DROdio Real Estate

If you are planning on putting your house on the market, leaving your house “as is” without steeply discounting the price will likely result in very few bites from prospective buyers (after all, there are so many properties on the market, why buy one that's not in good shape?) . At the same time, grand remodeling projects might not get the recoup value they did when the market was booming. So, what should you do?

During the housing boom of 2003 – 2006, major remodeling projects were well worth it. They were sometimes leading to recoups of 80 to 90 cents on the dollar. This is when the resale value of homes improvements was at their best.

We also might remember our parents telling stories of buying a “real fixer-upper,” because they were able to get to get a home at a great price, and saw the value in putting a little money and time into general repairs and basic remodeling. The end result, they had a dream house to raise their kids and retire in.

The truth is that times have changed and we have Generation Xers and the newest generation, the Millenials, ready to buy a home. Their priorities and desires, on average, are different from previous generations. The older generations, the Baby Boomers and the War generation, have all reached the age of wanting to relax and not have to worry about spending both energy and big bucks on buying a fixer-upper to retire in.

New times are ushering in new trends in buying. Couple that with the down market, what is yielded: Buyers who tend to look for home that is in perfect or near-perfect condition.

Before, the market had more buyers than sellers. At that time, it was easier to sell a house with wall that needed a paint job, broken light fixtures, or ratty carpet. Newer generations are now looking for “turnkey” houses. What this means, is that buyers want a house that is ready to use as soon as they turn that key to enter for the first time. A house that needs a lot of work may be a bargain, but it also means time, money, and additional headaches.

Buyers want to make sure that appliances are up to date. They want to make sure they can move in, and relax on a clean living room floor. They are looking to make sure that lighting fixtures work, the garage door opener, and that there is no immediate house odor that might be hard to get rid of. Therefore, very mundane improvements can add psychological appeal to your home.

Here are some quick and very affordable ways to get your house ready to sell that avoid the time and costs remodeling:

Keep your house looking good – Remove all of the junk from your house. You can add thousands of dollars in value just by spending the weekend taking out extra things from your house. Have that overdue garage sale and get rid of all the things you can do without. The additional space will also make your house appear bigger.

• Here are some additional ways of improving the walk through appeal of your house:
• Make your bed every morning.
• Buy new matching towels and make sure that they are always folded.
• Make sure all dirty clothes are hidden.
• Keep counter tops clean.
• Remove offensive posters and other décor that might turn off a buyer with a different taste. Try to keep everything neutral.
• Keep your windows sparkling clean.
• Make sure all light bulbs are working for when walk through buyers flip the switches.
• Create a stack of “House Features” sheets that can be placed on the clean kitchen island. When buyers walk through the house, they can pick these up and look at house related numbers and amenities. This includes square footage of the garage and basement, any newly added features, nearby schools and hospitals, if the house was just painted, etc.
• Get rid of offensive odors from pets or cooking.
• Keep waste baskets empty.
• Clean the oven and remove mildew from the inside of the dishwasher.

Getting that curb appeal – How does your house look from the street? Does the yard need to be cleaned up? Does your house need paint around the edges or whole coat? Are there oil stains on the driveway? Are there lots of cars in the driveway?

Clutter and mess is unappealing to people driving by and those who want to be able to visualize themselves in your home. Two many cars in the driveway and on the road in front will can both hide your for sale sign and make your yard appear small. If you used your garage for only storage, rearrange it and start parking your cars inside. If you park in the street, park further off to the side to open up the space in front of your house.

Some other simple and cheap ways to improve your exterior look or “curb appeal” are:

• Keep the landscaping neatly trimmed.
• Pick up animal feces in the yard.
• Put a fresh coat of paint on your front door.
• Fix any loose shingles.
• Make sure your gutters are repaired and painted.

The penny wise make over of the bathroom – In real estate, the look of bathrooms and kitchens usually bring the best return on investment than any other part of the house. This can be expensive; however, anything that you can do will make a difference.

