Real estate representation can often be a tricky matter. Many homebuyers and sellers are unaware of how real estate agents are meant to represent their clients. However, it is crucial for agents to fulfill certain duties in order to protect their clients' best interests. In this article, we will explore these duties and provide examples of agents upholding them.
Understanding the Duties
Real estate agents have several basic duties, also known as fiduciary duties, that they owe to their clients. These duties include the duty of loyalty, confidentiality, obedience, candor/disclosure, reasonable care and diligence, and accounting. They are required by state laws as well as local and national ethics rules.
The duty of loyalty requires the agent to prioritize the client's interests above their own. For example, if an agent has a conflict of interest with a potential client, such as being part of a lending pool that may affect the client's property sale, the agent should advise the client to seek representation elsewhere.
Confidentiality is another crucial duty. Agents must keep all information provided by the client confidential, except for certain material facts that need to be disclosed. For instance, if a client is going through a divorce and needs to sell their house, the agent should not disclose this information to potential buyers as it may create the perception of desperation.
The duty to disclose requires agents to share all relevant information with the client. This includes informing the seller about all offers made, regardless of their value. Such information can have a significant impact on the seller's negotiation strategy.
Agents must also adhere to the duty of obedience, which means following all legal instructions from their clients. However, they should not comply with any illegal instructions, as doing so can result in severe consequences.
The duty of reasonable care and competency requires agents to act professionally and according to their training. They should not provide legal advice unless they are qualified attorneys. Agents must also disclose when a client's needs extend beyond their expertise and seek external assistance to meet those needs.
Lastly, the duty of accounting necessitates accurate record-keeping of client money and property. Agents serving as property managers must maintain detailed records of rent, expenses, and legal documents related to property sales.
The Bottom Line
Given the trust and responsibility involved in representing clients as a real estate agent, it is essential to uphold fiduciary duties. Clients should expect agents to prioritize their interests, comply with legal instructions, and keep track of client money. By fulfilling these duties, agents can ensure their clients receive the best possible care.
Remember, working with a knowledgeable and ethical real estate agent is crucial when buying or selling a property. If you are considering a real estate transaction, seek an agent who prioritizes your needs and adheres to their fiduciary duties.
Securing a client-agent relationship.
Accounting for client money and property.
Additional resources:
- [What Is Dual Agency by Kevin Vitali]
- [How A Seller Handles Multiple Offers by Sharon Paxson]
- [Things That Realtors Do That Everyone Hates by Bill Gassett]
- [National Association Of Realtors Code Of Ethics]
About the author: This article, "How Real Estate Agents Should Be Representing Their Clients," was written by Luxury Real Estate Specialist Paul Sian, who can be contacted at [email protected] or by phone at 513-560-8002. Paul is experienced in marketing and selling investment and commercial properties. Reach out to him today!
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