Agents are required to safeguard the principal’s Confidentiality in order to protect the principal’s interests. If an agent is representing a seller, the agent may not tell the buyer about the seller’s willingness to reduce their price from the asking price unless the seller has authorized the agent to do so. Likewise, if the agent is representing a buyer, the agent may not disclose to the seller information about the buyer’s willingness to meet or pay more than the asking price unless the buyer has told the agent that this information may be shared with the seller. Some states require agents to disclose material facts about the property when the facts may adversely affect the health or well-being of occupants.
As a seller’s agent, you must tell the seller everything you find out about the buyer, but conceal information that would give the buyer an advantage, such as a pending foreclosure action.
As a buyer’s agent, you must keep information about the buyer’s financial position confidential, including their motivation for purchasing the property.
Reasonable Care and Diligence
Agents are required to diligently use their skills and knowledge when pursuing the principal’s interests. Because agents are real estate professionals, they are considered to have skill and expertise in real estate matters superior to that of the average person (the principal), and they are required to use this skill as is necessary to accomplish the objective of his or her employment.
- As a seller’s agent, you must be prepared to represent the seller competently
- As a buyer’s agent, you must be prepared to represent the buyer competently
Agents are required to account for all funds and property entrusted to them by the principal. This includes money, deeds, and other documents that a client has entrusted to the agent. License laws in the majority of states require that brokers provide copies of all documents to each interested party. These documents are also to be kept on file for state-specified amounts of time. Money entrusted to brokers is to be kept in an escrow or trust account.
- As a seller’s agent, you must account for any money or documents that have been entrusted to you
- As buyer’s agent, you must account for any money or documents that have been entrusted to you
Fees and Commissions
In most instances, a listing agreement between a seller and the agent gives that agent’s broker the right to exclusively market the home. In return for identifying a viable buyer, the seller pays a commission to the broker and in most cases, the amount compensated is a percentage of the property price that is divided between the listing broker and the broker who identified the buyer however, it is important to understand that the party that pays an agent’s fees or commissions does not determine the basis of agency. Depending on agency type, an agent may not be paid by the party he represents. Some agreements may compensate the brokerage for the fee it is due to less the amount paid by the seller. For example, a cooperative listing could offer a broker
2 Percent of the property sales price, whereas the brokerage operates at fees of 3 percent.
The buyer could meet the difference. Consider the following scenario: Milton is selling his home to Andrea, and although Andrea’s agent does not work for Milton, as the transaction is completed, Milton will pay Andrea’s agent a percentage of Andrea’s agent’s commission. To help alleviate confusion, sellers and buyers may retain their representation and pay separately for given representation regardless, to avoid confusion and frustration when it comes to agent fees, any and all commissions should be identified in written agency agreements.
Advocacy is part of an agent’s fiduciary responsibilities to their client. If there is no agency formed whether implied or expressed the person whom the agent is negotiating a transaction would be called a customer. To a customer, an agent would only need to be acting in an ethical and honest manner and give information that is required or allowed. The agent would not be held to the other duties such as loyalty, obedience, etc.
To be a person’s advocate in an agency relationship would be to stand up for that person, to negotiate the best deal possible. The agent would defend and maintain, support and promote the client’s (Seller or Buyer) needs.