TENNESSEE AGENCY LAW REQUIREMENTS FOR AGENTS WORKING AS BUYER AGENTS
IF IT IS YOUR INTENTION TO WORK WITH A BUYER AS A BUYER'S AGENT IN A REAL ESTATE TRANSACTION:
You will be representing the BUYER as a CLIENT of your Real Estate Company. The Company, you're Your Broker and you will be the BUYER'S AGENT.
After telling the BUYER about your Company, yourself and the services you provide, according to TCA 62-13-405, you must verbally disclose to the BUYER your status in the transaction before any real estate services are provided.
"Mr. Buyer, I wish to represent you as a BUYER'S AGENT." As your AGENT, there are two special duties I will owe only to you under Tennessee Law (TCA 62-13-404):
"Mr. Buyer, as your AGENT, I will owe to you and everyone involved with us in any transactions or activities the following duties under Tennessee Law" (TCA 62-13-403):
"Mr. Buyer, I am required by Law (TCA 62-13-405) to have you sign a DISCLOSURE FORM stating that I have given you all of this information before I can execute a Buyer Agency Contract with you. Please sign my Company's Disclosure Form."
THE BUYER AGENCY CONTRACT
Tennessee Law (TCA 62-13-102. # 7 and TCA 62-13-401.) requires you to have a written Agency Agreement between you and the BUYER establishing the terms and conditions of your BUYER AGENCY Relationship.
Your BUYER AGENCY Agreement should address the following:
Many of the terms and conditions of a Seller Listing Agency Agreement should also be considered in a BUYER AGENCY AGREEMENT.
WHO SHOULD BE A BUYER'S AGENT?
Based on Court Decisions, Real Estate Agents who work with the following MUST be a BUYER'S AGENT:
Based on recent Court Decisions, Real Estate Agents who work with the following SHOULD be a BUYER'S AGENT:
INFORMATION YOU MUST DISCLOSE TO YOUR BUYER CLIENT AND ALL OTHER PARTIES IN A TRANSACTION:
INFORMATION YOU MUST DISCLOSE TO YOUR BUYER CLIENT:
WORKING WITH OTHER REAL ESTATE LICENSEES AS A BUYER'S AGENT:
Under Tennessee Law (TCA 62-13-405), upon initial contact with any other Licensee representing a Seller involved in a transaction with you, you must disclose your BUYER AGENT status. This is a VERBAL Disclosure, the Law does not required it to be in writing. Licensees representing Sellers must verbally disclose to you their agency or status at initial contact. If at anytime, any Licensee's status changes during involvement in a transaction with you, that Licensee must immediately tell you of the change. Likewise, if at anytime, you change your status from a BUYER'S AGENT during involvement in a transaction with another Licensee, you must immediately tell them of the change. Written Disclosure of your change is only required between you and your CLIENT. Written Disclosure of any Licensee working with you in a transaction is only required between that Licensee and the person with whom they are working (seller).
Under the Law, you are only responsible for disclosing YOUR OWN agency relationship in a transaction, not the status of any other Licensee in the transaction.
THERE IS NO REQUIREMENT NOR PROVISION IN THE LAW FOR Licensees or Real Estate Companies to pass back and forth at the time of negotiating an Offer to Purchase, a Disclosure Form to be signed by all Licensees and parties involved.
While some Licensees and Companies may DESIRE a written disclosure from everyone involved in a transaction, this DESIRE is not a requirement and cannot impede the negotiation or completion of a transaction.
THERE IS A REQUIREMENT IN THE REALTORS® CODE OF ETHICS FOR "REALTORS®, acting as agents of, or in another relationship with, buyers or tenants, shall disclose that relationship to the seller/landlord's agent or broker at first contact and shall provide written confirmation of that disclosure to the seller/landlord's agent or broker not later than execution of a purchase agreement or lease." ( Article 16 - Standard of Practice 16-10 )
WORKING AS A BUYER'S AGENT WITH SELLERS NOT REPRESENTED BY ANOTHER AGENT:
When you approach an SELLER NOT REPRESENTED BY ANOTHER AGENT (FSBO) concerning a property which your BUYER CLIENT has expressed an interest:
Since the Seller is not represented by another Licensee, you must disclose to that Seller at first contact your status as the BUYER'S AGENT ( TCA 62-13-405 ). You would inform the Seller about Agency and of the seven duties that Tennessee Law requires you to give to him. If the Seller will sign a Disclosure Form at first contact indicating that he understands that you represent the BUYER, have him do so. If he refuses to sign a Disclosure Form at first contact, inform him that the Law (TCA 62-13-405) requires that you have a Written Disclosure Form signed by him prior to presenting him an Offer to Purchase from your BUYER CLIENT. If the Seller is represented by another Licensee, then no written agency disclosure is required of you.
SHOULD YOU CHANGE FROM A BUYER'S AGENT TO A FACILITATOR TRANSACTION BROKER WHEN WORKING WITH A SELLER WHO IS NOT REPRESENTED BY ANOTHER AGENT?
As a BUYER'S AGENT you have promised to be LOYAL and OBEY your BUYER CLIENT, in addition to the other seven duties required by LAW. Why would you now remove your CLIENT'S two most valuable duties? Put yourself in the BUYER'S position - you obligated yourself to nine specific Agency Duties and to deliver some specific services as HIS AGENT. Now, as his advocate and representative, you are asking if he will allow you to abandon him.
If you work with an unrepresented Seller as a BUYER'S AGENT you would owe to him the same seven duties a FACILITATOR/TRANSACTION BROKER would owe to him. You may work with that Seller who is not represented by another agent as your BUYER'S AGENT with a written disclosure stating your status as a BUYER'S AGENT and the seven duties you would owe to that Seller.
