When a Realtor represents you in transaction, the law requires them to provide you with certain legal duties (fiduciary duties). As with any agent/client relationship in any industry, you are putting your trust in this professional’s skills and expertise to act in your best interest, but it is not always that clear. It is critical that you understand the concept of Agency, or you may find yourself completely mis-represented.
A standard Agency Relationship (sole or single) is when one Realtor represents you and another represents the other party. In this situation, you are owed the following duties from your agent:
Full Disclosure – The Realtor must disclose all the information they have that may affect your decisions
Loyalty – The Realtor must always act in your best interest
Confidentiality – Any information provided in confidence, will remain so, always
Reasonable Care & Skill – The Realtor will exercise their skills in a manner consistent with the industry standards
Obedience – The Realtor must comply with your lawful instructions
Full Accounting – The Realtor will track all money provided to them for the transaction
In a Dual Agency Relationship (one agent represents the seller and the buyer), everything changes. There immediately becomes a conflict of interest, because the seller and the buyer usually have conflicting goals (price is the main example). A Realtor cannot properly represent one party, without breaching their loyalty to the other. This relationship must be consented to by all parties, and the Realtor would then become an impartial liaison. All confidential information is supposed to remain confidential; however the Realtor will be required to disclose certain items such as hidden defects in the property (leaky basements, etc).
Here is the kicker…. Most people don’t know that an agency relationship can be created without signing anything. Imagine, meeting a Realtor at an open house or calling them off a sign or an ad. You engage in conversation about the property and the Realtor begins asking you questions about your personal situation. You tell them that you are being transferred next week and that you are in town for the weekend to find a home (or some other personal detail). You have now created an implied agency relationship and that Realtor must keep that information confidential, right? Unfortunately, only in theory.
The Realtor is working for the seller and not for you. While legally you have created an implied agency relationship, most people (and Realtors) are not aware of this. It is not malicious, just honest ignorance. For this reason, you should assume that everything you tell this agent will go directly to the seller (or buyer in a “for sale by owner” scenario) and govern yourself accordingly, unless you directly discuss agency relationship and confidentiality.
Education is getting better for the industry and Realtors are required to explain agency at the first available moment that a relationship (implied or not) may be created. Although this rarely happens in practice.
So here is the key …. know who is working for you and who is working for the other party. If a Realtor offers to help you out, ensure that you know your rights and the legal duties that are owed to you. If you ever feel like you have not been properly represented by an industry professional, be sure to talk to their regulatory body. This will ensure that all Realtors act in a matter consistent with, and above the industry standard.
A standard Agency Relationship (sole or single) is when one Realtor represents you and another represents the other party. In this situation, you are owed the following duties from your agent:
Full Disclosure – The Realtor must disclose all the information they have that may affect your decisions
Loyalty – The Realtor must always act in your best interest
Confidentiality – Any information provided in confidence, will remain so, always
Reasonable Care & Skill – The Realtor will exercise their skills in a manner consistent with the industry standards
Obedience – The Realtor must comply with your lawful instructions
Full Accounting – The Realtor will track all money provided to them for the transaction
In a Dual Agency Relationship (one agent represents the seller and the buyer), everything changes. There immediately becomes a conflict of interest, because the seller and the buyer usually have conflicting goals (price is the main example). A Realtor cannot properly represent one party, without breaching their loyalty to the other. This relationship must be consented to by all parties, and the Realtor would then become an impartial liaison. All confidential information is supposed to remain confidential; however the Realtor will be required to disclose certain items such as hidden defects in the property (leaky basements, etc).
Here is the kicker…. Most people don’t know that an agency relationship can be created without signing anything. Imagine, meeting a Realtor at an open house or calling them off a sign or an ad. You engage in conversation about the property and the Realtor begins asking you questions about your personal situation. You tell them that you are being transferred next week and that you are in town for the weekend to find a home (or some other personal detail). You have now created an implied agency relationship and that Realtor must keep that information confidential, right? Unfortunately, only in theory.
The Realtor is working for the seller and not for you. While legally you have created an implied agency relationship, most people (and Realtors) are not aware of this. It is not malicious, just honest ignorance. For this reason, you should assume that everything you tell this agent will go directly to the seller (or buyer in a “for sale by owner” scenario) and govern yourself accordingly, unless you directly discuss agency relationship and confidentiality.
Education is getting better for the industry and Realtors are required to explain agency at the first available moment that a relationship (implied or not) may be created. Although this rarely happens in practice.
So here is the key …. know who is working for you and who is working for the other party. If a Realtor offers to help you out, ensure that you know your rights and the legal duties that are owed to you. If you ever feel like you have not been properly represented by an industry professional, be sure to talk to their regulatory body. This will ensure that all Realtors act in a matter consistent with, and above the industry standard.
