A buyer touring open houses without a buyer representation agreement:
Audio Lesson
Duration: 2:43
Question & Answer
Review the question and all answer choices
Can still claim the listing agent as their representative
A is incorrect because the listing agent owes fiduciary duties to the seller, not the buyer. Without a buyer representation agreement, the listing agent cannot and will not represent the buyer's interests.
Is likely being shown the property by the listing agent or seller
Automatically has representation from NAR
C is incorrect because NAR does not automatically provide representation to buyers. Representation must be established through a formal agreement with a real estate professional.
Must sign an agreement before entering the property
D is incorrect because buyers are not required to sign an agreement before entering an open house. While they must be disclosed agency relationships, they can tour properties without formal agreements.
Why is this correct?
Option B is correct because open houses are typically hosted by the listing agent or seller, who both represent the seller's interests. Without a buyer representation agreement, the buyer has no dedicated representation in this scenario and is being shown the property by someone who owes fiduciary duties to the seller.
Deep Analysis
AI-powered in-depth explanation of this concept
This question addresses a fundamental concept in buyer representation that has significant implications in real estate practice. Understanding the representation status when buyers tour open houses without an agreement is crucial because it affects fiduciary duties, agency relationships, and potential commission disputes. The core concept here is that without a buyer representation agreement, the buyer is essentially unrepresented when attending open houses. The question tests your understanding of agency relationships in this specific scenario. To arrive at the correct answer, one must recognize that open houses are typically hosted by either the listing agent (representing the seller) or the seller themselves. Without a buyer's agent present, the buyer has no representation. This question is challenging because it requires distinguishing between different types of agency relationships and understanding that representation doesn't automatically occur—it must be established through agreement. This connects to broader knowledge about agency disclosure laws, buyer representation agreements, and the importance of formalizing agency relationships in real estate transactions.
Knowledge Background
Essential context and foundational knowledge
The concept of buyer representation without an agreement stems from agency law principles. In most states, real estate agents operate under either single agency or designated agency models. Without a buyer representation agreement, the agent showing the property at an open house is automatically considered to be representing the seller's interests. This is known as subagency in some states. The buyer representation agreement creates a formal agency relationship where the agent owes fiduciary duties to the buyer, including loyalty, confidentiality, obedience, disclosure, accounting, and reasonable care. These agreements are typically exclusive, meaning the buyer agrees to work with only one agent for a specified period.
Think of an open house without a buyer's agreement like walking into a retail store without a personal shopper. The store employee (listing agent) is there to help the store owner (seller), not you as the customer (buyer).
When you see a question about open houses, remember this analogy to quickly determine who the agent represents.
For questions about open houses without buyer representation, remember that the listing agent always represents the seller. If no buyer's agreement exists, the buyer has no representation.
Real World Application
How this concept applies in actual real estate practice
A first-time homebuyer, Maria, decides to explore neighborhoods on her own by attending open houses. At one property, she speaks extensively with the listing agent about her budget, timeline, and even mentions her maximum offer price. Unbeknownst to Maria, the listing agent is legally obligated to share this information with the seller. If Maria had signed a buyer representation agreement with her own agent first, that agent would have been obligated to protect her confidential information and negotiate terms on her behalf.
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