Here are some cheap ways to improve your bathroom:

• Buy some simple framed art from a craft or retail store. Make sure they match the shower curtain and towels.
• As mentioned above, buy new sets of matching towels.
• Change the sink and tub faucets. Replace the door knobs on both the entrance door and on the cabinets.
• Get a brand new shower curtain. If you have a shower door, then make sure the chrome is shining or invest in a new door.
• Rip out that old fashioned medicine cabinet and replace it with a modern mirror.

…and what about that kitchen? – Updating your kitchen will probably cost the most. However, if you replace appliances, you can sell the old ones at the garage sale you were going to have or take them with you to your new home.

Here are some cheap ways to improve your kitchen:

• Install a nice modern kitchen faucet.
• If your cabinets are over thirty years old, you might want to consider replacing them. If not, semi-gloss paints for kitchen cabinets will eliminate that ancient look. If you don’t like either of these ideas, then consider resurfacing your cabinets.
• Replace cabinet door handles.
• Update lighting fixtures with brighter, more energy-efficient ones.
• Make sure those entire appliances match in color. This can be a little expensive, but a cohesive-looking kitchen can be a real grabber. If you buy new appliances, make sure you put them on that “House Features” sheet. People love to know that they have a brand new microwave or oven.

It is not necessarily hard to keep your house clean and looking good. Remember, you never know when an agent might bring someone by unexpectedly. Make sure your house is ready for a quick sale.

Read Related Posts:

How does the home inspection work?

Is it really cost effective to remodel my home in order to sell it?

Selling your home, what works (and what doesn't)

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Ever wondered if there are cracked floors in that beautiful home that you are about to buy? What about any flood damage that was never fixed? Does this have to be disclosed to you?

It can be a little complicated to figure out since disclosure laws will vary from state to state. Some rules are less strict if the property is owned by the bank or if the house is For Sale By Owner (FSBO). The laws also depend on whether the seller is represented by an agent or not.

What some buyers may not realize is that they can get a CLUE to a prospective house before you decide to purchase. A Comprehensive Loss Underwriting Exchange (CLUE) report provides dates of insurance claims, the type of policy, the insurance company involved, what caused the loss (natural disaster, etc.) whether the loss was property and the amount paid.

The best way to describe a CLUE report is by saying that is sort of like a CARFAX vehicle report. The only difference is that instead of covering the car’s history, it covers residential real estate. CLUE is a database of homeowners insurance claim histories. This database is available to those insurance companies who subscribe to it. According to the Northern Virginia Association of Realtors, about 600 insurers (about 90% of the market) feed into the CLUE database. The report will cover 27 types of losses, including theft, vandalism, earthquake, wind, dog bites, and medical payments. The report cannot be ordered by a potential buyer. Instead, only the people who own the home can order the report.

The report contains the last five years of the property’s history. Any time before this might be hard to come by since it is common practice to remove the information of losses over five years old.

The information in the report is critical to the buyer since its contents could determine whether that buyer reconsiders buying a particular home. The reason is that if there was a loss paid due to storm damage or mold, it could be more expensive and difficult to get insurance. For this reason, a real estate professional might not recommend this to a buyer or seller client, since this information is critical to the home buying decision process.

Why is this critical? First, every buyer should be aware if there is a possibility that something might have to be replaced or repaired in the near future. Second, once the property is closed and ownership is transferred, you could get a letter a few weeks later saying that your insurance company is canceling the policy due to a previous claim. This is a problem since most mortgage documents require the property to always remain insured. If the homeowner cannot find a company to insure their house, they will be forced to pay the mortgage company’s premium insurance rates. This could possibly lead to the homeowner foreclosing on the home since they might not be able to afford the huge payments.

Here is how you handle the problem:
• Ask your agent or the seller to order the CLUE report for their property. This will make you aware of potential problems with the house.
• Make sure the report is for the specific address and contains the seller’s personal information.
• Make the purchase dependent on viewing a CLUE report or on you being able to obtain affordable insurance.
• Check with the REALTOR® association of your state or real estate commission to see if you can put an addendum in the contract regarding obtaining insurance.

