Come on, now. Don't tune me out for using big words! A fiduciary, that's what I am. Yup. And I was a fiduciary for a few years before I realized how important and serious a role it is. So, here's my plunge into agency. Brace yourself!
A fiduciary is someone chosen by a "principal" to do business on their behalf with a third party. In the real estate world, the fiduciary is the real estate brokerage and its agents that you (the principal) hire to act on your behalf to sell your home to a buyer (third party) or to find a home for you to purchase from a seller (third party). The fiduciary or agent acts in your best interests to negotiate the best terms and price for you. The key words are "on your behalf". That means the real estate agent you hire has to keep your best interests in mind (not their own) at all times in the transaction. A good agent works very hard to remember this.
Fiduciary is a legally defined role. That is why states license real estate agents. As I've said before, they are very different from salespeople. A real estate agent is required by law to give the following duties to their clients:
- Loyalty - act only in the clients' best interest
- Obedience - carry out the clients' lawful instructions
- Disclosure - tell the client everything the agent knows about the physical condition of the property or other material facts that would impact the client's use and enjoyment of the property
- Confidentiality - "mum's the word" when it comes to telling anything personal about the client including how much you can afford to spend, where you work, your marital status, etc., unless the agent has permission in writing
- Reasonable Care - perform the fiduciary duties carefully and thoughtfully for the client's advantage
- Accounting - Keep a paper trail of any money or property received from the client
Books have been written on fiduciary duties and agency, and agents argue extensively about agency. I'm not going to go on and on in this post, but there's more to come in the future. Be forewarned! I've gotten on my soap box and I'm not likely to come down so soon!