What are the Fiduciary Duties of a Real Estate Agent?

A fiduciary relationship implies a position of trust and confidence. This applies to agency relationships in various types of industries, not just real estate.

Fiduciary duties require that the fiduciary acts solely in the best interest of the principal. This means free of conflicts of interest or abuse of the principal for personal advantage.

Sellers Agent Fiduciary Duties:

• Obedience: Must obey all lawful instructions from the Seller. Seller’s agent is not obligated to obey instructions from the Buyer.
• Loyalty: Must do everything possible to gain an advantage for the Seller.
• Disclosure: Must reveal any known material defects in the property. Must NOT reveal information about traffic problems, poor school system, declining property values, etc. since these items might make the property less desirable to Buyers.
• Confidentiality: Must tell the Seller everything known about the Buyer, including all financial details obtained. Must conceal anything about the Seller that would help the Buyer gain an advantage, such as impending foreclosure, need to move in a hurry, need to sell to settle a divorce, etc. The duty of confidentiality is not limited to the transaction. It extends even after the transaction is completed.
• Accounting: Must account to the Seller for any money or documents entrusted to them
• Reasonable Care (Diligence): Must prepare themselves through education and study to represent the Seller competently in all matters.

Exclusive Buyers Agent Fiduciary Duties:

• Obedience: Must obey all lawful instruction of the Buyer; is not obligated to obey instructions from the Seller.
• Loyalty: Must do everything possible to gain an advantage for the Buyer.
• Disclosure: Must tell Buyer everything known about the Seller including the motivation for selling and any reasons the Seller may have for wanting a quick sale. Must tell Buyer everything known about the property, including traffic problems, poor school system, high crime rates, etc.
• Confidentiality: Must keep all information about the Buyer confidential, including the Buyer’s ability or willingness to pay more for the property than offered, as well as the Buyers’ motivation for buying. The duty of confidentiality is not limited to the transaction. It extend even after the transaction is completed.
• Accounting: Must account to the Buyer for any money or documents entrusted to them.
• Reasonable Care (Diligence): Must prepare themselves through education and study to represent the Buyer competently in all matters. 

Home buyers and sellers need to understand that having the Listing (Sellers) agent represent both the seller and the buyer may not be in your best interest.  This practice is legal provided both buyer and seller give written consent to do so. However, there may be a conflict of interest with the agents fiduciary duties. You decide.

In a challenging buyers market like we are in today, it is not uncommon for buyers to want to work directly with the listing/sellers agent in hopes of leveraging the sellers agent to beat out the competition. While this strategy may work it may also come back and bite you.

What are the fiduciary duties of a real estate agent - by Kathleen Daniels, San Jose homes for sale - San Jose short sale agent.