The report will also serve as a benefit to the buyer, since it will alert them to the possibility of any incorrect information in the report. The cost of the report is very little. It can be ordered for $19.50 (electronic version for $12.95) per house.

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Much has been written lately about title insurance (see our related post and the necessity for it). What you might not know; however, is that significant changes have recently taken place in the title insurance industry and ALTA (American Land Title Association) is now offering an "enhanced" title insurance policy which provides significantly more coverage than the standard owner's title insurance policy of past years.

While doing a targeted search on the internet, I unearthed this gem: "70+ ways to lose your property" which was published by "First American Title". Now, being in the real estate industry, I consider myself pretty up on title issues and the things that might prevent someone from going to settlement, but, I never imagined there were so many things that could occur that actually might cause a homeowner to lose a home! If I wasn't already a firm believer in the benefits of title insurance, this document would surely convince me. While space doesn't allow here for me to include the list, check it out for yourself, it's pretty interesting reading!

To give you a baseline for comparision, I will list some of the areas of "standard coverage" on an owner's title insurance policy, most are pretty self-explanatory but I will give additional details on the ones I think most people might not know:

• Mechanic's Lien coverage (someone who has done work on your home and then put a lien on the house because they weren't paid for the work they did)
• Third party claims and interest in the title (someone other than you tries to claim the property as their own)
• Improperly executed documents (oops, the title company had the Seller sign in the wrong place!)
• Pre-policy forgery, fraud or duress (The previous husband's girlfriend signed the deed instead of his wife!)
• Non-recorded restrictive covenants
• Defective recording of documents (The clerk of the court had a hangover that day, and messed it up!)
• Prior recorded liens not disclosed in the policy
• Unmarketability of the title (Can't sell the home because an prior "unreleased" mortgage, will pay to clear this up)
• Policy insures anyone who inherits the property from you
• Policy insures the Trustee of your estate-planning trust
• Policy insures the beneficiaries of your trust upon your death

The list above represents a "traditional" title insurance policy. One of the things that I think is an especially great feature of the "enhanced policy" is that it would cover you, the homeowner, if your neighbor initiated a boundary line dispute or your homeowner association decided that you were in violation of a "restrictive covenant" and you were required to remove a fence or deck, for example. The "Enhanced" version of the title insurance policy is kind of like a hybrid policy. The new version offers expanded legal coverage that fills in the gap between the old style of title coverage and your standard homeowner's insurance policy. The cost difference in the D.C. corridor area between the two types of title insurance policies is about 20%

Let's take a look at some of the items that are covered with an "Enhanced Policy" (keeping in mind that it includes all of the items listed above which are in the standard policy).

• Automatic increase in coverage up to $150% (not based on inflation) meaning equity in your home gained by improvements you've made to the property
• Post policy forgery
• Post policy encroachment onto uninsured land
• Legal right to actual vehicular and pedestrian access (to and from the land based on legal right)
• Coverage for certain losses due to zoning law violations (subject to a deductible and liability limits)
• Coverage for certain losses due to existing violation of subdivision law (subject to a deductivle and liability limits)
• Post policy structural damage from third party easement for mineral extraction (so you're covered if the government decides to go mining for gold in your driveway!)
• Violation of restrictive covenants identified in the Policy:
  • resulting in loss from correction or removal (an example of this would be the homeowner association cites you and says you have to remove roof shingles which are the wrong color, or you have to re-paint the home as it is the wrong color as required by the homeowner association regulations.
• Forced removal of existing structures that:
  • encroach onto an easement identified in the policy
  • violate a building restriction line identified in the policy
  • encroach onto neighbor's land (built a shed or a fence that went over your property line onto your neighbors)

The bottom line is that an owner's title insurance policy protects your interests as the owner of the property and is always worth the investment, regardless of which policy you choose. Even if a property has been "in the family" for decades and you are positive that there are no hidden defects or unknown heirs waiting in the wings to make a claim on your property, you would still have to hire legal counsel to defend your rights should there be a claim, rightful or not. A title insurance policy actually covers the cost of defending you against any title claims that might happen down the road and, in my opinion, this benefit alone is worth the price of admission!

