The new “Agency Disclosure” law (effective Nov. 25, 1999) affects the way real estate is practiced in Pennsylvania.
The purpose of the new law is to help consumers by clarifying, up front and in writing, who works for whom in a real estate transaction, thereby making consumers more knowledgeable about what service options are available to them. Pennsylvania joins 47 other states in clarifying agency relationships between consumers and real estate practitioners.
The law is beneficial because it requires a clear and timely disclosure in the form of a written Consumer Notice that a consumer receives during the initial meeting with the real estate agent. This notice enables buyers, sellers, lessors and lessees to make informed decisions.
Under the new law, all licensed real estate professionals (licensees) may serve consumers through the following relationships:
Seller Agency - the licensee works only for the seller, owing the seller client loyalty, confidentiality and a good faith effort to find a buyer for the property.
Buyer Agency – the licensee works only for the buyer, owing the buyer client loyalty, confidentiality and a good faith effort to find a property for the buyer.
Dual Agency - the licensee acts as the agent for both the seller and the buyer in the same transaction, with the consent of all parties. Real estate companies have buyer and seller clients; it is not possible to predict when a buyer client will choose to buy a property from a seller client.
While this may put the agent in the middle, it does assure that sellers have the greatest exposure for their properties and that buyers can make selections from the entire market. A dual agent must provide services fairly, without promoting either party’s interests over the other.
Designated Agency - created for the in-house transaction where both buyer and seller are represented by individual agents in the same company. It allows the agent selected by the buyer to continue representing the buyer’s interest while the agent selected by the seller continues to represent the seller’s interests. This allows the consumers to retain the services they sought when choosing real estate agents to advocate for them.
Transaction Licensee - the licensee provides communication, document preparation services, or similar real estate related services without being an agent or advocate for either the seller or the buyer.
A transaction licensee could not disclose the fact that the seller will accept a price less than the asking price, or that the buyer will pay a higher price than the amount offered. A transaction licensee may not disclose any information deemed confidential by the consumer.
Every consumer seeking real estate services will be asked to sign the Consumer Notice that outlines their options for representation.
By requesting this form, a real estate professional is doing his job and fulfilling the requirements of the law. Even if you are attending open houses, you will be asked to sign the form.
The Consumer Notice is not a contract and does not commit the consumer to any specific relationship. You are required to sign this form at the first meeting with the agent in order to help you make informed decisions and to reduce the potential for confusion later in the transaction.
Once you select the relationship that best meets your needs, you will sign another for granting permission for such a relationship. This form will detail the duties owed to you within the chosen type of relationship.
The advantages to the consumer of the new law include the following:
- better understanding for whom the licensees work in a transaction
- clarification of the licensee’s role and responsibilities in a real estate transaction
- definition of the duties real estate licensees owe to consumers
- requires that certain information appear, in writing, in seller buyer contracts
Consumers with questions should contact their real estate agent, or visit the Pennsylvania Association of Realtors website at www.parealtor.org.
The Lancaster County of Realtors represents more than 1,100 members involved in all aspects of the real estate industry, is one of more than 1,800 local associations nationwide which comprise the National Association of Realtors.
–this article was taken from the December 9, 1999 Real Estate Weekly
Download the Consumer Notice in PDF format.
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