By Andrea S. Alford, Deputy Executive Director, Arkansas Real Estate Commission
The day has finally come. You’ve signed every last closing document and you’re standing in the living room of your new house. You get a little misty-eyed as you picture a brightly-lit Christmas tree in front of the window. You make your way to the kitchen, dreaming about the fantastic meals you’ll soon prepare for family and friends. But as you look around, you realize the kitchen looks different than before. And then you spot it: the gaping hole where the stainless steel, Wi-Fi enabled refrigerator with the French doors once stood. Your mind races. That refrigerator had been a major selling point. You were torn between buying this home and a very similar one down the street, but this one had that magnificent refrigerator and a custom-built firepit in the backyard…oh no, you think. You hurry to the back deck and look for the firepit, only to be greeted by a perfectly round patch of scorched earth.
We tell this tale with whimsy, but the sad truth is too many buyers could tell similar tales. It’s no secret that social media and the internet have drastically changed the way real estate is sold and bought. More often than not, prospective buyers have done a vast amount of online research before they ever step foot on a property. Not only can buyers scour multiple list service (MLS) listings, brokerage firm websites and listing agents’ social media posts, they can also visit sites like Trulia and Zillow to learn more about a property in which they’re interested. Consequently, the AREC is seeing more and more complaints filed about what the buyer saw online – and what the buyer ended up buying.
As we’ve investigated these complaints, we’ve heard a common refrain: the buyer says their agent told them that if the MLS listing (or Facebook post or brokerage website listing) said the refrigerator was included, it must be included regardless of whether that is specifically noted in the sales contract. Consequently, when the buyer closes and finds the refrigerator missing, the buyer cries foul against the seller and listing agent, contending that their own agent did nothing wrong by advising them to rely on the MLS listing rather than including the refrigerator in the sales contract or an addendum thereto. Savvy buyers (and sellers) will do well to note that many sales contracts contain language that essentially says the sales contract constitutes the entire understanding and agreement between the buyer and the seller. In other words, if the firepit isn’t in the sales contract, don’t go stocking up on kindling.
When Commission Regulation 10.10(a) states that “… a licensee, for the protection of the public and of all parties with whom the licensee deals, shall see that the exact agreement of the parties regarding real estate is in writing”, it is generally referring to the sales contract and any accompanying addenda. Whether the content of the MLS listing or any other advertising is binding upon the parties or agents who supplied the information is for the courts to decide. However, if an agent knows their buyer wants a specific item included as part of the sale, that agent and the buyers themselves should make sure that information is included in the sales contract or an accompanying addendum, thus ensuring “that the exact agreement of the parties…is in writing.”
When the Commission first took note of this issue, we were very much in a buyer’s market in Arkansas. Sellers were routinely accepting less than listing price and buyers were requiring substantial concessions at closing. As a result, it was not uncommon for sellers to change their minds about parting with valuable items they had originally intended to let go with the property. However, the tide has shifted in Arkansas, as it has in much of the country. Demand is outpacing supply in many markets, and sellers find themselves in the advantageous position of asking top dollar, selling quickly and expecting backup offers as buyers compete for limited inventory. It stands to reason that in a market requiring such agility from buyers, a buyer and their agent must be certain the full terms of the agreement between buyer and seller are solidly reduced to writing.
From the Commission’s perspective, a buyer would have a stronger case against their own agent in such a complaint since their agent has a fiduciary obligation to their client, the buyer. Of course, in dual agency situations where both buyer and seller are represented by the same firm, both agents will have a fiduciary obligation to both parties. Principal Brokers supervising such transactions must see that both parties’ interests are protected in somewhat of a limited capacity with regard to confidential information. However, specifying items which do or do not convey with a property is not usually considered confidential; hence, both agents and their Principal Broker would have an obligation to see that all resulting agreements are reduced to writing.
The message to buyers, sellers and agents is simple: avoid heartaches, headaches and complaints by reducing the exact agreement of the parties to writing, even when it comes to refrigerators and firepits.
House to House is distributed weekly by the Arkansas REALTORS® Association. For more information on homeownership in Arkansas, readers may visit www.ArkansasRealtors.com.