Ethical Realtors: Navigating Alabama's Real Estate Market
Ethical Realtors: Navigating Alabama's Real Estate Market
20 second overview: “Looking to buy or sell a property in Alabama? Here you’ll get information on the basics of Alabama’s real estate market and things to bear in mind when searching for an agent or Realtor®. Find out how the Caveat Emptor principle is applied in Alabama real estate law and what it means for you as a buyer. Also learn the difference between signing a broker contract and a single agent contract.”
Alabama is one of America's southern jewels. With its history, diverse culture, growing business profile and surging popularity, it's no wonder 4 of its cities were ranked as some of the top places to live in America. The 4 cities — Birmingham, Huntsville, Mobile and Montgomery — made the list following positive assessments of their job markets, quality of life, housing affordability, desirability and net migration rate. What's more, Huntsville, which recently overtook Birmingham to become the most populous city in Alabama, ranked 3rd on the list of best places to live with Boulder, Colorado, in first place and Raleigh and Durham, North Carolina, in second place.
The scenic and suburban neighborhoods for which Alabama is well known are prime attractions for people moving south from more densely populated cities on the east and west coast. Usually, it’s the relatively moderate population density, access to good schools and hospitals, and high number of parks, restaurants, coffee shops, and in some cases, churches, that people look forward to when they move to Alabama. This explains why suburbs like Homewood, Madison, Indian Springs Village, Hoover, Vestavia Hills and Meadowbrook ranked tops as best places to live in Alabama.
While housing is relatively affordable in Alabama, home prices have been inching upwards. According to the Alabama Center for Real Estate (ACRE), as of July this year, the average sale price of homes had increased by 11% year-on-year, and properties were selling much faster while the number of listings had gone down by 29.3% from the previous year. Also, listings are selling much quicker in major cities like Birmingham where listed homes sell within 7 days on average, and Huntsville where it takes an average of 13 days. The combination of high demand, low availability, and low rate of construction due to shortages in the construction industry, means that Alabama's real estate market is currently a sellers’ market and will likely remain so for the next few months.
Unlike in a buyers’ market where the buyer has bargaining power, a sellers’ market gives sellers an upper hand at the negotiating table. So, if you're in the market for a home in Alabama, you certainly need the help of an ethical Realtor® or agent who can help you navigate the market and ensure you get value for your money.
1. Appropriate credentials and licenses.
As mentioned in this 7-point checklist for assessing the trustworthiness of a Realtor®, ensuring that the Realtor® or agent you want to work with is duly licensed is important. All matters pertaining to real estate in Alabama are regulated by the Alabama Real Estate Commission (AREC) and real estate agents are required to be licensed with the Commission. Confirm that your would-be agent is licensed using the license search tool on AREC's website. You can also use the website of the Association of Real Estate License Law Officials (ARELLO) to search for an agent by last name, license and jurisdiction (state).
Remember that agents are required to be registered in Alabama in order to work in real estate, and it is unlawful to act as an agent or broker without appropriate licensing. Also be aware that Agents can only call themselves Realtors® if they belong to the National Association of Realtors (NAR) and you can confirm this independently via the Alabama Association of Realtors.
2. Guidance on Caveat Emptor status of Alabama
Alabama is one of 3 states in the US which applies the principle of 'Caveat Emptor' to the purchase of used houses. Translated “Let the buyer beware”, this principle makes the buyer responsible for conducting thorough due diligence inspections to ascertain the soundness of a property and identify material defects. The implication of this principle is that a buyer cannot sue a seller or broker for material defects discovered in a property after sale has closed and papers have been signed.
In view of the financial implications of this Caveat Emptor principle for buyers and the technical nature of figuring out what may or may not be in order about a property, you need an agent who will guide you in conducting detailed property inspections (due diligence) to ensure you don't get a severe case of buyer's remorse after you've parted with your hard-earned money. However, do note that if a material defect poses a risk to health or safety, and you can prove that the seller was aware of this risk and further, that the material defect could not have been discovered through due diligence, then Caveat Emptor is voided and the seller can be held liable.
3. A broker contract vs a single agent agreement/contract
As a result of the Caveat Emptor principle in the law governing Alabama real estate, neither the seller nor broker has an affirmative duty to share any information they may have about the material defects in a property except if directly asked about that particular defect and if the defect poses a risk to health and safety. When you sign a single agent agreement however, the agent has a responsibility to not only disclose all they know about a property to you as their client, but to assist you in discovering any present or future problems a property may have based on its history, location, structure and build.
This is why it may be in your best interest to sign a single agent agreement instead of a broker agreement. While the former is relatively more expensive than the latter, it favors you in the long run especially if you're in the market for a used house.
4. No history of misrepresentation
Misrepresentation is one problem that's hard to get rid of in most real estate markets. It can take different forms, such as when a property is not as advertised or described, when potentially harmful material defects are concealed in order to secure a sale, and also when an agent or Realtor® fails to disclose that they have a direct or indirect stake in the property you're about to purchase.
You want to be sure you're not signing up with an agent or Realtor® who has a history of misrepresenting the properties they sell. A brief search of their name and reviews online will give you an idea. You could also ask your agent for references and interview the referees to get more information. You should know that by Alabama law, an agent or Realtor® is required to provide written disclosure of any personal interest she may have in the sale of a property to all parties involved in the deal, and furthermore, that all parties must sign in acknowledgement of this disclosure.
5. Identifying harmful material defects
As a buyer, you owe it to yourself to get educated about the things that can pose health and safety risks to you and your family if found in a home. If you have children, you also have to pay attention to thresholds of exposure for certain chemicals and substances as what may pose little danger to adults could be very harmful to children in their formative years. Harmful substances include asbestos, lead based paint, severe mold infestations, and any other substances which can easily dissolve into powder, becoming airborne and potentially harmful to your respiratory system.
You want to make sure you choose an agent or Realtor® who is sufficiently knowledgable about properties in your locale to guide you in doing your due diligence inspections. You should also inform your agent if you or a member of your family has a health condition or allergy which requires careful screening for certain substances.
6. Looking beyond surface information
While the internet is a good place to start you search for a home, it is not in your best interest to decide on a property based solely on the information you've found online. The reality is that there's often a lot more history behind certain older properties than is explicitly stated in its online listing. And for new constructions, it may be beneficial for you to know a thing or two about the land on which the property is built before you make up your mind to acquire it.
Unfortunately, these types of details are often not available online. Only an agent or Realtor® who specializes in the town that's of interest to you, who understands the governing laws and policies of the area, and who has garnered a sufficiently wide network can suss out these details in the real world. So, look for an agent who has the right expertise and experience to help you find out more about a property than what you'd find in a flattering online listing.
Useful Links: License and agent search
Here are links you may find useful if you're looking for an agent to help you buy or sell property in Alabama: