Real estate representation can be a complex matter, often leaving homebuyers and sellers uncertain about how their agents truly represent their best interests. However, real estate agents have specific duties and responsibilities towards their clients, as mandated by state laws and ethics rules. These duties are designed to protect clients and ensure that their interests are prioritized throughout the entire process. In this article, we will explore these duties and provide examples of how agents can effectively uphold them.
The Duties of a Real Estate Agent
Real estate agents, also known as Realtors, have a set of fundamental duties towards their clients. These duties, which fall under the category of fiduciary duty, include loyalty, confidentiality, obedience, candor/disclosure, reasonable care and diligence, and accounting. Let's take a closer look at each of these duties.
Duty of Loyalty
The duty of loyalty requires real estate agents to put their clients' interests before their own. For example, if an agent has a potential conflict of interest, such as being a member of a lending pool that lends money to investors, they should advise the client to seek representation elsewhere. This ensures that the agent's personal interests do not compromise the client's best interest.
Duty of Confidentiality
Real estate agents have a strict duty to maintain confidentiality regarding any information disclosed by their clients. Exceptions to this duty include situations where disclosing relevant information is necessary. For example, an agent should not disclose a client's divorce situation to potential buyers, as it could be seen as desperation. Similarly, an agent should not disclose a buyer's full pre-approval amount to the seller, as it could hinder negotiations. However, agents cannot withhold material facts regarding a seller's property condition, as property disclosure laws supersede confidentiality.
Duty to Disclose
Agents have a duty to disclose all relevant facts known to them, and sometimes, even those facts they should have known. For instance, when representing a seller, the agent must inform the client of all offers made, regardless of their nature. If a buyer can afford more than what they offered or is ready to buy at any cost, such information should be communicated to the seller. This allows the seller to make informed decisions during negotiations.
Duty of Obedience
Real estate agents must follow all legal instructions given by their clients. Whether it's pricing a property at a specific amount or adhering to specific showing schedules, agents must comply with their clients' directives. However, agents should avoid following any illegal instructions, such as discriminatory practices.
Duty of Reasonable Care and Competency
Agents are expected to act professionally and in accordance with their training and expertise. They should not provide legal advice unless they are qualified attorneys, and they should limit their representation to areas within their expertise. If a client's needs extend beyond an agent's capabilities, the agent should be transparent about seeking outside help to meet those needs.
Duty of Accounting
Real estate agents are responsible for maintaining accurate records of all client money and property they handle. For example, if an agent is acting as a property manager, they must keep meticulous records of rents, expenditures, and provide regular reports to the client. Additionally, when selling properties, agents must safeguard all legal documents related to the sale.
Conclusion
Serving as a real estate agent involves a high level of trust and responsibility. To ensure that clients are well-cared for throughout the process, agents are bound by fiduciary duties and ethical standards. Clients should expect their agents to prioritize their interests, follow their instructions, and maintain transparent and accurate accounting practices. By adhering to these duties, real estate agents can successfully represent their clients and provide the best possible service.
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 Can Best Serve Their Clients," was written by Luxury Real Estate Specialist Paul Sian. For any inquiries or assistance with selling or buying investment or commercial properties, Paul can be reached at [email protected] or 513-560-8002. With his extensive marketing knowledge and expertise, he is committed to providing excellent service. Contact him today! Working in Greater Cincinnati, OH, and Northern KY areas, Paul serves Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.
