It’s one of the first things you learn when you go to school to become a real estate agent. Duty of loyalty. It’s a keystone of standing for anyone in the business, and your continuing education will be discussed time and time again as a representative. It is also a fundamental part of the code of conduct to which every realtor is bound.
But what exactly is a fiduciary duty? Let’s start with a simple acronym: Cargo. There are seven principles that define fiduciary duty:
CLoyalty– Any information distributed by the customer is kept in the highest confidence and will not be shared with anyone. Think doctors and lawyers.
ALooseness– The agent has the client’s best interests at heart, and will go to great lengths to ensure the best possible outcome for them.
REasy care– The agent ensures that all procedures are completed on time, monitored and followed. Think of your agent as a project manager.
Loyalty– The agent acts in the best interest of the client; Every decision and discussion is taken as a customer representative.
ohObedience– The agent who makes an agreement with the customer will do it according to their agreement. The agent acts (or does not act) on the client’s instructions (of course within the law).
AAccountability– The agent keeps the customer aware of any changes in the transaction and keeps the lines of communication open. The agent will also double check all numbers to ensure there are no surprises.
DClosure– Any information within the scope of the transaction will be disclosed to the customer. All offers are offered to the customer, even the “low ball”.
You will notice that the word CLIENT is used throughout the previous discussion. Anyone interested in buying or selling a home can be considered a client, and an agent has a general duty to be truthful and reasonable with them. However, there is no fiduciary duty. A client is a client who has entered into an agency agreement with the agent, including a listing agreement or a buyer-broker employment agreement. Once this agreement is made, the agent is officially on the client’s team, and therefore must act as a trustee.
One illustration of this importance is in the case of dual agency. Suppose Bob and Betty Buyer are driving down the street and see a realtor’s sign on an apartment building. Sammy Shalesman, the listing agent, decides to call the number on the sign. During the call, Sammy asks if they are represented by an agent, and they reply that they are not. This is an opportunity for Sammy to offer his services to Bob and Betty. This may be an issue because Sami’s fiduciary duty remains with the homeowner, and it may be problematic to assign the same duty to buyers without violating most or all of the carload; For example, the duty of full disclosure conflicts with the duty of confidentiality. Not illegal, but clearly a conflict of interest. Bob and Betty are certainly free to take it; They agree to do so. Limited representation. A much better solution for them is to work with a buyer’s agent who works for them under a buyer-broker employment agreement.
Whether you are buying or selling real estate, the importance of quality representation is hard to overstate. By having a professional in your corner, you can ensure that your best interests are being met, and that the transaction will come to a successful and satisfactory conclusion.