Take a Peek-A

Take a Peek-A

HOW TO MAKE YOUR REALTOR GET YOU THE BEST DEAL: ILLINOIS EDITION

5. How It Works in Illinois Under the old rules, Realtors® participating in a Multiple Listing Service always represented the seller unless a written agreement existed to the contrary. This occurred in spite of the fact that most buyers believed they were working with "their agent", and "their agent" owed them loyalty, confidentiality and all the normal fiduciary duties. Some real estate attorneys described this situation as "Agency by Surprise".

In 1992, brokers and agents around the country suddenly started to pay attention to representation issues for two reasons. The first reason was due to one of the large private firms in Minnesota being sued in a class action lawsuit involving the practice of "undisclosed dual agency" in hundreds of transactions. This made national news in the real estate industry and was a very serious matter. If the firm lost the lawsuit, the penalties could be as severe as having to return all the commissions they collected form all the customers in the lawsuit, and possibly more. This sort of talk gets a real estate agent's attention.

The other event which woke up real estate sales people to agency issues was when states began to re-examine agency disclosure laws. The growing national interest in buyer representation, along with the class action lawsuit and the national press coverage, made it a good time to examine disclosure laws. Generally, Realtors® were required to disclose in writing on all purchase agreement forms whether they represented the interest of the buyer or seller. However consumers were not given the information they needed to make an informed decision.

Recognizing the need for change, a new agency bill took effect on January 1, 1995. The first change created the presumption that the agent represents the consumer they are working with as a designated agent, unless they have a written agreement to the contrary. The second change considers the agent as both the person working with the consumer and additionally requires providing representation to the consumer. This designation ultimately prevents dual agency from arrising on an in-house transaction. The third change clarifies rights and duties for both real estate agents and consumers. Lastly, the law repealed the requirement of agency disclosures to buyers and sellers at the first significant contact, replacing it with the requirement to disclose whenever the licensee performs any ministerial acts for a consumer.

Look for Disclosure forms in the Appendix section of my book.
GET THE BEST DEAL WHEN SELLING YOUR HOME: CHICAGO, ILLINOIS EDITION

1. Going It Alone

Although the names have been changed, the following stories are real, and may help you decided whether selling your house yourself will really save you money.

First Story

Jack and Lorraine want to sell their home. Jack decides they should sell their home themselves; Lorraine reluctantly agrees. In the language of real estate, these people are referred to as FSBOS (For Sale by Owners). Jack believes their home is worth $500,000, and using a common 6% commission rate, he feels he can save $30,000 by selling the home himself.

Jack spends money on newspaper advertising and holds open houses every Sunday. After six weeks, a buyer is interested. Jack and Lorraine are offered $465,000 and decide to take it; it's only $5,000 less than they would have received if they had paid a Realtor®. After four weeks the buyer cannot obtain loan approval and the deal falls through. Jack wants to keep the buyer's deposit, but after the threat of lawsuit, he refunds it. Jack starts over again.

Ultimately, Jack sells the house for $455,000. After closing costs and expenses to market his house, but not counting time and aggravation, Jack nets $345,000 after paying off his $100,000 mortgage.

Unfortunately, the story doesn't end here. About a year later Jack and Lorraine were sued by the buyer because it appeared the home was in a flood-control basin, and the required disclosure to the buyer had not been made. Had Jack paid the $30,000 commission to an agent, he could have saved himself from legal exposure, been protected in the failure of the first sale and marketed his house to a wider audience. He might even have sold his house for the initial asking price of a $500,000. So in the end, Jack lost much more than $30,000..

Although this story is not a guaranteed representation of the realities of selling your home, it illustrates that you must be educated . And often, it pays to rely on an expert's education and experience. Don't attempt to sell your most precious asset without reading this book first.

Contact Information

Photo of Allyson Hoffman Real Estate
Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview IL 60025
847-310-5300
Fax: 847-400-0881

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Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview, IL, 60025

(847) 310-5300
[email protected]

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