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What Is PMI (Private Mortgage Insurance) And How Does It Work?

Private Mortgage Insurance insures the lender for 20% of the loan in the event that the borrower defaults. Keep in mind that even though the borrower pays the monthly premium on the insurance policy, this does not protect the homeowner if they default on the loan. In the event that the borrower does default on the loan, the lender will sell the property to cover the debt, and will then be reimbursed by the private mortgage insurance company up to the amount of the policy value.

PMI Options: Upfront, Financed or Monthly Payments?

• Financing PMI into your loan generally carries with it an overall lower payment than a mortgage payment with a PMI payment attached.
• Upfront payment of PMI means you pay this fee upfront and have no monthly PMI premium obligation.
• Paying your PMI premiums monthly involves paying the PMI premium in in addition to your mortgage payment.

As you can see, you have the option of paying PMI upfront, financing it into your loan or monthly payments through escrow. PMI does not build equity, however, once you have 20% equity in your home you no longer have to pay private mortgage insurance. Of course, you will need to decide based on your specific situation which option is best for you as there is no way to tell how long you will be paying PMI. This depends on how your home appreciates; does it appreciate quickly satisfying the 20% requirement or remain flat? Depending on your scenario, you may be paying private mortgage insurance for a long time.

Is Paying PMI Upfront At Closing Generally Less?

Paying PMI upfront at closing presents the greater likelihood that you will pay out a larger amount over the life of the loan than if you were to pay it monthly. This is due to real estate generally appreciating over the long haul even with market corrections. Furthermore, with each amortized mortgage payment you build equity in your home. This means that you are more likely to achieve 20% equity in your home sooner thereby halting PMI payments than if you pay it all upfront for the term of your loan. PMI premiums paid upfront aren't returned to you when you achieve 20% equity in your home, so it is best to consider how long you will own the home, the type of loan you get and market conditions as this will help to determine if paying PMI upfront or over the life of the loan will be worth it.

PMI Tax Deduction

PMI was originally only deductible if you purchased your home in the calendar year 2007. So even if you bought your home in 2006 or earlier, you would not qualify for the tax deduction, however, the PMI deduction was extended through 2010. Also, keep in mind that while PMI premiums are deductible, this is based on your yearly income. If you make less than $100,000, then you can deduct the PMI payment just as you would your mortgage interest payments. For incomes between $100,000-110,000, a portion of it is deductible. For incomes above 110,000, no deduction is allowed.

4 Tips to Avoid PMI

• Put 20% down
  • This is of course, the most obvious way to avoid PMI. By putting 20% down you become less of a risk to the bank as they will only be loaning you 80% of the loan while you fork over the other 20%.

• Piggy Back Loan: 10% down
  • You put 10% down, the banks you the other 10% and 80% in two separate loans. While this avoids PMI, the smaller loan at 10% often carries a higher interest rate and a shorter term, however this higher interest rate is also tax deductible.

• Government Insured Mortgage
  • FHA and VA mortgages have the option of low cost or free PMI depending on whether you meet certain criteria. Since the government insures the mortgage, this makes it easier for you to qualify for the loan.

• Roll PMI into the Mortgage
  • This option allows you to avoid PMI altogether by accepting a slightly higher interest rate which covers the cost of the insurance policy. However, while this carries a larger mortgage payment, the extra interest is also tax deductible for the borrower, so this is a win-win situation for both the buyer and lender.

As always, your individual situation determines your course of action, if you have questions, feel free to contact Daniel, our owner and meet with him over coffee to discuss your plan and any questions you may have.

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Monthly dues to the condominium association can turn some potential buyers, especially if people see these as an unnecessary expenditure, on top of utilities and mortgage.

