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The Fiduciary Duties of Real Estate Agents

The Fiduciary Duties of Real Estate Agents

If an agency agreement has not been signed that determines an agent’s client, rather than his customer, the agent is acting as a fiduciary agent of the seller. Fiduciary duties are legal obligations to the client, not the customer. Fiduciary duties vary but it is the responsibility of the real estate agent to follow ethical and legal guidelines. 

What can be considered a fiduciary duty of a real estate agent? Read more below:

Obedience

The law calls for fair and honest dealing, no matter who the agent represents. However as long as it is in accordance with the law, the agent is obligated to the seller’s agenda. If a seller asks their agent to list a house at a certain price, the agent must do so. If the price is unreasonable, the agent should encourage the seller to reconsider, but cannot list it at a different price.

Loyalty

Agents must act in the best interests of their clients, including placing their client interests above their own. If an agent is interested in buying a house they know is perfect for one client, they must give the client priority and refrain from making an offer unless and until the client rejects the house.

Disclosure

Real estate agents are obligated to reveal all relevant material facts to the client. However, agents are not responsible for disclosing facts of which they would have no knowledge. The agent will probably be unaware of certain facts until a title search is completed. On the other hand, if an agent notices a crumbling chimney while showing a house and fails to mention it, that would be violating fiduciary duty to the buyer client.

Confidentiality

Agents must always protect their clients’ secrets. The lowest price that a seller-client is willing to take or urgency to sell due to an emergency must be withheld. Buyer’s agents must also keep the highest price they are willing to pay and or if they love a specific house confidential.

Reasonable Care

Agents are expected to know how to use real estate knowledge to fulfill the client’s needs. Clients understandably look to their agents to market houses, show houses, negotiate sales and give relevant advice. They can logically and legally assume the agent will follow through with these duties competently and diligently.

Accounting

An agent must account for money and property they are entrusted with and give escrow funds to their brokers or to the client’s attorney who will keep it in an escrow fund. Listing agents are expected to keep track of showings with a record of those came by. 

It is the agent’s responsibility to ensure that a listed house is secure, either by signing out keys to other licensed agents and tracking whereabouts or by securing a lockbox on the property.

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In addition to bringing you the latest news from the insurance industry, PL Risk provides Resources for Agents and Brokers nationwide. We’ve recently implemented Hiscox Now, which allows agents their own access to Hiscox and instant quoting. To learn more about our operations, contact us today at (855) 403-5982.

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