Fiduciary Responsibility - What does it mean to you?

Fiduciary responsibilities should be taken seriously.  The require duties to the client that go above an beyond those if a consumer remains a "customer."

I take fiduciary duty very seriously.  I typically only represent buyers because I don't ever want to be a dual agent. 

Upon the first meeting with a client/customer, I explain the IABS (INFORMATION ABOUT BROKERAGE SERVICES) and go over in detail with them about the fiduciary duties. Once in awhile, I've caught them being already represented by another agent. The main issue is explaining the IABS. Couple times I've represented both in a dual agent capacity. Don't like to do it but have done it and the outcome really was quite pleasant. Also that's where the buyer's representation agreement comes into play in the "Intermediary Clause". Also comes into play in the listing agreement. Need to make it very clear through the whole process. I want them to totally understand who the fiduciary client is.

Kristal:

A few weeks ago, I initiated a blog post about fiduciary duty and it stirred up quite a discussion.  You might want to look back on it.  What most people missed in that blog discussion was the  "conflict of duties" that Carla refers to above.  The issue is never about our legal permission to represent all parties in the same transaction,  or whether such a transaction can be accomplished "pleasantly" and to everyone's satisfaction.  The issue is always about the inherent conflict of duty that occurs when we attempt to be loyal to the best interests of opposing parties.  Some states allow the practice of dual agency, but dual agency by definition limits our ability to represent any party exclusively within the scope of our engagement. Exclusive representation is what fiduciaries afford their clients. My firm practices the dual agency model.  Buyers and sellers who permit agencies to practice it on them are foolish, in my opinion.  

Yes to this post and its author too. It means we are joined at the hip for the next 60-90 days and your welfare is my welfare and we are striving for best possible outcome...

Kristal,

I'm concerned with your second sentence:

I'm Utmost care, integrity, honesty and loyalty in dealing with Seller/Buyer. 

Loyalty is only for clients. Without the term client there you're actually wrong.

Jill from post #9 said "Dual agency is allowed in New York and your fiduciary is to the seller but you end up acting as mediator."

I think you may want to go back and edit that:

If you are a dual agent you are required to try to represent both seller and buyer, and treat them both as clients. (Except that you can't help them with anything that would hurt the other, like valuation discussions or negotiation discussions.)

If your fiduciary responsibility is to the seller you are a seller's agent, not a dual agent.

Also, a mediator is not the same as a dual agent. A dual agent is trying to represent both seller and buyer, a mediator represents neither. (Unless your state has some other definition in statue  law for the term mediator.) In Michigan that is a "transaction coordinator". 

Some rules are G o l d e n ... Very thought provoking post and somewhat forgotten about is our fiduciary when dealing in foreclosure and short sales so much over the last few years. Congrats on being featured- cheers!

I've done both sides of the sale for years now with no problem. I ALWAYS explain my position up front and tell them that my PRIMARY duty is with MY Seller, and if negotiations start to get "too weird" then I will drop the Buyer and recommend a few good Agents to work with.

Hi Kristal!  

I was just in the WORST Catch-22 of my career lately and I kept thinking about my client fiduciary responsibilities all the way through the transaction.  

The first item of the NAR Code of Ethics is: 

When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS^®pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS^® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS^® remain obligated to treat all parties honestly.

In my recent transaction, we ran into an appraisal issue and requested by email to the listing agent that the seller reduce the contract price by a portion of the short-fall (my clients would make up the remaining difference).  I was then in the awkward position to fullfull my duty to my buyer client and to present to the buyer a seller signed contract addendum which reduced the contract price and also REDUCED MY COMMISSION which was not something that I agreed to do!  It was not a trivial commission reduction but about a 50% reduction on what was already a pretty lousy commission.

I believed that I did the right thing presented the contract addendum to the buyers and told them that the commission was not a concern for them as the listing broker had made a promise via the terms of the MLS as to what my compensation would be.  The addendum was in the client's best interest so it was signed.

I was really careful throughout the transaction to not cause any delay with completing the sale (not lying but also not raising my concerns about a forced commission reduction), as it would not have been in my client's best interests.  My fear of course was that the seller or the listing agent would have tried to throw the deal somehow.  Fair conclusion given that the rules were already broken by indicating that they wanted to claw back my hard earned commission....

At the end of the day, the escrow office made several mistakes and allowed the sale to be completed without proper documentation on the commission!  I had signed the original instructions (twice!) and ignored all requests for signature on a revised commission amount.  Apparently the escrow office only had the seller signatures on the "revised" instructions.  So now I'll need to head to arbitration to recover from the listing broker the commission that I believe that I'm owed.  I may also have remedies against the escrow company because of their mistakes but at the end of the day I'm owed the commission from the listing brokerage so that is where I head first.

My ethical quandry was balancing the buyer's best interests (getting the deal done at a fair price) vs. my right to a commission as well as honesty to all parties.  I've been called all sorts of things in the past couple of days by the listing agent and the escrow officer but I hold my head high because I think that I did the right thing by promoting my client's best interests first, above my own.

Good morning Kristal,

Those are definitely words we should utilize and live up to in each and every transaction.  They're very important and you're right about agents getting complacent.  Something as simple as putting pictures in the MLS sideways is not living up to your fiduciary duty.

I have done dual agency, but you have to be careful and honest.  

Hi Kristal, excellent post and right to the point.  We agree!  Florida doesn't allow dual agency but allows "transaction brokerage" - very hard to manaage in our opinion.

At the end of the day, it's really simple to me: always look out for your client's best interests. Keep that in mind and you won't go wrong! No hidden agendas!

Realtors have a fiduciary role in their performance to be virtuous in every aspect of a transaction not with standing their clients goals and objectives. 

Kristal, I agree with you. Everyone in the Active Rain community is inspiring. Every day I learn something new and find a topic that I want to research in more detail.

I think agents often forget the honesty part when they're representing one side or the other - and think it's OK to be dishonest with the "opponent."

I represent the transaction to the detriment of no one. I am upfront right off the bat with what I do, Most don't listen.