However, for some people, the extra cost may be well worth it. Whereas some see the fees as a luxury expense, others might argue that the fees improve the quality of their life by offering benefits that are not widely known to the lay public.

First, let’s start with explaining what condominium fees are.

To understand the anatomy and purpose of condominium fees, you must understand what makes up a condominium. A condominium is made up of two parts: The individual dwelling units and common elements. The dwelling unit is the space you purchase to live in. The common elements of the building usually include the lobbies, pool, elevators, walkways, gardens, recreational facilities, lounges, etc. One part of common elements that is often forgotten is the structural elements along with mechanical and electrical services. When you own an individual dwelling unit, you also own these common elements. Therefore, since you share these common elements, you must help out with the cost for their operation, maintenance and ongoing replacement.

This is important to maintaining the attractiveness, atmosphere and property value of the property. Each dwelling unit owner has an interest in the common elements of the building since they directly affect their individual property value. This is important to those who not only want a cool place to live, but also want to make a great investment.

So, here is how the fees work. If you are an individual dwelling unit owner, you will be required to pay a monthly condominium fee for your portion of the operating expenses of these common elements. A portion of the fee is allocated to a reserve fund. This reserve fund is in place to ensure that there are enough funds available in case there is the need for major repairs and replacements over the life of the building.

The condominium fees are calculated by taking the annual operating cost of the entire building and dividing that number by your unit factor. Your unit factor is the percentage of your contribution to the common expenses. This is based on the square footage of your unit.

The specifics of your fees may include:

• Property management fees
• Building repair and maintenance
• Utilities
• Upkeep and the everyday care of the common property elements. These include snow removal, painting, heating/cooling system maintenance, cleaning of common elements such as exterior windows and carpets, landscaping, mowing the lawn, etc.
• Amenities such as use of the pool, lounge or party room, recreational facilities, etc.
• The corporation’s insurance policies.
• Internet and/or cable access
• Salaries of condominium staff. This can possibly include on-site building managers, security guards, concierge, and maintenance personnel.

Some condominium owners see the expenses and benefits. Some the perks of paying fees might be allowing a couple, who usually spends over $100 a month for gym membership, to drop that and workout at the buildings fitness center. Others could save money by not having to purchase an internet service since the condominium might have a WiFi service. Another way of reducing your utility bill, by paying condominium fees, is by taking advantage of an association bulk cable package. Many condominiums are now purchasing a full package of telecommunications services on behalf of new owners.

Another savings, that is not money, is time saved. Included in the fees are the labor to do the yard work and housing maintenance. This is one reason that condos are popular among young, single professionals and the baby boomer generation who is now entering retirement.

If you have any questions about what is and what is not included in your monthly fees, it should be clearly stated in the buildings operating budget. You can easily get this information from the building manager or the developer prior to purchasing a condominium unit. If you are shopping for a new condominium, the fees and their breakdown should be stated in the disclosure statement. If one is being resold, it should be stated in the estoppel or status certificate.

A Few Notes—if the fees will be adjusted from time to time. Why? This is how business practices work in order to deal with the economy and other external reasons. The property might also take on new staff in order to deal with an ongoing problem or to help maintain a new addition. Each adjustment is reflected in the next year’s budget.

Also, if there is an overestimation for the common expenses, it will not be refunded to you. Instead, it is applied to the reserve fund or it is applied to future expenses. Refunds usually are not given, even if you are selling your unit. Some sellers have added a portion of common expenses paid to the unit’s purchase price.

Finally, the condominium fees are not negotiable. If you do not work out, swim, like to hang out in club houses or enjoy any of the other amenities, you are still required to pay a share. Depending on the laws in your state, some condominium companies can register a lien on your unit if you do not pay your share. If this happens, the company can sell your unit in order to make up for the money you did not pay.

Other posts about condos: Condo vs. Co-op? How do they Compare?

