“Transparency and the Real Estate Agent with Anna Gerlants”

According to real estate agent Anna Gerlants, transparency has long been an issue in the real estate industry. Its importance was addressed in the 1970s with the creation of the Truth in Lending Act, which was made to require disclosure of the Annual Percentage Rate (APR) to clarify consumer costs. These are usually lender charges that add to necessary closing costs beyond the down payment. However, says Anna Gerlants, if disclosure is left to the lender, it won’t happen until loan application is made after a buyer has selected a house, and the seller has accepted the buyer.

Also in the 1970s, Congress enacted the REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA). This was not to address consumer advertising, but to require lenders to disclose closing costs as material facts to buyers. A closing happens when a purchase agreement is finalized with title transfer. Anna Gerlants reminds, “The last thing a buyer wants is to be short of money at closing!”

In the 1990s, the passage of disclosure laws was prolific, says Anna Gerlants . An early 1990s disclosure requirement was the SELLER DISCLOSURE ACT 0f 1992. This law requires disclosure of material facts that the seller knows about the property in a Seller Disclosure Statement form designed for seller use. According to Anna Gerlants, material fact disclosure is so important that a form was mandated by the state to ensure disclosure. Its goal is to provide transparency about any property, whether listed with a broker or sold “by owner”.

Anna Gerlants notes that a Notice of Assessment has been required under Public Act 206 as long ago as 1893. As recently as 1995, State Equalized Value was changed as the basis of ad valorem taxation following the first year of ownership. Today,“taxable value” limits the increase in annual taxes to the lesser of 5% or the Federal consumer price index (CPI). While the Notice has been altered several times since 1893, the most recent change was the form itself in 2017.

Another change Anna Gerlants reminds us about is the federal law that originally banned the use of lead-based paint for residential structures in 1978 led by the Consumer Production Safety Commission of the U.S. Today, the Federal Government considers lead-based paint to be any paint that is 0.5% lead by weight, adds Anna Gerlants. The Federal Government passed the RESIDENTIAL LEAD-BASED PAINT HAZARD REDUCTION ACT of 1992, requiring a seller to disclose material facts as to what he knows about the presence of lead-based paint on or in the structure.

By law, says Anna Gerlants, lead-based paint was not allowed in residential structures built after 1978. By 1992 many sellers didn’t know if lead-paint was used. As a result, buyers 1) were given ten days to have an inspection to determine whether it was present or not and 2) received a required booklet from the Environmental Protection Agency (EPA) documenting the dangers of lead-based paint. Today this disclosure is necessary from both sellers and landlords as well as anyone doing construction work on buildings constructed pre-1978, adds Anna Gerlants.

In her experience, Anna Gerlants has found that the description of the agent’s job as “full service” is not understood by consumers without further explanation. A Disclosure of Agency Position requires an agent to be transparent with a customer about his position. This was first required in 1995 when the real estate occupation changed to include the possibility of representing buyers. A buyer, however, can only be represented by a broker if he enters into a Buyer/Broker contract that is comparable to the listing agreement a seller signs to hire a broker, explains Anna Gerlants.

An agent who represents a seller or buyer, Anna Gerlants reminds us, must provide much more transparency in a sale. A client’s agent owes fiduciary duties and the services that accompany them. One fiduciary duty is full disclosure and transparency about all aspects of a sale and another is care and due diligence, telling a client that he must hire other experts to assist in the process.

Anna Gerlants provides a list of these experts. They include an attorney, a mortgage lender, a surveyor, an appraiser, an accountant or any of various kinds of inspectors. Full transparency, says Anna Gerlants, requires that a real estate agent disclose that he isn’t the only professional a buyer or seller should hire.

In truth, an agent can try to provide a buyer with all kinds of help, but clients sometimes won’t take professional advice, Anna Gerlants laments. Buyers, while they do hire inspectors and use lenders, often don’t hire an attorney to serve as their expert in the law and language, or an appraiser who can determine the value of the structure, or a surveyor who can identify the property lines of the parcel being purchased.

Anna Gerlants warns, “Beware of an ‘agent’ who doesn’t represent you. This licensee owes a customer only limited service.” Anna Gerlants points out that customer service has only three elements: 1) honesty, the truth, which can be a simple yes or no answer with no explanation; 2) integrity, the requirement that the person who works with you remain ethical, and; 3) fair dealing, the requirement that an agent behave fairly, i.e. according to the law.

Anna Gerlants warns that the outcome of non-representation may be to leave a consumer with a shortage of information. It is very important, says Anna Gerlants, that the salesperson make full disclosure of his position so a buyer knows what to expect from his agent.

According to Anna Gerlants, the disclosure Regarding Real Estate also warns, “Before you disclose confidential information to a real estate licensee about a real estate transaction, you should understand what type of agency relationship you have with that licensee.” This is transparency that a customer should expect up-front from any real estate agent. If the agent doesn’t speak of it himself, the consumer must always ask so he understands how the process will work as disclosed in the Disclosure Statement. “If I am your agent, you will always know what is going on with your transaction,” says Anna Gerlants.