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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.

More Information

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.

If you have any questions regarding this post, or would like to enlist my high level of expertise and experience for your purchasing or selling needs here on Maui, you may contact me directly.

Tracy Stice, Realtor (Broker)
Hawaii Life Real Estate Brokers (Wailea)—Maui Broker in Charge
Direct Cell: 808.281.5411
Tracy@HawaiiLife.com
ABR CRB CRS GRI GREEN
President Hawaii Association of REALTORS 2010

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Hawaii Real Estate Agency Laws | Hawaii Life » ССРН

August 16, 2011

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Hawaii Real Estate Agency Laws | Hawaii Life » ССРН

August 16, 2011

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David E. Buck, R, BIC

August 16, 2011

Great info. Tracy. I can’t tell you how often I’ve encountered buyers that are believers in myths #2 and #3. Thanks for the time you’ve invested in this subject and we’re fortunate to have you with us as a resource. This article will definitely serve as a great reference for buyers and sellers alike for years to come. Unless the law changes that is…

David E. Buck, R, BIC

August 16, 2011

Great info. Tracy. I can’t tell you how often I’ve encountered buyers that are believers in myths #2 and #3. Thanks for the time you’ve invested in this subject and we’re fortunate to have you with us as a resource. This article will definitely serve as a great reference for buyers and sellers alike for years to come. Unless the law changes that is…

Tracy Stice

August 17, 2011

David,

We have to keep stirring the fire. I don’t know if the Real Estate Commission will ever wake up to the day to day issues most brokers deal with on these issues. A core , 4 hour agency course with CE credit would be the first step and HAR is presently looking at developing the course and getting it approved. The Realtors Association of Maui is supporting this move as a first step towards a Designated Agency campaign which they believe is the panacea for all agency problems. Education is the first step.

Tracy Stice

August 17, 2011

David,

We have to keep stirring the fire. I don’t know if the Real Estate Commission will ever wake up to the day to day issues most brokers deal with on these issues. A core , 4 hour agency course with CE credit would be the first step and HAR is presently looking at developing the course and getting it approved. The Realtors Association of Maui is supporting this move as a first step towards a Designated Agency campaign which they believe is the panacea for all agency problems. Education is the first step.

Victoria Cheromcka RB

August 17, 2011

Wonderful article Tracy – clearly outlines the difference between client perception and legal reality. The consumer
loses out and conscientous agents are stymied with our current
dodo bird system
Thanks

Victoria Cheromcka RB

August 17, 2011

Wonderful article Tracy – clearly outlines the difference between client perception and legal reality. The consumer
loses out and conscientous agents are stymied with our current
dodo bird system
Thanks

Meg Malani Stewart

August 17, 2011

Aloha Tracy, Very clear explanation, some agents and most of our clients do not realize they SHOULD have NO representation in certain transactions. I say “should” because let’s face it if you have been working for a Seller, been in their home and know the names of family members it is difficult not to advise and negotiate on their behalf just because the Buyer is also represented by the same office. If you have been driving a buyer around for days, bonded with them, eaten lunch or dinner with them, again, difficult to ask an agent not to work in the buyer’s best interest when writing on a company listing. It is simply human nature, we can assist our agents and our clients by presenting them with an option that I have used and know works. The best part is that clients are very grateful to have a clear explanation of their choices. Thank you to all who are working on a solution to our current Hawaii agency situation.

Meg Malani Stewart

August 17, 2011

Aloha Tracy, Very clear explanation, some agents and most of our clients do not realize they SHOULD have NO representation in certain transactions. I say “should” because let’s face it if you have been working for a Seller, been in their home and know the names of family members it is difficult not to advise and negotiate on their behalf just because the Buyer is also represented by the same office. If you have been driving a buyer around for days, bonded with them, eaten lunch or dinner with them, again, difficult to ask an agent not to work in the buyer’s best interest when writing on a company listing. It is simply human nature, we can assist our agents and our clients by presenting them with an option that I have used and know works. The best part is that clients are very grateful to have a clear explanation of their choices. Thank you to all who are working on a solution to our current Hawaii agency situation.

janet sipila

December 7, 2015

a realtor put a for sale sign up at the end of my driveway. It is for a lot in the back. I was told the sign needs to go on the actual property. But she said the easement is connected to the property. but the lot is for sale and if a person were to buy the lot the easement would come with the lot. The sign impedes my vision when I pull out of the driveway. And people are calling me and asking if my house is for sale. My question is, Is it legal for the sign to be on the easement? I was told by a realtor that it needs to be on the actual lot

janet sipila

December 7, 2015

a realtor put a for sale sign up at the end of my driveway. It is for a lot in the back. I was told the sign needs to go on the actual property. But she said the easement is connected to the property. but the lot is for sale and if a person were to buy the lot the easement would come with the lot. The sign impedes my vision when I pull out of the driveway. And people are calling me and asking if my house is for sale. My question is, Is it legal for the sign to be on the easement? I was told by a realtor that it needs to be on the actual lot

Tracy Stice

December 7, 2015

Janet, I don’t understand what a real estate for sale sign has to do with this blog I wrote. If you have issues with the sign, check with the agent’s broker. The first thing I would do is discuss it with the agent and tell the agent that it is a safety concern and it creates liability for the real estate company and the seller of the property.

Tracy Stice

December 7, 2015

Janet, I don’t understand what a real estate for sale sign has to do with this blog I wrote. If you have issues with the sign, check with the agent’s broker. The first thing I would do is discuss it with the agent and tell the agent that it is a safety concern and it creates liability for the real estate company and the seller of the property.

elizabeth duca

March 21, 2018

Aloha Tracy!

Thank you so much for your insight and advice today. Not only did I find reading your article very helpful, but the information and recommendations you provided to me over the phone were invaluable. I now have increased confidence going forward as I continue my search to purchase property here in Hawaii. With your background and experience I know that anyone who selects you as their agent will be in great hands. I will definitely recommend you to any friends and family I know looking to purchase property on Maui.

A Big Mahalo!

– Elizabeth

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