In every state, these days, the real estate broker is required to explain,
early on, just who he or she is working for.
What difference does it make?
Plenty.
And whether you use a buyer's or seller's agent, you can make your real
estate transaction much more effective if you understand the legal fiduciary
duties of an agent.
While there are at least half a dozen such duties, the three that are most
important to you are confidentiality, obedience and notice, all owed to the
agent's (ital)principal(endital), otherwise known as the (ital)client(endital).
To take the first, confidentiality: the seller's agent is obliged to keep
the seller's situation confidential. The buyer who asks a seller's agent "Do
you think they'll take
less?" or even "How much do you think we should offer?" is not entitled to an an
swer, even if the agent knows the sellers are desperate and will grab at any
offer.
A seller's agent owes no confidentiality to the buyer, though. If the
buyers say "We'll offer $140,000, and if we had to, we'll go to $150,000", the
agent is actually
duty-bound to pass the information on.
That's because of the fiduciary duty of notice. The seller's agent is
required to convey to the seller anything that would be of value -- and owes no
duty of confidentiality
to the buyer.
The buyer is, however, entitled to honest treatment even from the other
party's agent. A scrupulous seller's agent cautions the buyer "Don't tell me
anything you wouldn't want
the seller to know, because telling me anything is the same as if it were told
to my principal."
A buyer's agent, on the other hand -- one specifically hired to represent
the buyer -- owes just the opposite duties. He or she must keep the buyer's
information confidential, and obey the buyer's lawful orders. All that's owed
to the seller is honest treatment; sometimes an honest answer is "I can't
answer that because of my duty to my client."
These days about half of those buying real estate retain their own buyer
brokers. The old system, under which almost all agents represent sellers, can
still work well, however -- if you keep in mind just who is on which side, and
where loyalties are legally required to reside.
Published: February 15, 1999
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