Most people, when buying real estate, have an "agent." Few however, seem to know the duties owed to them by their agent, nor do they recognize the value of having their own agent as opposed to "dual agency." Agent is defined as "A party who is authorized to act in the best interests of another (called the principal) and is obligated to place the principal's interests before the interests of any other parties, including the agent's own interest-regardless of whether the agency relationship is with the seller of the property or the buyer."
I've seen several sales where the agent is the owner of the property, acting as their own agent also representing the buyer. This is not a position I would want to be in. Recognizing that you have an obligation to your buyer to place their interests above yours, while at the same time representing yourself as the seller, makes for a difficult position. Keep this scenario in mind as you read on.
The fiduciary duties owed to a principal by the agent are as follows: (fiduciary is defined as relating to or involving a confidence of trust)
Undivided loyalty: The agent must place the principal's interests above all others, and cannot conduct business in a way that would be detrimental to this interest. The agent cannot advance anyone else's interest above that of the principal/client.
Obedience: The agent is required to act, following all lawful instructions from the principal, and cannot exceed the scope of these instructions. In other words, the agent cannot make decision on the behalf of the client without the client's expressed direction.
Reasonable care and diligence: The agent is required protect their client from foreseeable risk and harm by recommending that their client obtain expert advice or assistance when issues are beyond the scope of the agent's expertise.
Confidentiality: The agent is prohibited from communicating personal information about the principal that was obtained within the scope of the agent/client relationship. Personal information must remain personal however material facts and defects of a property are not confidential.
Full disclosure: The agent must disclose all information concerning the transaction and property that might affect the principal's decisions.
Accounting: The agent is required to report to the principal all money and property received and paid out and/or to safeguard money or property held on behalf of the principal.
Going back to the scenario above, where the agent / seller was also representing the buyer, I think you can see the pitfalls of such a relationship because ANYTHING the buyer tells their agent has automatically been conveyed to the SELLER.
The topic of agency relationship is one of vital importance, and it is critical that you, as a buyer or seller, understand just whose interests the agent is representing before you start talking. The best way to find out who an agent represents? Just ask! If you find out the agent is representing the seller, and you do not wish to have that same agent represent you as the buyer, I recommend you find an agent who is accredited as a Buyer's Representative. If your agent has an ABR after their name, they have the Accredited Buyer's Representative Designation. Four (4) requirements must be met to attain and use the ABR® designation:
1. Successful completion of the two-day ABR® Designation Course, including an 80% passing grade on the exam. After successful completion of the ABR Designation Course, you will have three (3) years in which to complete the other ABR designation requirements
2. Successful completion of one of the ABR® elective courses, including an 80% passing grade on the exam, within three (3) years of completing the ABR® Designation Course.
3. Documentation verifying five (5) completed transactions in which you acted solely as a buyer representative (no dual agency). Any transactions closed prior to taking the ABR® Designation Course or closed within three years after completing the ABR® Designation Course are eligible for credit. Documentation necessary for each of your five (5) completed transactions:
4. Membership in good standing in the Real Estate BUYER'S AGENT Council and the National Association of REALTORS®.
Click here to learn more about the ABR designation. More on agency in later posts. Any questions, don't hesitate to call or email. That's why I'm here!
Aloha, Elaine
Elaine Schaefer (R, GRI, ABR)
Broker in Charge - Princeville Resort Office
Graduate, Realtor's Institute
Accredited Buyer's Representative
Top Producer 100% Club
RE/MAX Kauai
Princeville Resort Office
POB 223632
Princeville, HI 96722
cell: 808 639 2935
home fax: 1 808 440 4552
email:soldonkauai@yahoo.com
website: www.kauairealestatenow.com
......you can have your own piece of paradise
ask me how!
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