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So here's the scenario: You and your family decide to take a nice leisurely drive on a Sunday afternoon in Alexandria, VA when suddenly, you see it, the home of your dreams! Your heart starts beating fast as you frantically grab your cell phone and dial the telephone number on the sign. You connect with the listing agent who informs you that yes, the home is still available and she can show it to you right now! The agent pulls up in her car, introduces herself to you and then unlocks the door. The moment she opens the door, you know, this house is the one! The agent mentions to you that another couple will be viewing the property later on this evening and there will be an "open house" tomorrow! You go into total panic mode. You remember that a friend of yours told you that you shouldn't ever work with the listing agent, but you don't remember why. Besides, this agent seems really nice and you are really scared that you will lose the house if you don't write an offer right now! Didn't the agent just say there were other interested parties and you should probably consider making a full-price offer?

You follow the agent back to her office while she prepares the offer for your signatures. She returns with a thick stack of paperwork which is frankly incomprehensible to you, so you listen carefully to the explanations the agent gives you as to what you are signing. You are anxious and excited and just want to get this done, so you're not really listening too well when she hands you that "consent for dual agency" paperwork that you need to sign. Something about how the agent represents you? Well, it doesn't matter, an agent is an agent, right? As long as you get the house, that's all that really matters to you at the moment!

You leave the agent's office with a copy of the offer that you signed and wait anxiously for a response from the Seller. The agent calls you back a little while later with the joyous news that the Seller has accepted your offer with a few exceptions. The Seller is happy with your offer overall, but he just reduced his price by $35,000 and is taking a loss so he would like for you to take the property in "as is"' condition and he still has to find somewhere else to live, so he needs a little bit of extra time and could he rent back from you for a little while after the settlement? The "as is" part sounds a little unsettling to you, so you do a little homework and insist on having a home inspection performed. The home inspection reveals that there are some outlets with "reverse polarity" as well as some cracked/missing roof shingles and some pipes under the bathroom sink are leaking. Your agent writes up a "request for repairs" which is agreed to and signed by the Seller.

Settlement day arrives and everything goes forward without a hitch. Since the Seller is remaining in the property for two weeks after closing, you didn't think it would be a big deal to put off your final walkthrough until the Seller had vacated the property. Finally, the long wait is over, the Seller has moved out and you are finally free to take possession of this home! Your agent calls you and sets up a time to do an inspection of the property. You open the door and the first thing you realize is that the the Seller apparently punched a hole in the wall while he was moving out. You see stains in the carpet (which were previously hidden by furniture) and the items the Seller agreed to repair? They were completed, but the Seller wanted to save some money, so he did them himself instead of hiring licensed professionals to complete them as he agreed to in the "request for repairs" that was executed. Your agent is embarrassed at how the Seller left the property and upset on your behalf but admits that since settlement has already occurred and the Seller is long gone, there is not much she can do. Although you are really disappointed in the condition of the home, these things are, afterall, relatively minor in the grand scheme of things, you decide to just let it go. At this point, you just want to move in to your lovely new home!

Can "agency" really make that big of a difference?

Taking the scenario above, how might it have turned out differently if the buyer had chosen to have an agent represent him exclusively? First of all, a buyer's agent would have no reason to suggest that you, as the buyer, should offer full price (unless there truly were multiple offers or the property was underpriced to begin with). Since an exclusive buyer agent representative has no existing relationship with the Seller, he/she has no incentive to consider the Seller's wants/needs/desires. This frees up the buyer agent representative to fully pursue the property on your behalf without any underlying conflicts. In contrast, an agent who already has a relationship with the Seller has prior knowledge of the Seller's situation and may inadvertently try to manipulate you, as the buyer, in that direction. I'm not saying the listing agent is corrupt or a bad person but it's just human nature to want to get the deal done, especially when there is a financial incentive attached.

