list of steps in the home buying process. But then I deprive myself a chance to practice my writing skills.
Okay, to start this series off, let’s put things in to context and explain your rights as a client.
Part 1: Fiduciary Responsibility
That is not just a pretty phrase. It means that we must put our interests above the client’s and we can be fined heavily, be sued or lose our licenses if we do not.
This is not nothing. When I bought my first house I had no idea that realtors could be held to such high levels of responsibility for what they do. No wonder I didn’t trust them.
We take on a lot of responsibility when we agree to represent your interests.
Here are the things that define fiduciary responsibility, in understandable language:
Confidentiality – Safeguard your secrets unless doing so would violate disclosure requirements. In short, we can’t tell the seller that you are willing to pay more than you offered.
However, if you are the seller and you ask us to hide the fact that there is a secret hive of little green aliens in the basement, we cannot. That’s material to the sale. Plus, I think hiding aliens from Mars is illegal. I’ll get back to you on that one.
Accounting – Account for all funds entrusted to us by you. To be fair, we don’t handle money much anymore. It used to be that the buyer would give an earnest money check to the realtor to hold during the transaction. I’m so glad it’s not like that anymore! Now, f you are a buyer and you deposit earnest money, it goes to the title company.
Reasonable Skill and Care – We must work within our knowledge and capacity. In other words, we can’t pretend that we know how to sell the Westward Ho or an empty shopping mall if we don’t have experience at that.
Loyalty – Act in your best interest. We have to help you meet your goals in a way that is not harmful to you. We can’t, for instance, help the other side of the transaction if we think it could help us personally. Seems simple, right? We must put your interests first. But, I guess we had to spell this one out, huh? There are some bad agents out there, and we’ve met a few of them.
Obedience – This means we need to follow the client’s lawful instructions. We can’t break the law. But, if you tell us you want to list your house 20% above market level, we have two choices: do it, or end our listing agreement.
Accountability — You can count on us to communicate to you in a timely manner and be respectful of your time. You’d think this one is easy, but really…
Disclosure – Disclose all material facts to you. If we find out, for instance, that there are cracks in the foundation of a home, we must tell you. It is material to the sale of the home. We are not inspectors. But if we see a “red flag”, we gotta tell you.
There are some things we are not required to tell you (especially if we don’t know), such as whether the home was the site of a felony, if somebody died in the home, or if the home is in the vicinity of a sex offender. We can’t tell you if somebody lived in the home who had HIV or AIDS. That is Arizona law. Otherwise, if it could affect your decision to purchase the home, we need to let you know about it if we know.
That’s it. Agents don’t just sell homes and buy big cars. There are actual repercussions if we don’t respect our fiduciary responsibilities.
You might notice, by the way, that those words spell C-A-R-L-O-A-D.
Gee, those realtors are clever.
Next installment: Buyer disclosures and buyer/broker agreements.
