Why do you need an agent??

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LOYALTY: A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to his principal. This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest. A corollary of this duty of loyalty is a duty to avoid steadfastly any conflicts of interest that might compromise or dilute the broker’s undivided loyalty to his principal’s interests. Thus, a real estate broker’s duty of loyalty prohibits him from accepting employment from any person whose interests compete with, or are adverse to, his principal’s interests. A classic example of breach of this duty of loyalty by a real estate broker is a broker who purchases property listed with his firm and then immediately resells it at a profit. Such conduct ordinarily is perfectly appropriate and lawful by persons acting “at arm’s length.” But a fiduciary will be deemed to have “stolen” a profit opportunity rightfully belonging to his principal and thus to have breached his duty of loyalty.

CONFIDENTIALITY: An agent is obligated to safeguard his principal’s confidence and secrets. A real estate broker, therefore, must keep confidential any information that might weaken his principal’s bargaining position if it were revealed. This duty of confidentiality precludes a broker representing a seller from disclosing to a buyer that the seller can, or must, sell his property below the listed price. Conversely, a broker representing a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more for a property than has been offered. CAVEAT: This duty of confidentiality plainly does not include any obligation on a broker representing a seller to withhold from a buyer known material facts concerning the condition of the seller’s property or to misrepresent the condition of the property. To do so would constitute misrepresentation and would impose liability on both the broker and the seller.

REASONABLE CARE AND DILIGENCE: An agent is obligated to use reasonable care and diligence in pursuing the principal’s affairs. The standard of care expected of a real estate broker representing a seller or buyer is that of a competent real estate professional. By reason of his license, a real estate broker is deemed to have skill and expertise in real estate matters superior to that of the average person. As an agent representing others in their real estate dealings, a broker or salesperson is under a duty to use his superior skill and knowledge while pursuing his principal’s affairs. This duty includes an obligation to affirmatively discover facts relating to his principal’s affairs that a reasonable and prudent real estate broker would be expected to investigate. Simply put, this is the same duty any professional, such as a doctor or lawyer, owes to his patient or client.

DISCLOSURE: An agent is obligated to disclose to his principal all relevant and material information that the agent knows and that pertains to the scope of the agency. The duty of disclosure obligates a real estate broker representing a seller to reveal to the seller: 

 All offers to purchase the seller’s property.  The identity of all potential purchasers. 

 Any facts affecting the value of the property. 

 Information concerning the ability or willingness of the buyer to complete the sale or to offer a higher price. 

 The broker’s relationship to, or interest in, a prospective buyer. 

 A buyer’s intention to subdivide or resell the property for a profit. 

 Any other information that might affect the seller’s ability to obtain the highest price and best terms in the sale of his property. 

A real estate broker representing a buyer is obligated to reveal to the buyer: 

 The willingness of the seller to accept a lower price. 

 Any facts relating to the urgency of the seller’s need to dispose of the property. 

 The broker’s relationship to, or interest in, the seller of the property for sale. 

 Any facts affecting the value of the property. 

 The length of time the property has been on the market and any other offers or counteroffers that have been made relating to the property. 

 Any other information that would affect the buyer’s ability to obtain the property at the lowest price and on the most favorable terms.

OBEDIENCE: An agent is obligated to obey promptly and efficiently all lawful instructions of his principal. However, this duty plainly does not include an obligation to obey any unlawful instructions; for example, an instruction not to market the property to minorities or to misrepresent the condition of the property. Compliance with instructions the agent knows to be unlawful could constitute a breach of an agent’s duty of loyalty.

ACCOUNTING: An agent is obligated to account for all money or property belonging to his principal that is entrusted to him. This duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to him that relate to his client’s transactions or affairs.

I am not stating that it is this is an implicitly unethical practice, but even at a 100,000 foot view, one can see there are several points where conflicts of interest can arise when one Broker attempts to represent both sides. If I am looking at the causes of the NAR Settlement, it would appear that there were a few bad seeds that ruined the pot for the rest of us trying to bring good repute to the industry. 

In doing more research on the three larger lawsuits that prompted the Class Action case filing, I discovered that in the Burnett case, Rhonda and Scott were presented with a document by their agent with four commission choices; six, seven, eight and nine percent! Obviously, this was an attempt to show that commissions are negotiable. The reality is that there should have been lower choices.  Imagine if an Agent representing a Seller is willing to do this to their Principal, what would they do to you if they represented both you and their Seller?! Remember who they met first, more than likely the Seller that asked them to market your home.

I want to take a quick minute to steadfastly protect the reputation of this profession. It has been a wonderful career choice and I am proud of the way I represent my clients on either side of the transaction. I would say the majority of the agents I have had the pleasure of working with similarly exemplify this sort of behavior. 

If you play the Dual Agency game, you just  never know who you are going to end up  with representing your interest. You may get lucky, but in my humble opinion, it is better to find an agent you trust and have them represent you as your Advocate on properties that you both identify.