Real Estate Blog - THE BUYER'S AGENT IS THE ONLY FIDUCIARY

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THE BUYER'S AGENT IS THE ONLY FIDUCIARY

Brian Brady is, no doubt, a gentleman and a scholar. He agrees that Realtors "should accept the role as a primary financial advisor as their fiduciary responsibility." I would have to qualify that premise to limit it to the management of the buyer's needs in connection with the purchase of real property as agreed in the Buyer's Agency Agreement.

However, I still can't wrap my arms around the description of Realtors as a "sub-agent to a particular lender. I take words very seriously and sub-agent has a particular and specific meaning in Realtordom. Sub-agency ceased to be practiced by myself or my agents since 1993 when buyer's agency became the preferred practice.

As to the lender acting as a fiduciary, there is a risk here. Since the buyer's interest is paramount to the duty of fiduciary, management of the CONTRACT OF SALE is an important part of the buyer's agent's duty. If lenders are going to assert a duty of fiduciary, the lender's duty of fiduciary would have to be subordinate to that of the buyer's real estate agent. It is, after all, our duty to manage the contract and get it to settlement. Otherwise, there is no contract, no settlement and no loan.

Lenn Harley, Homefinders.com. http://www.homefinders.com/. Serving Virginia and Maryland real estate buyers.

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 10/14/2006 06:39 AM

Comments (8)

active rain, homefinders, lenn harley, realtor, buyers agent maryland, buyers agent virginia

8 Comments on THE BUYER'S AGENT IS THE ONLY FIDUCIARY

OCT

2006

Lenn here in Florida probably 90 % of agents act as transaction brokers it was our answer to Dual agency

Lenn, I agree completely. There is no way a Lender or LO could have a fiduciary with a buyer. A fiduciary involves putting your client's interest ahead of you own and you can't do that if you are selling them a product. As for the Realtor being a sub-agent to the lender, well can't do that either as it would now be dual agency. The realtor is the sub-agent of his Broker.

Agency is a pet peeve of mine as well. It is abused way to often and misunderstood even more often.

Thanks for the post Lenn.

Lenn, I'm with you on this. Sub-agent to a lender?? No way, and I don't understand how a lender could ever actually think that way. We still have sub-agency here in NH, although very few if any still work that way. I personally believe it should go away, should have gone away long ago.

Ann Cummings
www.AnnCummings.com

I have quit practicing sub-agency and so have the agents in my office. NC still recognizes vicarious liability and I don't want any part of that. I don't see how I could be a sub-agent of the lender, two separate entities.

Lenn,

This rather limited prospective on fiduciary is interesting. As a mortgage broker, which is distinctively different from a direct lender we have a fiduciary obligation to the client. If the buyer employees the services of an attorney are they also without fiduciary or a sub agent of yours? In fact the fiduciary of these three are distinctly separate and different even though they all are working towards the same goal for the same client with the same property. In fact the only logical argument about sub-agency is that despite "agency law and agreements" they are still paid by the seller. The mortgage broker and attorney contract with their client for their commission (Don’t bring up YSP it’s disclosed and agreed to by the client) the buyers agent’s commission is contracted for by the listing agent who determines how much he’ll share with the buyers agent.

This is not 1972 mortgage brokers originate most real estate loans, because representing the buyer instead of a single lender means they can finance more clients than direct lenders.

This is interesting all of us interested in what’s best for the buyer and all this over a word. If it rains again next Saturday lets debate "situs."

Bill

William J Archambault Jr

The Real Estate Investment Institute

http://www.reii.org

Situs refers to the non-homogenate of land.

William Archambault introduces the attorney to the mix of agent, home inspector, title company, all working for the buyer.

No question about this one. Attorney trumps real estate agent.

I know my place.

Lenn

NOV

2006

I can't believe I missed this blog.

Lenn, thank you for the nice comments. I have, without a doubt, enjoyed the discourse we had and affirm the educational experience it was.

Your banter and blogging caused for some good hard thinking on my part (and I believe your's as well). i think we both learned a whole lot more about each other's roles, and more importantly, how better to integrate our respective industries inasmuch as it related to the consumer; THAT is the most important thing.

I want to reaffirm how your blogbacks have created the most educational experience I've had here.

AUG

2007

Great points!

Many buyers don't realize that the lender, albeit nice and oftentimes helpful, does not have a fiduciary duty to them. I'm about to blog about getting independent appraisals when a lender is in bed with a builder.

Thanks

Frank

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