Fiduciary Responsibility - What does it mean to you?

By
Real Estate Agent with KB Home Bre # 01424127

Fiduciary Responsibility - What does it mean to you?

"Utmost care, integrity, honesty and loyalty in dealing with Seller/Buyer." Words I believe we should refresh in our minds with each transaction. Even experienced agents can become complacent and need reminding of the importance of our Fiduciary responsibility.

These words lay the foundation for Realtor actions, causing me to review different transactions I have been involved with during the last month.

Upon accepting a transaction you may not be familiar with it is the agents responsibility to educate themselves on the different components of that transaction ie short sales, probate, Trustee sales, etc.  Even the traditional residential purchase agreement should be constantly reviewed as changes are implemented.

Again complacency is the enemy of any good Realtor.

As I read a post written by Kathy Godin "Be Careful I Kiss and Tell" one of the comments made me stop and think about my fiduciary responsibility to buyers when I am the Listing Agent or is there an ethical obligation - but to whom?

I spoke with an agent in my office who had the opportunity to act as a dual agent. He declined and did the right thing by the client who was going to allow him to sell the house for 150k but because the agent refused she ended up with an offer of $185k. The agent helped his client gain 35k.

One of my great take-aways from ActiveRain is the communication of ideas which inspire me to additional thought, research and sometimes office conversations.

But one thing I have grown to understand  is a true awareness of the importance of my Fiduciary Responsiblity to clients. As a consumer you need to have this discussion with your Realtor.

Posted by

 

If you are considering  buying or selling new construction in the Inland Empire ~ Give me call or email me 

Cause We Like Em' New!

 

Kristal Wilson                                           

cell: 951- 288-7079

Shoot for the moon & if you miss you'll be among the stars

 

 

Comments (32)

Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

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

 

Feb 11, 2013 11:33 AM
M. Lynn Delatte
Developers Realty - Broadview Heights, OH

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

Feb 11, 2013 09:38 PM
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

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.

Feb 11, 2013 10:30 PM
Randy Hilman REALTOR® Associate Broker
Randy Hilman Homes - Moultonborough, NH
Guide & Mentor to Home Buyers & Sellers

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.  

Feb 11, 2013 10:52 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

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...

Feb 11, 2013 11:05 PM
Jon Boyd
Home Buyer's Agent of Ann Arbor - Ann Arbor, MI
Ann Arbor Real Estate Buyers Agent

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". 


Feb 11, 2013 11:21 PM
David Evans
RE/MAX TOWN AND COUNTRY - Cumming, GA
HUD NLB Cumming GA

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!

Feb 11, 2013 11:52 PM
Travis "the SOLD man" Parker; Broker/Owner
Travis Realty - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

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.

Feb 12, 2013 12:00 AM
Michael J. O'Connor
Diamond Ridge Realty - Corona, CA
Eastvale - 951-847-4883

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.

Feb 12, 2013 12:27 AM
Sharon Sanchez
Ace Home Realty - Carson, CA
Your Number "1" Source For Real Estate.

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.

 

Feb 12, 2013 02:33 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

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

Feb 12, 2013 04:23 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

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.

Feb 12, 2013 04:56 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

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!

Feb 12, 2013 05:25 AM
Kristal Wilson
KB Home - Fontana, CA
Cause We Like 'Em New ~ New Home Specialist!

Nina ~ Hidden agendas will always reflect poorly on the agent.

Bob ~ Dual agency, due diligence of reasonable care, duty of fair and honest dealings...so much is involved in our responsibility.

Gene ~ it is a very delicate dance.

Sharon ~ or not adding pictures

Michael ~ Thanks for quoting the first paragraph which I believe sums up the dilema of balancing fair and honest dealings with all parties involved. Good luck to you. You're a great agent and I sure you will prevail.

David ~ so true when dealing with any type of real estate transaction, especially short sales, REO's and Trustee Sales.

Jon ~ I was quoting from the California Disclosure Regarding Real Estate Agency Relationship.

Feb 12, 2013 06:34 AM
Kristal Wilson
KB Home - Fontana, CA
Cause We Like 'Em New ~ New Home Specialist!

Richie ~ I totally agree, we are working to protect our clients and ensure they achieve their dream of home ownership.

Randy ~ In an idea world we would all work towards a win/win solution however each agent should understand their obligations to their clients, and other parties involved.

 

Feb 12, 2013 06:39 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

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. 

Feb 12, 2013 10:03 AM
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

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.

Feb 12, 2013 03:25 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

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."

Feb 12, 2013 04:04 PM
Kristal Wilson
KB Home - Fontana, CA
Cause We Like 'Em New ~ New Home Specialist!

Kimo ~ I'm in agreement with you as Michael in item# 22 provided a paragraph from the NAR Code of Ethics.

Sharon ~ reading through various posts you will find a wealth of information.

Marte ~ My Mom used to say "honesty is the best policy."

Feb 13, 2013 06:53 AM
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

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.

Feb 17, 2013 05:23 AM