Sometimes BUYER'S AGENTS are concerned about how they might receive compensation from a transaction when there is no listing contract with a Seller. Sometimes they make the mistake of trying to persuade the Seller into signing a "one time showing" listing contract. This would make you a DUAL AGENT - do you have your BUYER CLIENT'S authorization to do this? The most common way for BUYER AGENTS to receive compensation in a transaction where there is no listing contract with a Seller is to have your CLIENT make your compensation a condition of their offer to purchase. "Mr. Seller I will buy your property conditioned upon (your name), my BUYER'S AGENT receiving (the stated dollar amount) from the proceeds of this transaction at the closing."
As stated earlier, you must address how you will be compensated in different situations in your BUYER AGENCY CONTRACT with your BUYER CLIENT.
The only time you would have to change your status from a BUYER'S AGENT to a FACILITATOR/TRANSACTION BROKER status would be when your BUYER CLIENT becomes interested in a property you have listed as a SELLER'S AGENT. Having already discussed your Company Policy and Procedures for "In-House" transactions and changing agency relationships with both your BUYER CLIENT and your SELLER CLIENT prior to obtaining a Buyer Agency and a Seller Agency Contract with them, you would now go back to both CLIENTS for their consent to allow you to change your status. If you can convince them, then you may change your status. Your Company Policy and Procedures will dictate how you do this and which agency relationship you may default to - FACILITATOR/TRANSACTION BROKER or to DUAL AGENCY.
If it is your intention to REPRESENT both your BUYER CLIENT and your SELLER CLIENT in the same transaction, you must REPRESENT them as a DISCLOSED DUAL AGENT. You cannot REPRESENT them as a BUYER'S AGENT and as a SELLER'S AGENT.
You cannot work as a BUYER'S AGENT for your BUYER CLIENT and as a FACILITATOR/TRANSACTION BROKER for the SELLER in the same transaction.
YOU CAN WEAR ONLY ONE "AGENCY HAT" AT A TIME IN THE SAME TRANSACTION.
BUYER AGENCY CONFLICTS OF INTEREST DISCLOSURE
When a Buyer's Agent represents several Buyer Clients and two or more of his/her Buyer Clients are interested in the same property and wish to make an offer on the same property, the Buyer's Agent must specify in writing (either in his/her Buyer Agency Agreement or by separate disclosure) how he/she plans to handle the Buyer Client "CONFLICT OF INTEREST."
Here is an Example:
"Agent will not reveal any confidential information from one Buyer Client to another without client's written authorization."
"In the event Agent is showing or presenting offers for another Buyer Client on the same property being considered by this Buyer Client."
"Agent will not reveal the terms of any offers on the same property of one Buyer Client to another Buyer Client without Buyer Client's written authorization."
REQUIRED EXCLUSIVE BUYER AGENCY DISCLOSURE
Buyer's Agents must comply with the Tennessee Real Estate Commission's Policy for an additional Disclosure. It is important that an Exclusive Buyer's Agent makes certain that their Buyer Client understands the Exclusive Buyer Agency Agreement before they sign the Agreement. This Disclosure must be given in writing and signed by the Buyer prior to signing a Buyer Agency Agreement.
Thanks for choosing our firm as your Exclusive Buyers Agency. The Tennessee Real Estate Commission requires that you be given the following information in writing about what "Exclusive Buyers Agency" means in Tennessee in addition to our written Agency Disclosure and prior to your signing our Exclusive Buyer Agency Agreement.
1. Buyers should not contact Listing Agents directly to make appointments to view property without their Buyers Agent during the effective period of the Agreement.
2. In the event that the Buyer comes into contact with a Seller's Agent(s) for example, at an open house viewing. Buyer shall immediately inform the Seller's Agent(s) that he/she is represented by a Buyer's Agent.
3. If Buyer buys property through another real estate agent, a Seller's Agent or directly from an owner, Buyer still owes a commission to the Buyer's Agent.
Buyer's Signature Date
Buyer(s) Signature Date
Agent's Signature Date
THE BUYER'S PERSPECTIVE
Finding and purchasing the right home can be difficult especially when you're not sure who is involved. The more informed you are, the better choices you'll make, and the sooner you'll move into your new home!
To help you understand your choices, the following should give you answers to many basic questions. For in-depth answers to your specific situation, talk with a REALTOR® and ask about individual and local practices before you hire a real estate professional.
Your REALTOR® will ask you some basic questions to get to know a little more about you and the type of home you need or desire. Questions about your income and your liabilities or debts are not to delve into your personal finances, but rather to determine the amount and type of mortgage that best suits your needs.
Be honest with your REALTOR®. Don't withhold income information; it will surely surface later when you apply for a mortgage and can thwart your house hunting efforts. If you are honest with your REALTOR®, chances are they can work with you to resolve any problems that may arise. Your REALTOR® will use this information to "pre-qualify" you for a mortgage and determine how much house you can afford, based on your income-to-debt ratio and how much you have to put down on the house.
It is important as first time homebuyers to be realistic. Keep in mind homeownership, on any level, be it condominium, townhouse or single-family home, provides you with a foot in the door to the real estate market, a chance to save rental dollars and the opportunity to realize tax benefits. In addition, your first home is the launch point from which to trade up to a larger home in the future.
Make three lists:
As you compile your lists, you'll have the beginnings of an overall checklist you can use to rate the houses you'll be visiting. Comparing one house with another is difficult, so a master checklist is invaluable.