Real Estate Rules: Touring Homes

Real Estate Rules - Touring Homes

Real estate agents have a lot of rules that we need to follow. The rules include the State Laws and Regulations that govern our licenses, the policies created by the State Real Estate Commission, and the Code of Ethics from the National Association of REALTORS(R). The public doesn’t know the rules, so I’m going to highlight the rules around common situations where the public interacts with agents.

Touring a home is often the first point of contact between a member of the public and a real estate agent. There are a few important rules that agents are required to follow when showing a potential buyer a property.

Rule: During a showing, the agent MUST represent either the buyer or the seller. (Source: CT Real Estate Commission Policy on Agency)

Connecticut allows buyer agency, so people interested in purchasing a home have the ability to hire their own representation to guide and advise them through the process. After hiring an agent (by signing a contract), a buyer and their agent are allowed to tour any property covered by the contract without dealing with paperwork at the showing.

But what about potential buyers that have not hired an agent? There are four common situations:

1. Contacting the listing agent.

The listing agent represents the seller, giving them flexibility in how they interact with a potential buyer. Most listing agents will show the home by considering the potential buyer an “Unrepresented Person.” This is the path of least resistance since it requires they disclose that they are the listing agent, but the potential buyer doesn’t have to actually sign anything.

The listing agent could also try to convince the potential buyer to hire them as a buyer’s agent. This is not needed for the potential buyer to tour the home (see above). It’s simply an added bonus for the agent since they now have a buyer client in addition to their listing.

2. Contacting an agent in the same brokerage as the listing agent.

Now we get into the gray areas. Because sellers technically hire brokerages and not specific agents, any agent at the listing brokerage can show a property as a representative of the seller.

This situation sometimes comes up when the public inquires about a home online, or if they call the main desk at the brokerage and don’t specifically ask for the listing agent.

Since the showing agent is part of the listing brokerage, they may represent the seller (even if they don’t know the seller). The agent can then consider the potential buyer an “Unrepresented Person” during the showing. However, the agent has a strong incentive to convince the potential buyer to hire them as a buyer’s agent since that’s their main goal in the interaction.

3. Contacting an agent at a different brokerage from the listing agent.

A common situation with online inquiries is that a potential buyer connects with an agent who is not affiliated with the listing brokerage of the property they want to tour.

Since the agent does not represent the seller, the only way they can legally show the property is if the potential buyer hires them as their buyer’s agent. The potential buyer must sign a contract to see the home.

There are a variety of approaches to this situation. Some agents try to maximize their leverage and surprise the potential buyer with a contract at the front door of the property. I go to the other extreme and propose a reasonable contract in advance. I try to use the showing as an opportunity for both me and the potential buyer to get to know each other without either of us making a long-term commitment.

4. Attending an open house.

Finally, it is possible to tour a home during a public open house. These events are hosted by either the listing agent or one of their colleagues at the listing brokerage. The host agent represents the seller, and the visitors are assumed to be “Unrepresented Persons.” You do not have to sign anything to attend an open house.

Rule: If the agent is representing the seller at the showing, then they MUST disclose their role as the seller’s representative at the beginning of the showing. (Source: CT Section 20-325d-5)

There are multiple situations above where the agent showing the home represents the seller. State regulations require that the agent disclose their role as the seller’s representative at the beginning of the showing. This is accomplished either by presenting the “Real Estate Agency Disclosure Notice” during a private showing, or by displaying a sign with similar information at a public open house.

The public cannot get into trouble if they tour a property in which the representation and disclosure requirements are not met. It is the agent’s responsibility to follow the rules.

That said, it is important for a potential buyer to know whether or not the agent they are interacting with is following the rules. If the agent is cutting corners on something as basic as showings, you have to wonder what other shortcuts they will take.

It’s also possible that you could be harmed by an agent’s actions. When you tour a home with an agent representing the seller, they have a duty to tell the seller everything relevant they learn about your situation. That’s the first point made in the disclosure they are required to give you. Skipping the disclosure means you might not be aware of the situation and could tell the agent details that impact your bargaining position with the seller.

Those are the rules about showings. The more the public understands them the better, so please share this article if you found it helpful.