Utah real estate lawyers weigh in on the controversial “salvation” to the real estate industry
A map of the state would show Utah’s real estate market to be somewhat mottled: mountain real estate in Park City and around Sundance feature properties in the multi-millions from sprawling ranches to tiny timeshare resort condominiums. Meanwhile, drier, flatter lands to the south are more affordable and residential properties in the Salt Lake Valley reflect a more typical American home-buyers’ market. One attorney familiar with mountain real estate wrote this opinion article detailing some of the closing options agents and transaction-brokers consider in a sale. Utah real estate lawyers like Douglas Shumway comment on some of the implications of dual representation and the historical model of brokering a transaction.
Opinion writer Noah Klug reminds readers that in the “not-too-distant past” all real estate brokers acted as a seller’s agent in a deal, and that “even if a broker was ostensibly working with a buyer, the broker was deemed to be a sub-agent of the seller’s broker.” If that doesn’t sound complicated to you, you’re probably one of the Utah real estate lawyers like Shumway who has spent time untangling the implications that buyers’ broker really worked for the seller. “This was seen as borderline fraudulent to buyers,” and was bad news for brokers who were simply working within the law.
But having a broker represent a buyer worried “the old guard,” who feared that buyer-agency would drive down real estate prices, and that the requirement that a broker couldn’t represent both sides of a sale (thus earning both sides of a commission) put off the industry stakeholders, too. In order to address these issues, Klug suggests that transaction brokeragehas been the best solution, at least in Colorado’s mountain real estate market. Transaction brokerage essentially allows a broker to act as a neutral go-between for buyer and seller without representing either party. It allows brokers to “double dip” and get both sides of the commission without the dual-agency dilemma that Utah real estate lawyers know is an ethical quandary in the industry.
Not without its own issues, transaction brokerage is currently the best solution available, Klug purports. With a duty to deal honestly and fairly in regards to both buyer and seller in a deal, transaction brokers are not supposed to advocate, but often end up doing so. Remaining an unbiased intermediary can be difficult, especially when relationships develop between parties over millions of dollars and many months. But Klug and Utah real estate lawyers like Shumway agree on one thing: “buyers and sellers should at least understand the difference between an agent and a transaction broker so they have a right to know what to expect.”
And of course, having not just an agent or a broker, but an attorney who is well-versed in the legal requirements and potential hazards of something as complex as real estate law representing your interests as a buyer or seller is exceptionally valuable. And when property values are in the millions of dollars, as so many mountain tracts are, attorneys’ fees become a worthwhile and affordable investment to avoid industry pitfalls.