Changes in Maryland Real Estate Agency Laws
If you’ve purchased a home in Maryland any time since 1999, then you should have been made aware of Maryland Agency Laws – who represents whom in a real estate transaction. Maryland has been on the leading edge of consumer advocacy for many years, so the Maryland Real Estate Commission has worked hard to protect the consumer. They’ve created laws to ensure that home buyers, as well as home sellers are aware of the opportunity for representation during the home buying process. Many states in the country still don’t have laws to address to the subject for Buyer Agency.
On October 1, 2016, new laws regarding agency have taken effect, and they will have an impact on home buyers. Here’s what home buyers need to know:
As of October 1st, there will be three types of agency:
- Agents who represent the seller – including the Seller’s Agent and the Subagent (can assist the buyer in purchasing a property, but his or her duty of loyalty is only to the seller.)
- Agents who represent the buyer – the Buyer’s Agent
- Dual Agents – dual agency arises when the buyer’s agent and the seller’s agent both work for the same real estate company
What has changed since the 1999 Agency Laws were put into place? On October 1st, there will no longer be the type of agency called “Presumed Agency”. For the last 15 years, when a buyer met with a real estate agent, and didn’t want to sign a Buyer’s Agency agreement, the agent could continue to help the buyer by providing services as a Presumed Agent. That presumptive representation is no longer recognized in Maryland.
What Does this Mean for A Home Buyer?
Before the advent of Buyer’s Agency Laws in 1999, every agent worked for the seller, and represented the seller’s best interests. The Maryland Real Estate Commission wants to ensure that Home Buyers know their rights and understand that they have Buyer Agency available to them. Consumers need to understand that ALL agents are mandated by law to represent the seller’s best interest when there is no Buyer’s Agency Agreement in place.
Please be aware that all real estate agents are required by law to give “Fair and Honest” real estate services, but without a written buyer’s agency agreement, the law states that the agent represents the seller.
After October 1st, home buyers are now presented with a disclosure which explains the various forms of Agency in Maryland, as well as a Buyer’s Agency Agreement. It is the law. When visiting an open house, a new “Open House Disclosure”, notice will be placed visibly, which explains that the agent conducting the open house represents the seller. Real Estate agents are required to educate buyers and sellers on their rights upon the first meeting.
Agency is More Than Information
Today’s home buyers are well aware that this is the “Information Age”, and are able to obtain vast amounts of information on houses, neighborhoods and lifestyles. But this is the important part about Buyer Agency: Without a written agreement, you cannot get any information that is tailored to your interest. Buyer Agency is designed to give the buyer representation. Immediately upon reading these statements, many home buyers will have questions…
- “What if I don’t want to make a commitment, I just want to see a house?” Consider that a real estate agent has expertise that comes from hundreds, if not thousands, of real estate transactions over their career…why not take advantage of that knowledge? Especially appealing should be the fact that the knowledge can be used for your interests.
- “What if I don’t like that real estate agent?” All Maryland contracts are required to have a cancellation clause. You can hire a real estate agent for an hour if you really want to.
- “I just met the agent 2 minutes ago, I really don’t want to sign something.” That is your right. The law is in place to let buyers know their rights and options. Buyers have the right to enter a home purchase agreement unrepresented.
This is a cursory overview of the changes in Maryland Agency Laws. For a full explanation and view of the documentation, visit the Maryland Real Estate Commission Website: https://www.dllr.state.md.us/license/mrec/