What is a real estate agent’s fiduciary duty and how does it play out in our Silicon Valley real estate market?

24 Days – The Final Stats
March 30, 2017
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September 13, 2017
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When a buyer or seller hires me to help them with their real estate needs, they are hiring me for more than just marketing and selling their home for the highest dollar or helping them find and negotiate the purchase of their dream home, they are hiring me to act as their fiduciary.  Being a fiduciary is an extremely important concept and unfortunately some agents just don’t get it, or if they do, they don’t apply it.

Fiduciary duties involve loyalty to the client, confidentiality, disclosure, obedience, reasonable care and diligence, and proper accounting.  However, being a fiduciary involves so much more.  The following excerpts, provided in one of our legal seminars, describes the judge’s instructions to the jury regarding an agent’s fiduciary duties to his or her client:

“As a fiduciary, a real estate broker must disclose to his or her client all material information that the broker knows or could reasonably obtain regarding the property or relating to the transaction…. The broker must place himself or herself in the position of the client and consider the type of information required for the client to make a well informed decision.

“The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of the transaction, the knowledge and experience of the client, the questions asked by the client, the nature of the property, and the terms of the sale.”

Additionally, “a real estate broker cannot accept information received from another person, such as the seller, as being true and transmit it to his or her client without either verifying the information or disclosing to the client that the information has not been verified.”

As a fiduciary, the agent is obligated to act at all times in the best interests of the client to the exclusion of all other interests, including the agent’s.  To do this better, agents should:

  1. Know who the client is – is the agent representing the seller, buyer, or both (dual agency)?  How can one be a fiduciary to both buyer and seller at the same time?
  2. Explain to the seller about current market conditions as well as his or her disclosure obligations. Make sure the seller fully completes all disclosure documents.
  3. Explain to the client about home pricing and what makes a home more/less desirable.  Describe how the home’s price compares to those that have recently sold and the circumstances under which they were sold.
  4. Make sure the client receives all relevant information and make sure the client is aware of ALL their options regarding that information.  Depending on the information and/or situation, there can be up to 5 or 6 different options on how to handle the information/documents received. Unfortunately, some agents “advise” their clients to “just sign the form” without detailing the ramifications/options of doing such.
  5. Read all disclosures, documents, and correspondence, making sure they are complete and then transmit them to the client.  You would be surprised how many agents just pass the documents on to their client without actually reading them.  How can an agent act in the client’s best interest if they haven’t taken the time to read about the condition of the property, neighborhood or neighbors. 

The sale or purchase of your home is one of the largest financial transactions you will ever make. Make sure your real estate professional is acting in your best interests, as your fiduciary, and the process and results will be more rewarding.

If you have any questions or would like to discuss working together to achieve your real estate goals please contact me directly at 650 465-0755.

Note: I am not an attorney and this should not be taken as legal advice.  Should you have specific legal questions regarding fiduciary duties one should seek the advise of a qualified license attorney.

 

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