Whether first time home buyer or seasoned homeowner considering selling, there are a number of real estate terms that are essential to know. Today's word is Fiduciary.
Fiduciary—A relationship of trust created when a home buyer or home seller signs a contract with a REALTOR®. After a contract is signed, a real estate agent has several fiduciary duties that protect their client, This fiduciary relationship is not only effective throughout the transaction; it continues forever. This means as a first time buyer, once a contract is signed with an agent, that agent cannot tell anyone anything that is private about you and your situation. In Minnesota, these duties require the agent to be loyal, confidential, and obedient with their client's lawful instructions. They are accountable to the client and must disclose any information they learn that would be of benefit in the purchase of a home. Throughout the transaction and afterward, they must use reasonable care to protect their client's interests.
It is important for a first time buyer to understand what a fiduciary is because every seller that is listed with a real estate broker already has a contract in place. This means when a buyer calls the listing agent for information or stops by at an open house, the friendly REALTOR® asking about your ability to buy a home is under contract with and WORKING for the SELLER. This agent has a fiduciary duty to disclose EVERYTHING you say to the seller of the home. But it is not a two way street. The friendly agent cannot tell you anything that the seller doesn’t want you to know (unless it is about the condition of the property). Because of their contract, the agent cannot say why the seller is moving or if a price reduction is in the works.
As a home buyer, it is essential to interview potential agents to assist with the home search as soon as possible in the process. When good match is found, sign a contract with a REALTOR® so that your interests and information are protected. Then your REALTOR® can make calls to other agents on homes, set up private showings and assist you through the homebuying process. The agent you sign a contract with will be working for YOU!
What if you just met the agent and you are not certain you want to work with this particular person? The contract does not have to be a long term commitment. I often sign up new home buyers for a couple of weeks and extend the contract once we have formed a stronger relationship. Rest assured that even if you decide to part ways with your agent, the fiduciary duty to keep your private information private continues forever.
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