Your Fiduciary Duties as a Buyer’s Agent
In the real estate business, once a deal is closed, you are obligated to provide your client certain fiduciary duties. But one must ask, what are fiduciary duties? They can be explained as duties bound by only trust and legality. This fiduciary relationship in very crucial and depends on trust. Such a relationship can be compared to that of doctor and patient. You might do everything right in terms of negotiation a better deal for your client but if you make them disbelieve you with a mistake, your real estate career might suffer.
Minimum level of service:
Whether you have bound your client with an agreement or not, there is a minimum level of service you need to provide to the customer. These services include from a provision of listings to the customer to attending phone calls and seeing them personally. If we look at the minimum servierces provided to the client(without a formal agreement) they would be as follows:
- Disclosure of defects
- Treating them fairly
- Being accountable on all monetary transactions
- Provide an accounting of all funds received and disbursed
- Complying with federal and state laws
Once you bind your customers with a legal agreement they become your clients and now all the fiduciary duties must be fulfilled by you in every aspect of the business
What are your fiduciary duties as a real estate agent?
The acronym COLDD AC is commonly used in real estate. This particular acronym entails all the fiduciary duties of a real estate agent. This acronym stands for:
- C is for the Care offered to the client.
- O is for Obedience.
- L is for Loyalty. Without this you can get repeated sales from the same client
- D is for Disclosure of facts.
- D is for timely Diligence. Also referred to as due diligence.
- A is for Accounting
- C is for Confidentiality. The confidentiality clause is often included in the legal contracts.
Dual agency
This might come to pass if your buyer client is interested in one of your listings. You might be asked for your listing from a client in another state. If such thing is to happen, you need to make the buyer fully aware of the fact that you represent both sides of the transaction.
Dual agency can sometimes be a slippery slope in terms of the fiduciary duties. Depending on the state you work in, you may be allowed to represent both sides of a transaction; you cannot disclose the seller’s willingness to take a price lower than the list price. You may not disclose if the buyer is willing to pay a price higher than the offer price. In addition, you may not disclose any negotiating strategy or the motivation of the seller to sell the property—unless you are explicitly authorized to do so (in writing is best).