Consumer Beware: Commonly Believed Myths Regarding Hawaii Real Estate Agency Laws
Hawaii’s real estate agency rules are covered under Hawaii Administrative rules §16-99-3.1 Disclosure of Agency. If you take the time to read the rules and understand them, they seem fairly straightforward and appear to favor the consumer; however, there are many pitfalls and holes in the rules. This article will outline many common myths that consumers (and Hawaii real estate agents) believe to be true.
Myth #1: My agent represents my interests in the transaction.
Not true, unless you consider your agent to be the real estate company’s principal broker. The agency actually falls under the umbrella of the company’s responsible broker. You may tell your “agent” all kinds of information and give up a lot of personal information. The law presumes that all of that information passes directly to the principal broker, so your true agent is the principal broker of the firm.
This may seem a little hard to believe, especially with a company like Hawaii Life Real Estate Brokers, with offices on the 4 major islands. Matt Beall, the principal broker, lives on Kauai and law presumes that he knows everything about every deal on Oahu, Hawaii, and Maui. Hawaii Life Agency Life Agency Disclosure and Consent Form.
Myth #2: If I buy a listing from the same firm that my agent works for – the agent going to work for my advantage, trying to negotiate the best possible deal for me, telling me why the seller is selling – I can trust my agent not to pass any of my personal information to the listing agent in the same company.
Not true. If you have signed a dual agency consent agreement prior to negotiations to purchase a property, you have compromised your agent’s ability to do anything that would put the seller listed with the same company to any disadvantage. Since the true “agent” is the principal broker and the law presumes that the broker knows everything, no confidential information from either buyer or seller may pass to either side of the transaction. Hawaii Association of Realtors Dual Agency Consent Addendum.
Myth #3: If I choose to buy directly from a listing agent, that agent must become a dual agent and represent me as well.
Not true. Nothing in the law requires a real estate agent to accept dual agency. The agent may write up an offer with your instructions and must present all written offers to the seller immediately, but the agent does not have to represent you. The fact that the agent’s company may receive all of any commission paid by the seller has nothing to do with establishing an agency relationship with an un-represented buyer.
Here is the Hawaii Life customer buyer disclosure:
The only way you can truly get full representation when buying a listed property is to buy using an agent from another real estate firm, or hire a licensed Hawaii attorney to represent you. Generally, the attorney will only handle the actual contracts and will not assist with recommendations for lending, home inspections, survey, and similar real estate issues outside of their field of expertise. Hawaii Life Buyer’s Representation Agreement.
Myth #4: My agent works for the same company as another agent who has a buyer for a house we both want to buy, the agents say this is not dual agency.
Not true. You are competing for the same house with the same company. Your true agent is once again the principal broker for the company. The broker must review and approve both contracts and has actual knowledge of the offering terms and prices of both offers. If a dual agency consent form is not signed by both buyers, then undisclosed dual agency has occurred. Hawaii Life Notice to Buyer Clients.
Agency potholes exist in many real estate deals in Hawaii because of the limited real estate agency laws we have in Hawaii. The actual licensing law HRS 467 does not address agency at all in any substantive manner. Hawaii Administrative Rules Chapter 99 fills in a lot of gaps, but really does not do justice to some of the situations noted above. Sub-agency is still on the books as an acceptable practice in Hawaii (all agents are the agents of the seller in sub-agency), but it is rarely practiced.
In a state with many consumer protections legislated, it continually amazes me that the legislature and real estate commission feel that our present real estate agency laws have not been addressed to more fully inform consumers and licensed real estate agents. We passed a law in 2010 to increase continuing education to 10 hours per year for real estate agents, but none of the new hours have been mandated for education for real estate agents on this subject.
It is time for the real estate commission and state legislature to pay more attention to this issue and for consumers to be better educated about their choices when choosing an agent.
I have been a licensed Hawaii real estate broker since 1983, chaired the Agency Task Force for Hawaii Association of Realtors in 2003, 2004, 2005, and sat on the Hawaii Real Estate Commission Task Force to evaluate the existing real estate laws in 2005, 2006, and 2007. No changes in the law have resulted in over 1,000 hours invested in this subject.
Tracy Stice, Realtor (Broker)
Hawaii Life Real Estate Brokers (Wailea)—Maui Broker in Charge
Direct Cell: 808.281.5411
ABR CRB CRS GRI GREEN
President Hawaii Association of REALTORS 2010