After negotiating the best deal for you as the buyer, the buyer's agent would then have insisted that you complete a home inspection. The buyer's agent, more than likely would also have asked the the Seller to execute a "post settlement occupany agreement" which would have required the Seller to have a "security deposit" held in escrow by a title company in the event that there were some damages to home that were found after the Seller vacated the property (like the hole in the wall and the stains on the carpet). The buyer's agent would have made sure that a walkthrough was completed prior to settlement and would have asked the Seller's agent for repair receipts from the licensed contractors who were supposed to have completed the repairs that were agreed to following the home inspection. If the Seller's agent could not produce these receipts, the buyer's agent would then have asked to have the Seller to agree to take money from the his proceeds at settlement to either escrow or credit to the buyer to cover the cost of these repairs that he agreed to make.

The high cost of doing business with a "dual agent"

The ironic thing is that there are actually a subset of consumers who purposely seek out listing agents to work with because they feel they are more likely to be able to "get a deal" if only one agent is involved. Traditionally, the commission is split equally between the listing and selling agents, so many agents are willing to cut their commission if they get both sides of a transaction. The thinking is that since the commission paid is reduced overall the Seller's cost are cut and he/she in turn, can take less money for the property. While this premise seems to make sense on the surface, there is no guarantee that just because the Seller pays less commission that the Seller will take any less for the property.

Additionally, as seen from the example above, there is a lot more to the home buying process than simply getting the best price. What good does it do you to get $5,000 off the price of the home and then find out that you will have to replace your furnace or your roof a year after moving in? Or even paying full price and then finding out that a home around the corner exactly like the one you just bought, just sold for $20,000 less than what you paid? A buyer's agent would have had a legal obligation to let you know that a home exactly like the one you just bought was listed for $20,000 less in the same neighborhood.

The Northen Virginia Association of Realtors "Disclosure of Dual Representation" states the following: "The undersigned understand that the dual representative named above may not disclose to either client or such client's designated representative any information that has been given to the dual representative by the other client within the confidence and trust of the brokerage relationship except for that information which is otherwise required or permitted by the Code of Virginia to be disclosed."

By comparison, most "Exclusive right to represent Buyer" agreements have the Broker duties outlined such as "seeking property at a price and terms acceptable to the Buyer" and "assisting in the drafting and negotiating of offers and counteroffers to and from the Buyer and Seller and in establishing strategies for accomplishing the Buyer's objectives". The Greater Capital Area Association of Realtors "Buyer Agency Agreement" states "Represent the interests of the Buyer in all negotiations and transactions regarding the acquistion of real property".

"Fiduciary obligation" defined:

When an agent signs an "Exclusive Right to Represent Buyer" agreement, that agent has then become a "fiduciary" representative of his/her buyer client. I found this great definition of "fiduciary obligation" in the "Lectric Law Library":
When one person does undertake to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter. The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill, care and diligence at his disposal when acting on behalf of the client.

Just say "no" to dual agency!

I hope that having read the preceding you are more convinced than ever that it is not in your best interests in most cases to consent to "dual agency". This also applies if you are listing your home for sale. You might be thinking it would be great if your listing agent found you a client and sold it to that client him/herself, but this is not always the best scenario. Having been involved in this type of situation in the past, I can tell you that neither party receives the best representation and there are more likely to be issues in a transaction where your agent can be put into a "rock and a hard place" situation where he/she can please neither client. If your agent asks you to "consent to dual agency" simply say "no". If a prospective buyer does call your agent, the agent can refer that buyer to another agent to show the property. This keeps everything clean and above board and avoids the potential of a conflict of interest occurring.

Should Virginia and D.C. take their cue from Maryland?

Lastly, it is interesting to note that several states have outlawed the practice of "dual agency" (including Maryland) in the sense that it is not legal for one agent to represent both parties in the same transaction. In Maryland, the only "dual agency" that can occur is when a buyer's agent is from the same brokerage firm as the listing agent, in this case, the broker, not the agent, becomes the "dual agent" and both agents still have fiduciary obligation to their respective clients. A listing agent may work with a buyer (if the buyer gives consent in writing) to purchase a home he/she has listed, but only as an exclusive representative of the Seller.

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