Buyers' remorse: "What do you mean you didn't represent me?"

    Real estate laws are complicated and differ state to state.  They are fraught with all kinds of traps for the prospective buyer.  I have been monitoring some online real estate discussion boards lately, and some of what I read is downright scary.  In Florida, for example, "dual agency," or the representation of both seller and buyer by one brokerage or agent, is against the law.  Yet a few Florida agents participating in one forum say they represent both sides.  That puts their license and any deals they consummate at risk. 
    Florida and a few other states recognize how difficult it is for one agent or a brokerage with multiple agents to maintain their fiduciary and statutory obligations to both parties when the interests are so different.  The buyer wants the lowest price, and the seller wants the highest.  They have other divergent interests as well.  Most agents recognize this and steer clear of dual agency; if they have a listing and are approached by potential buyers, they refer them to another agent.
    In states where dual agency is permitted -- in the southeast, all but Florida and Alabama permit it -- all parties must agree to the arrangement in writing and must be informed that the agent's (broker's) duties of disclosure and confidentiality are limited by the consent of the parties.  In practice, this "informed consent" alerts both the buyer and seller that they should be more vigilant about their interests than if they had independent representation.
    Brokers cannot intend to create an undisclosed dual agency, but sometimes through the inexperience or zealousness of an agent, it can happen.  For example, an agent may have acquired a house listing and scheduled an open house.  At the open house, a couple wanders in and asks if the price is firm.  The agent responds that she thinks the seller might take 10% less than asking price.  This would lead the potential buyers to believe the agent is working for them ("implied agency") and could put both an eventual contract and the agent's license at risk because such an undisclosed dual agency violates state law.     
    The advice here is simple:  Identify and engage a qualified real estate agent to represent you -- and only you -- as the buyer.  If a listing agent provides you with information about the seller's intent or pricing flexibility, or indicates you don't need your own representation, they are being driven by the prospects of a full 6% commission (half typically goes to a buyer's agent).  This is rare because the vast majority of agents understand the distinction between responsibility and greed; but if you encounter it, run...or contact me and I will find a qualified local buyer's agent for you.
    Here's one small but telling example from a couple in Louisiana about the potential consequences of being unrepresented in a real estate transaction (I've edited their online account): 
     We bought a house using a dual agent.  We were pushed to close sooner than we intended even though, in order for the prior owner to sell the house, he had to install a new septic system to make it current with regulations (use of the old system had been grandfathered after new regulations).  We were told that if we went ahead and closed, the owner would put the money in escrow for us and we could go ahead and move in, but we were not going to be able to transfer the electricity to our names until the new septic was installed. According to our agent, it wasn't going to be an issue because the owner would keep electricity in his name until the installation.  Unfortunately three weeks later, it hasn't stopped raining and the septic still has not been installed.  The prior owner has cut off the electricity.  We are going on two weeks now with no electricity and no hope of installation any time soon.
     Generally, it costs you nothing to retain your own "buyer's" agent; they are almost always compensated by the listing brokerage.  Your own agent must disclose to you, up front, and in writing, any potential obligation on your part.  Do not go it alone.  To paraphrase a popular line, the potential buyer who represents himself in a transaction has a fool for a real estate agent.

Tomorrow:  Dishing the dirt: Strategies for dealing with the developer's sales office.