Should A Home Buyer and Home Seller Speak Directly?

 

Sometimes a home buyer or home seller wonders if they can talk to each other directly. 

So, can buyers and sellers talk to each other directly?

Is a buyer talking directly to a seller of a house ok?

Should a Seller Talk To A Buyer Directly?

Before we delve into this let's talk about REALTOR's or real estate agents and the role that they play in a real estate transaction.

Real Estate Agents Cannot Talk To A Buyer Or Seller If They Are Represented By An Agent

Most buyers are represented by buyer's agents and most sellers are represented by a listing or seller's agent.  Meaning there is a client-level relationship and agents have fiduciary responsibilities to their clients.

It is unethical for a REALTOR to speak to another agent's client directly.

A buyer's agent should not be directing questions directly to a seller who is represented by a listing agent without given permission to do so.

A listing agent should not be speaking directly to a buyer who is represented by a buyer's agent.

The point is the real estate agents are intermediaries that control the flow of information.  Not only do they control the flow of information they know when something should be put in writing.

Can A Buyer And Seller Communicate Directly?

While it is unethical for a REALTOR to speak to another agent's client, there is nothing wrong with a buyer and seller communicating directly. 

They are not held to the same ethical standards.  It is completely ok for a buyer and seller to directly speak to each other.

But just because you can, is it wise?

The Downsides Of A Buyer And Seller Speaking Directly

A buyer or seller may want to speak to the other party because of an unresponsive agent, impatience, to get to know the other party, ect...  But just because you can doesn't mean it's a good idea for either a buyer or seller.

A seller carries a certain amount of liability if they choose to talk to their buyer directly, as we will discuss shortly.

In the almost 20 years I have been in the business, I have had a few buyers and sellers get together behind my back and talk. And, every time it is has turned into a nightmare to unravel.  Why?

People Use Agents To Represent Them For A Reason

Some parties want to use an agent to represent them because they want limited contact with the other party.  Just because you may want to speak to the other party directly doesn't mean they want to speak to you.

Respect the other parties' wishes.  When you are in escrow you have a relationship with the other party and you want to keep it harmonious.  Emotions and tension are high enough!

Expectations

Things are said and promised, a seller promises to do some work, a buyer allows a seller to keep some items in the garage for a few weeks, etc...

But an agent knows the trouble that this can bring that a layman may not understand.

Any promises need to be spelled out in detail.

A vague promise like, I will paint the downstairs will require more specifics.  What color? When is the work to be completed? Who's doing the work?

Or, the buyer allows the seller to keep some items in the garage past the closing.  How long? What area? Who is insuring the items? When will the seller have access to the items?

I bring these two scenarios up as they actually happened to me.  In the end both situations turned into a nightmare and both parties were angry with each other.

Verbal Contracts Are Legal But Not Enforceable

While it is completely legal for a verbal contract to be made between both parties it cannot be enforced in a court of law.

Meaning if you agreed to something and one party defaults you have no recourse.  Any agreements need to be written.  And, beyond that, it needs to be incorporated into the purchase and sales contract or again it may not be enforceable.

If something goes wrong you are out of luck.

A Seller Needs To Be Careful About Fair Housing Laws

Simple, benign statements can get a seller into trouble when it comes to fair housing laws.  Asking if someone is married or has kids could be construed as violating fair housing laws.

While you may have no malintent what so ever, anyone can bring suit against you.  Fair housing suits can be costly to defend and if you lose big fines can be levied.

Never mind pointing out there is another Chinese family that lives down the street or there is a synagogue nearby.

The less a seller knows about their buyers the better.  If you know nothing about your buyer then there can't be any fair housing claim brought against you.  Fair housing laws vary from state to state.  Massachusetts has 16 protected classes and I bet most home sellers don't know who is included in those protected classes.

Sellers Need To Be Careful With Disclosure

Being asked direct questions about the property is certainly something a buyer's or buyer's agent will try to do.  But how you answer the questions is what can get you in trouble.

One particular question often asked is about property lines.  A seller will always tell you exactly where their lot lines are, but when you ask them if they have a survey they say no. 

The only way to know where your lot lines are is to have the property surveyed and marked.

A seller could say to the best of their knowledge from the previous seller, the lot lines are xyz but the buyer should verify with the town or registry of deeds.

Improper disclosure is one of the leading causes of lawsuits between buyers and sellers. It is important the seller answers questions very carefully.  Matter of fact statements can be what get you in trouble.

 

Avoid He Said She Said

My clients do not realize this, but I leave a trail of communication between myself, clients and other parties so there can be very little left to be misconstrued.  If I have an important conversation during a transaction, it is documented. 

Furthermore, I will clarify the discussion in an email to make sure there are absolutely no misunderstandings.  An email is dated, IP addresses can be tracked and if there is a misunderstanding the other party has an opportunity to clarify with a response.

If something is important enough I will make sure the attorneys draft an addendum to the purchase and sale memorializing any promises between parties.

Have Your Agent Present

It is best if you keep the flow of communication between a home buyer and home seller through the agents representing their prospective clients.

If after reading this article buyers and sellers still want to get together, have each party's agent available. 

This way things can be reeled in and clarified if it gets off track.  And if important issues are discussed, it can be recapped in an email to all parties or if something is agreed to an addendum be added to the purchase contract.

While on the surface it may seem to be a good idea for buyers and sellers to speak directly with each other, it really may not be in your best interest.  There is too much at stake and things can go horribly wrong. 

Sellers, while it is not good for either party to talk directly, remember you have a greater risk.

While on the surface when you see an agent cringing when buyers and sellers talk directly, there is actually good reason behind it. Keep communications between agents to avoid any issues.

Other Real Estate Resources:

Do you know who your agent is working for?  It actually can be more complicated than you think.  Bill Gassett points out the first conversation you should have with every agent is understanding how they are working with you.

What does a client level relationship bring to a real estate transaction?  Paul Sian discusses what it means to have a real estate agent to represent you.

Sellers sometimes think they may try to sell their house on their own.  Sharon Paxson delves into why you may want to hire a listing agent.

Can Buyers and Sellers Talk Tor Each Other Directly? was written by Kevin Vitali, a Massachusetts Real Estate veteran of almost 20 years.  If you are thinking of buying or selling a home call Kevin at 978-360-0422