What Does a Realtor Owe to Their Clients?
When a real estate agent or broker is acting in an agency capacity for a buyer or seller client in a transaction, they have certain legally mandated duties that are called fiduciary duties. For a real estate agent or broker, fiduciary duties begin when a Principal, the buyer or seller places trust into a fiduciary (the Realtor) to act on their behalf. This is usually, and should always be, initiated in writing–usually a listing agreement or buyer’s representation agreement.
These obligations are very important for everyone to understand what the basic expectation is, regardless of any other factor and the first step to finding a Realtor is to be sure they are willing to follow the laws and regulations set forth by the State.
- A real estate agent is required to keep all privileged and private information confidential, meaning a Realtor cannot disclose any information to another party (unless legally obligated) that might weaken their client’s position from a negotiations standpoint.
- For example: a buyer’s agent telling the seller’s agent that their clients are willing to pay more than the price offered. The buyer’s agent’s responsibility is to get the best price for their clients. Admitting that they are willing to pay more would not be acting in their best interest and is illigal to do so.
- This may seem like an obvious duty to a client, but what it really means is that your real estate agent is legally required to act in your best interest at all times and place your interests above their own at all times with regard to the real estate transaction in question.
- Reasonable Care
- A real estate agent is required to show reasonable care and consideration in each step of the home buying or selling process. While the agent is still required to act in his or her client’s best interest, the agent is also required to show reasonable care and diligence to all parties involved.
- All real estate agents are required to efficiently obey and carry out all requests and conditions made by the client. The exception to this duty is that a Realtor is not required to comply if doing so would be breaking the law.
- An agent must account for and document the transfer of any and all money (or other forms of consideration) that belongs to their client. Essentially, it forces the agent be held responsible for handling clients’ money and must be able to show proof that they have done so properly.
- A Realtor is required to disclose any and all known, relevant information regarding the transaction. This includes, but is not limited to, withholding information of any known material defects to a property, as well and any facts that may affect the desirability or value of the house.
The primary purpose of these duties is to help govern fair practice and encourage ethical business methods. Although much of it seems like common sense, neglecting to acknowledge these fairly straightforward obligations has resulted in countless business relationships being ruined, contracts being voided, and ultimately, deals not getting closed.