By Mark Moyle
Caveat emptor is Latin for "Let the Buyer Beware." Generally, caveat emptor is the contract law principal that controls the sale of real property (but may also apply to sales of other goods). The phrase caveat emptor arises from the fact that buyers often have less information about the goods or services they are purchasing, while the seller has more information. Defects in the goods or services may be hidden from the buyer, and only known to the seller. Thus, the buyer should beware. This is called information asymmetry. Credit
Did you know what while most states in the USA and many other civilized countries have introduced laws to protect buyers, the Bahamas actually still has it written in the law that the buyer must exercise Caveat Emptor?
In addition, it also clearly states that the seller does NOT have to disclose ANY information to the buyer. The Bahamas Real Estate Association (BREA) code of ethics also states that an agent representing a seller shall NOT divulge any information to the buyer that may be detrimental to the seller's interests under any circumstances. That is - the seller's agent does not have to disclose that anything is wrong, even if they know for a fact that the house is infested with termites, that it floods every time it rains and the central air-conditioner unit is full of indoor mold!
Did you also know that as defined by Bahamian Law the BREA code of ethics, all standard forms of real estate agencies shall have a fiduciary (primary trust relationship) with the seller? That means that in spite of all appearances, the friendly smiles, them taking the time to show you properties and ask you how much you have to spend and glean all the other important information that is handy for the seller to know, the whole time the agent is professionally and legally beholden to act in the best interests of the seller.
Unless you have entered into a formal Exclusive Buyer Agent Agreement
This relatively new form of agency is gaining popularity in the USA and is a perfectly acceptable option for a property buyer in the Bahamas as well. It must be registered as a formal, signed contract, otherwise the broker relationship defaults back to the seller, by law. This EBA agreement changes the fiduciary (primary trust) relationship between the agent and the SELLER to the agent and the BUYER.
When using an Exclusive Buyer Agent Agreement the same standard rate of commission is typically applied to a gross sale price and then split equally between the buyer's agent and the seller's agent.
So as a buyer, by entering into an Exclusive Buyer Agent Agreement you get an agent legally committed to serving your best interests in a property transaction without any change in cost. An agent representing the buyer could provide a home inspection, comparative costing exercises, research and discovery of defects, qualify repairs and modifications to the described property, help to negotiate a price that is in the buyer's best interest and also make sure they get the best representation throughout the closing, among many other benefits.
The downside is that an agent acting as an EBA cannot accept listings or sell his own listings without compromising the exclusive buyer representation, so very few agents choose to limit their forms of income to the buyer side only.
Hopefully now armed with the above information, even if you choose not to use an Exclusive Buyer Agent, the next time you have a real estate agent show you one of their listings and they try to make you feel all warm and cozy about getting the best deal they can for you, just try and remember those ancient Latin words for buyer beware.
*For more information please contact Exclusive Buyer Agency Bahamas
Labels: Bahamas real estate, buyer beware, eleuthera, exclusive buyer agent, harbour island, HG Christie, island real estate, nassau, POTENTIAL INVESTOR & HOMEOWNER INFORMATION, real estate, real estate agent